Exhibit 99.1
TEMPUR-PEDIC INTERNATIONAL ACHIEVES 45% NET SALES INCREASE AND RECORD EARNINGS
IN FIRST QUARTER OF 2005
PRO FORMA NET INCOME INCREASES 66% TO $0.27 PER DILUTED SHARE, GAAP NET INCOME
INCREASES 127% TO $0.26 PER DILUTED SHARE
COMPANY RAISES SALES AND EARNINGS GUIDANCE FOR 2005
LEXINGTON, KY, April 21, 2005 - Tempur-Pedic International Inc. (NYSE: TPX), the
market-leading manufacturer, marketer and distributor of premium mattresses and
pillows worldwide, today announced record net sales and earnings for the first
quarter ended March 31, 2005.
FIRST QUARTER 2005 HIGHLIGHTS
o Pro forma net income rose 66% to $27.5 million, or $0.27 per diluted
share, from $16.6 million, or $0.16 per diluted share, in the first
quarter of 2004. The Company reported net income under GAAP of $26.8
million, or $0.26 per diluted share, compared to $11.8 million, or $0.11
per diluted share, in the first quarter of 2004, an increase in net
income of 127%.
o Net sales rose 45% to $222.4 million from $153.1 million in the first
quarter of 2004.
o Operating margin increased to 22% from 20% in the first quarter of 2004.
o The Company's retail channel continued its strong growth, with net sales
rising 62% worldwide. Sales in the U.S. retail channel were especially
strong, increasing 74%.
o Worldwide, mattress net sales increased 65% on unit growth of 51%.
Chief Executive Officer Robert B. Trussell, Jr. commented, "Tempur-Pedic
International turned in another stellar performance in the first quarter of
2005, with our best quarter ever in terms of net sales and earnings, as we
continued to drive growth through the successful expansion of our retail
channel. The key elements of Tempur-Pedic's strategy - our superior products,
unique marketing model and expanding distribution capacity - all played an
important role in the Company's outstanding performance. We believe we have put
all the pieces in place to deliver sustained growth and capitalize on the huge
market opportunity that we believe exists in the premium bedding category."
President H. Thomas Bryant added, "During the seasonally strong first quarter,
Tempur-Pedic continued to generate strong growth in our established accounts and
added approximately 330 net furniture retail stores in the U.S., substantially
exceeding our target number. These factors combined to increase U.S. furniture
retail store sales 91% to $93.4 million for the quarter. In addition,
internationally, we added approximately 170 net furniture retail stores. We were
also pleased to see signs that the visco-elastic category as a whole is
continuing to expand. We believe the superiority of our proprietary Tempur(R)
material, combined with the Company's role as `first-mover' in the category, is
helping us solidify Tempur-Pedic's worldwide leadership position as the overall
market continues to grow.
"In addition to generating exceptional financial results, we made excellent
progress in our new product initiatives during the past several months. In
January, we began delivering our futon product to Japan's large department
stores, where the Company's sales representatives are beginning to introduce
customers to the features and attributes of this new product. Initial reaction
to the futon has been very positive and our next step will be to expand
distribution to bedding and futon stores.
"More recently, we unveiled `The EuroBed by Tempur-Pedic(TM),' a unique new
sleep system that recognizes how important design elements have become in the
bedroom. `The EuroBed by Tempur-Pedic(TM)', which represents an important
addition to the growing array of products our Company offers, received an
enthusiastic response when it was introduced in the U.S. in April this year. The
new offering will start shipping in the U.S. in June.
"During the first quarter, we increased our advertising spend as planned to
continue driving sales and expanding Tempur-Pedic's brand awareness, including a
new marketing campaign focused on our pillow offerings. Finally, construction of
our new manufacturing facility in Albuquerque, New Mexico proceeded on schedule.
We expect the 750,000 square foot factory, which will play a key role in
fulfilling the growing demand for Tempur-Pedic's products in North America, to
begin operations in the second quarter of 2006."
For a complete discussion of pro forma adjustments, see the Supplemental
Information included later in this press release.
2005 GUIDANCE
Given the Company's strong performance in the first quarter of 2005 and its
continued positive outlook for the year, Tempur-Pedic International is
increasing the full-year guidance it previously provided for 2005. The Company
now expects net sales for 2005 to range from $880 million - $890 million, rather
than being in the vicinity of $880 million. It currently expects pro forma
diluted net income to range between $1.10 to $1.13 rather than being in the
vicinity of $1.10. It also currently expects GAAP diluted earnings per share to
range between $1.08 to $1.11 rather than being approximately $1.08.
The Company notes that 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.
CONFERENCE CALL INFORMATION
As previously announced, Tempur-Pedic International will host a live conference
call featuring Chief Executive Officer Robert Trussell, Jr., President H. Thomas
Bryant, and Chief Financial Officer Dale Williams to discuss first quarter
financial results today, April 21, 2005 at 5:00 p.m. Eastern Time (2 p.m.
Pacific Time). The dial-in number for the conference call is 706-634-0167. The
call is also being webcast, and can be accessed at
http://www.tempurpedic.com/ir.
For those who cannot listen to the live broadcast, a replay of the call will be
available from April 21, 2005 at 8:00 p.m. Eastern Time through April 28, 2005.
To listen to the telephone replay, dial 706-645-9291, conference ID #5309320.
An archived webcast will also be available on the Tempur-Pedic International
investor relations website at http://www.tempurpedic.com/ir.
FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements," which include information
concerning one or more of the Company's plans, objectives, goals, strategies,
future revenues and performance, capital expenditures, financing needs and other
information that is not historical information. When used in this release, 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, management's expectations regarding continued growth and its
net sales and pro forma and GAAP net income for 2005, the construction of its
Albuquerque facility and the timing of new products, 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 release.
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. Certain of these risk factors 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 "Business-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 to reflect
events or circumstances after the date on which it is made or to reflect the
occurrence of anticipated or unanticipated events or circumstances.
ABOUT THE COMPANY
Tempur-Pedic International Inc. (NYSE: TPX) manufactures and distributes Swedish
Mattresses and Neck Pillows(TM) made from its proprietary Tempur(R)
pressure-relieving material: a visco-elastic material that conforms to the body
to provide support and help alleviate pressure points. Products are currently
sold in 60 countries under the Tempur(R) and Tempur-Pedic(R) brand names. World
headquarters for Tempur-Pedic International are in Lexington, KY.
For more information, visit http://www.tempurpedic.com or call 800-805-3635.
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
---------------------------
($ in thousands, except per share data) 2005 2004 Chg %
- --------------------------------------- ------------ ------------ ------------
Net sales $ 222,379 $ 153,123 45%
Cost of sales 108,136 71,784
------------ ------------
Gross profit 114,243 81,339 40%
Selling expenses 44,969 34,955
General and administrative
expenses 19,090 15,362
Research and development
expenses 804 488
------------ ------------
Operating income 49,380 30,534 62%
Other income (expense), net:
Interest expense, net (5,363) (6,094)
Loss on debt extinguishment (717) (5,381)
Other income (expense), net (85) 80
------------ ------------
Total other expense, net (6,165) (11,395)
Income before income taxes 43,215 19,139
Income tax provision 16,465 7,368
------------ ------------
Net Income $ 26,750 $ 11,771 127%
============ ============
Basic earnings per share $ 0.27 $ 0.12 125%
Diluted earnings per share $ 0.26 $ 0.11 136%
Dilutive weighted average
shares outstanding
(in thousands) 103,392 103,074
SUPPLEMENTAL INFORMATION
PRO FORMA NET INCOME AND OTHER FINANCIAL DATA
To further provide investors useful information, pro forma net income is
presented and represents the Company's GAAP net income before non-cash
stock-based compensation expense of $0.7 million and $1.5 million for the three
months ended March 31, 2005 and 2004, respectively. In addition, for the three
months ended March 31, 2004, GAAP net income includes, and pro forma net income
excludes, a loss on debt extinguishment totaling $3.3 million, net of tax,
relating to the early write-off of capitalized deferred financing costs
subsequent to the repayment of the associated debt.
The Company believes that excluding non-cash stock-based compensation expense
and loss on debt extinguishment provides a measure that is more representative
of ongoing costs and therefore more comparable to the Company's historical
operations. The following is a reconciliation of GAAP net income to pro forma
net income and per share amounts:
TEMPUR-PEDIC INTERNATIONAL INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO PRO FORMA NET INCOME,
AND OTHER FINANCIAL DATA
Three Months Ended
March 31,
---------------------------
($ in thousands, except per share data) 2005 2004
- --------------------------------------------- ------------ ------------
GAAP net income $ 26,750 $ 11,771
Non-cash stock-based compensation expense 775 1,499
Loss on debt extinguishment, net of tax - 3,309
------------ ------------
Pro forma net income $ 27,525 $ 16,579
============ ============
GAAP net income per share, diluted $ 0.26 $ 0.11
Pro forma net income per share, diluted $ 0.27 $ 0.16
Other financial data
Depreciation and amortization $ 7,414 $ 6,894
Net debt $ 247,527 $ 298,222
SUMMARY OF CHANNEL SALES
The Company generates sales through four distribution channels: retail, direct,
healthcare and third party. The retail channel sells to furniture, specialty and
department stores globally. The direct channel sells directly to consumers. The
healthcare channel sells to hospitals, nursing homes, healthcare professionals
and medical retailers. The third party channel sells to distributors in
countries where Tempur-Pedic International does not operate its own distribution
company.
The following table highlights net sales information, by channel and by segment,
for the first quarter of 2005 compared to 2004:
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31,
--------------------------- --------------------------- ---------------------------
($ in thousands) 2005 2004 2005 2004 2005 2004
- -------------------- ------------ ------------ ------------ ------------ ------------ ------------
By Sales Channel
Retail $ 169,309 $ 104,657 $ 117,185 $ 67,480 $ 52,124 $ 37,177
Direct 28,569 24,979 25,366 21,469 3,203 3,510
Healthcare 12,752 11,841 3,025 2,835 9,727 9,006
Third Party 11,749 11,646 2,354 1,174 9,395 10,472
------------ ------------ ------------ ------------ ------------ ------------
Total $ 222,379 $ 153,123 $ 147,930 $ 92,958 $ 74,449 $ 60,165
============ ============ ============ ============ ============ ============
By Segment
Domestic $ 147,930 $ 92,958
International 74,449 60,165
------------ ------------
Total $ 222,379 $ 153,123
============ ============
SUMMARY OF PRODUCT SALES
A summary of net sales by product is reported below:
CONSOLIDATED DOMESTIC INTERNATIONAL
Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31,
--------------------------- --------------------------- ---------------------------
($ in thousands) 2005 2004 2005 2004 2005 2004
- -------------------- ------------ ------------ ------------ ------------ ------------ ------------
Net Sales
Mattresses $ 154,092 $ 93,180 $ 111,056 $ 64,656 $ 43,036 $ 28,524
Pillows 33,331 34,852 13,797 12,262 19,534 22,590
Other 34,956 25,091 23,077 16,040 11,879 9,051
------------ ------------ ------------ ------------ ------------ ------------
Total $ 222,379 $ 153,123 $ 147,930 $ 92,958 $ 74,449 $ 60,165
============ ============ ============ ============ ============ ============
Units Sold(1)
Mattresses 184,319 121,995 111,813 70,940 72,506 51,055
Pillows 630,261 704,099 258,132 252,617 372,129 451,482
(1) Units sold represent net sales after consideration of returned mattresses
and pillows and excludes units shipped to fulfill warranty claims and
promotional activities.