TPX - Earnings call transcript Q1 2020 | Tempur Sealy International, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Tempur Sealy First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]

It is now my pleasure to introduce Aubrey Moore, Investor Relations.

Aubrey Moore

you. Thank and participating everyone today's you thank morning in for call. Good

Chief are in Rao, Chairman, and Q&A. prepared our call me open Scott we Executive Officer. will remarks, Lexington President Bhaskar Joining for and headquarters Thompson, the After CEO; President Vice Financial and

regarding the Litigation that that statements expectations Reform uncertainties. and and the XXXX. are cautioned to Act forward-looking income during provisions statements, of company's are made this XXXX of earnings, Forward-looking harbor call the these adjusted including performance make anticipated involve pursuant and we net safe sales, Private Securities Investors periods subsequent EBITDA for

results Actual press materially release identified factors include business. due company's The the of variety factors operating discussed economic, that in regulatory, from factors those competitive, actual a and differ that may could other issued adversely to the differ could affect cause today. to results

These XX-K Risk reports the factors not Special which in forward-looking annual but of discussed the and/or under the to, reports Notes speaks only company's statement made. the Any day including, it filings, heading Regarding and Forward-Looking the SEC are was Form XX-Q also Statements on Factors. company's Form limited on on quarterly

release forward-looking no information except contains information. as otherwise statements. undertakes update well most currency in presentations. in non-GAAP GAAP information comparable as non-GAAP press our the as methodology directly of used morning's obligations company financial include to this The commentary will The reconciliations regarding This release any constant financial press information the the to discussed

also filed the company's at press the and investor have posted SEC. the have We with website release on it investor.tempursealy.com

the supplement press will the provided comments detailed release. in Our information

it's it to introduction, turn over pleasure to Scott. And now with that my

Scott Thompson

morning for quarter on and Good XXXX joining Aubrey. first us you you, Thank earnings call. our thank

thoughts all impacted. have are are an people our the world crisis, lives unprecedented global those been whose around with experiencing and We health

financial impact regarding with I'll on then call, of On provide the begin you thoughts sheet also liquidity performance, review provide operation and Bhaskar overview an in position. operations. current our with today's some Then COVID-XX our our trends I'll the of will and and performance, quarterly comments balance you strength on with quarterly detail

with I'll crisis. we why well-positioned we stronger will through as emerge this is and manage to Tempur thoughts period believe Sealy conclude challenging Finally, of believe the side on a on global this some why even other company

quarter outstanding. It mid-March. first was record was The all firing adjusted and We're both until and cylinders, XXXX truly for quarter first EBITDA. a financially, operationally of sales on

earnings double As compared to adjusted grew and digits. last year, sales both

ratio approximately declined acquiring significantly of even year-over-year, bedding repurchase. In leverage Sherwood addition, and stock after our $XXX million

and Both direct currency grew sales our and channels. North wholesale across America both constant International segments

broad-based, channel. Our across performance strength was with brand, very and geographies,

that for the noted in due well our pandemic a COVID-XX of U.S. on and we as the as these significant to achieved in most be operations should drop results quarter. It Asia exiting impact the sales despite negative quarter the European of

eighth the from also Turning adjusted per marks solid to net quarter only repurchase. Adjusted a adjusted the growth. sales earnings a X% XX%. share EPS adjusted note for I came EBITDA in increased of EPS growth increased robust consecutive XXX%. quarter, reported XX%. that of increased should share the this results And This

to adjusted you also highlight idea you deliver to can the results, items if gives This $XXX I'd some in pace like I first consider results: strength the approximately the business of going our note into you should quarter the EBITDA we on three seasonality, on of that in were quarter see first crisis. XXXX. model with million

and Sealy The our in-store. preferred products newly availability both brand has First expanded products of & is the customer Tempur-Pedic, of distribution. our completion U.S. increased resulted rollout Stearns the distribution online and new of in through Foster,

and quarter and gains it history, robust It new first well execution the our significant all with were was strong planned distribution in the single was growth. by The drivers largest smooth company's in teams. rollout

direct the In from XX% first our channel. highlight year-over-year. grew our the quarter Second channel was global XX% growth America, North in direct

sales of greatly the end XX%. Our online that And from subsequent global benefiting closure. to grew accelerated direct the growth store quarter,

I'd like team experienced declines, XXXX, the by of out to Outfitters significant Sleep at outstanding overseeing and the loss. same-store acquisition. a out bankruptcy operating acquired Sleep in sales were work When we they call they the Outfitters significant

growth. impact the team profitable through of a then believe track mix, Since prior was to in in pandemic. merchandising sales the the We Outfitters Sleep reinvigorated improvements programs, for year advertising same-store on XXXX

the with label private non-branded is a Family & Tempur-Pedic, marks Sealy. Sherwood's products integration from complete private label branded ranging us partnership our Third our to bedding. of of the including category, products, Stearns giving into Ellman's well-known products This and Foster, Sherwood highlight entrance suite

additional offering In This points. long to portfolio gain price acquisition expanded provides a the an distribution leverage products. Sherwood products brand for we range of to and wide overall our term, expect

quarter highest delivered the history, despite global In COVID-XX impact total, first EBITDA the adjusted we the in on of company's operations.

and within Our underlying withstand and confidence industry that strategies our robust structure give us that to working the associated headwinds we're quarter COVID-XX. first uniquely are our with results well positioned

are Before Bhaskar COVID-XX and downturn. the economic actions resulting financial to recent taking like an in provide response overview I'd of the reviews statements, we our to

health to possible employees review restricted to We where measures and health employees. protect to specific that home face-to-face applicable protocols of work and implemented global and to operations. the travel adopted all First our safety from regional meetings, I'd and our the foremost, we've like allowed

and priority. Keeping employees time healthy and our a top during this is safe customers of uncertainty

during work the of and people variety has We need different are especially this a Sealy in organizations of crisis. done support that Tempur to proud

products. important teams part pandemic, specialized these amount donating related mattresses, innovative amount we're items and short and time, be it's in we foams a believe We medical during that other do have which hospitals help is substantial medical-grade of developed Over our R&D to our to this facilities. a used of why other

we're who are during that workers frontline community all are our global personal support hardship. protective serving we selling donating, of manufacturing cost, this Additionally, the we in are equipment to

entire been at our impacting has during times. shareholders Our regions The different customers, to virus committed remains times. suppliers different these organization changing and rapidly

our For our example, stages regions. of geographic impact Asia countries the of and show operations degree the within within one

in consistent lifted and period a the But two new Japan orders compared been sight were in corona-XX at Then were are in the our Singapore order. total, to same last prior specifically decline April. as Asia restrictions enacted, restrictions year Korea and of has now since to grow impact seen we've growing orders were peak of year-over-year. Operations, In beginning double-digit business growing the Meanwhile, experienced year-over-year. March. weeks in with

infrastructure country-by-country market this is the pandemic, to own limited doors. helps response markets to Asian example us online our access monitoring that decisions We're its how basis the has the brick-and-mortar country to recover. and markets each government a can responses on closely information across an and While shifting operation. make strategic to In in global U.S. their consumers informed using shopping pattern their are understand

our As powerful you know, strengths of distribution is model. our omni-channel one

retail weak, direct very well. our has third-party online retailers' very been While and sales our traditional have performed

uniquely into to As our our a result, are serve needs. we customers' online suited channels, which leaning is

April Cocoon April more last by U.S. business for Sealy to doubled products Tempur than compared as year. Our driven and online by

response of online recently We expanding continue online Tempur the been to behavior distribution cloud to compressed shopping by this has our adapt market. to entire product new strong. The U.S.

began impacting us a to reduction business financial needed This mid-March. reduce but the operational actions expenditures has growth major Despite delaying of deleverage in total materially in we repurchase. by decline, highly impact eliminating since partially still face The capital to mitigate headcount, we sales share sales team the nonessential experienced implemented and our online, quickly our further suspending which reducing in offset business to variable us cost more. The the do expenses, cost. structure, model COVID-XX required allows to

this decline. furlough balance for savings our U.S., we match In our that actions example, personnel. the considering implemented implemented all XX the actions new $XXX current salaried sales workforce For the expected regarding we estimate an help of In have days, total, in we've XXX(k) impacting XXXX. and to for million past suspended a approximately recent week, included we business these the annualized mitigate throughout of actions, XX%

to strengthening we position impacted near-term long-term our expect headwinds, see results we downturn. be financial the competitive significantly COVID-XX throughout While by

an fully to has fundamentals faced products has ability superior challenges sheet product past powerful to headwinds balance due for iconic adapt temporary have distribution, of demand environment. and from brands, omni-channel our constantly our company are bedding solid believe The numerous industry to quality, history. the recovered and demonstrated we changing The a sound throughout we seasoned management. But our

turn through walk to Bhaskar detail. results call financial I'll that, With in over the to more the you

Bhaskar Rao

Thank you, Scott.

the details, the few first Before a like from quarter. I going financial to would call into out highlights

EBITDA XX.X%. for quarter to XXX the Adjusted points very margin prior increased $XXX basis gross year, XX.X%. and compared XXX%. to the million $X.XX, XXX to improved of XX% improved EPS margin adjusted points basis Adjusted increase to an a robust operating was As

There impact prior material in This We very The growing the The business. few exceptional. in call of the January quarter as February first compared the strength before highlights with of as financial strong want monthly robust COVID. excess momentum, the trends in to the strong the first of I prior are was experienced which to America a into growth January results. out February, company's items continued to bifurcated turning are to year. exited due with business trends we performance quarter impact to the sales North XX% and and XXXX underlying

carried the in the performance despite beginning of strong March, quarter early Asia. Our into in slowdown a

the March, update we impact U.S. in as with Thereafter, in were declines began we material trending have the saw significant and over and our of At to down disclosed end sharply XX%. orders declining a America that North trends in Europe. Europe COVID market

month-to-date, bottomed year. and down seen early the as trends a then, continue to Orders the compared prior as fall Since year. days XX% in is April improve, to April prior to down and compared during we XX% out few have

with During also charge of connection the took the $XX we a million the impact in bankruptcy, customer unrelated COVID-XX. to of quarter,

were GAAP American Our North results this impacted onetime by charge. quarter first

did we this related charges forward, expect not Going to further customer.

sales the channel the in the a American North quarter. wholesale results. first Turning On North American XX% reported to North direct basis, and channel net American XX%. XX% increased increased increased

Scott of the a mentioned. our wholesale that robust The channel new distribution of previously acceleration in XX%. significant includes late the were Outfitters, gains channel growth. driver channel direct Sleep March Excluding direct increased online The

the American cost prior expenses. expense North operating leverage favorable gross The compared North XXX as points points cost to American leverage. adjusted floor lower margin improved model margin operating commodity the improvement year. on prior basis driven the improvement primarily was basis margin to primarily in XXX year. to as operating in by compared volumes, driven higher margin improved was XX.X% decreased adjusted This unit profit improvement XX.X% and gross fixed by and to

X% on X% both a constant decreased sales net with and growth International Net positive basis, a reported sales Turning increased wholesale basis. direct International. channels. to On currency in the

of The international a material first quarter impact COVID. results include

Our February the first we feel operations When results has with impact in the to in you our very and virus dealt business the began international region. as began throughout the pandemic and the negative with the flexibility of in to of what pleased the spread model. these group consider quarter, are Asia resilience

XXX the year. the of expense As improved Asian points driven The operational margin leverage, is and primarily compared margin concentrated lower by operating favorable country venture, to the was points China. to by partially primarily improvement which margin XX%. driven International improved prior costs. was compared improvements, gross year, as commodity adjusted prior favorable to joint offset The operating the our mix by and gross basis performance in international XXX basis improvement

year. was EBITDA Turning is fourth million, consecutive quarter EBITDA adjusted million to This performance. income XX% the $XXX double-digit of the operating year-over-year last adjusted company's $XXX from up Adjusted was and global growth.

variable in primarily volumes, fixed commodity the decreased lower costs. higher adjusted lower model compensation driven expenses, on increase was EBITDA cost leverage by floor and The unit

Commodities better for expected the than first were quarter. slightly

forward, that Going continue a on would see expect unit we to basis to favorability. per

$X.XX, commodity improvements operating up volumes the Adjusted thus from by the future in uncertainty have was benefit for do we EBITDA. performance. potential the estimate to XXX%. visibility entirely driven total This quarter the and almost growth crisis, EPS to good Given was not currently

million to in Now We flows in items. on moving and balance first from CapEx. sheet generated operating of quarter $XX spent and continuing $XX the flow the cash cash operations million

April. is a pleased the lift be investments We're a we're cross-functional start. with good efforts heavy outstanding this that and departments. support is in went As work we ERP in XXXX ERP needed CapEx to to do software. IT expected of our to still elevated U.S. a our very in was proud other but our in the live system There Sealy to team more of report reminder, there, collaboration This

of debt liquidity to the was I the billion. first would net end our $X.X position. quarter, turn At to like

under for in from first target ratio facility after of Our on million our of the spending the XXXX the long-term X.X was of of the $XXX our times our million approximately of is leverage levels credit significantly acquisition $XX quarter X.X our our the based middle of shares leverage declining to Sherwood accelerated prospects of X.X during business times times, down and X.X XXXX. first that time. repurchasing senior range quarter repurchase times. and our in is and share We conviction at This during

down year and from in to It leverage to that our is increased lesser our to note by pay the XXXX. driven ratio prior a the extent, important in profit, operating reduction debt was by decision

will we competitive current this significant downturn. be forward, leverage a enter anticipate Going that as we advantage our

to and liquidity sales prolonged our period near-term overview The had is decline. a being withstand in want the We positioned give I to company maturities, XXXX. to debt moment with of first of no position. well take an a severe debt

$XXX credit facility. $XXX March of as have and million under approximately cash revolving on XX million hand $XXX liquidity, million available our We of approximately including

We expectations any see generate our our cash operating agreements. Based issues in not current material debt expect flow with we this situation, XXXX. dynamic very to on do in

market Although, temporarily in and adequate to we our above XXXX. liquidity on our believe based do We that debt-to-EBITDA current anticipate our increase ratio our expected is current target conditions. ratio

initiated our with variable banks a have loan. commercial nature of rate crisis, liquidity incremental of given we the this in the the secure to discussions form and uncertainty However, term

additional working XX We liquidity this days. next obtain to are the within

loan Our shares agreement. short-term ability be will to under repurchase new limited this

financial our significantly expect COVID. quarter to impacted we results the be with mentioned, As challenges by second associated

early quarter to were net and of improved. reflect have XX% sales the April a trends compared to-date Our in year. consolidated trends The decline prior recently second worst

comp have current across vast the benefit As employees, earlier, advertising, done nine reducing XX% U.S. on to for compensation. year about with Scott reductions expenses to many including in of with $X cash of furlough the there react of outlined and are $XXX million are million The majority and staffing-related liquidity being includes XXXX. by the variable will amortization. that This these basis, personnel, annualized the items other primarily position $XXX things we an environment. last These our of salaried items approximately stock months million

actions, this near CapEx by approximately are We million price, headwinds we $XX would have non-essential products selling average planned purchasing margins. expect during trends, XXXX projects. also to have as a as reduced crisis in delayed for our Within have we Despite reduction term we recent these significant lower-priced consumers cost seen period.

in gross operating will fixed addition, manufacturing manufactured resulting as are in EBITDA over costs In expect This margins, spread units. deleverage fewer unadjusted an create deleverage expected and negative in quarter. and the we operating second loss

the recovery in pace markets being COVID-XX. by and on dependent impacted Going in third the quarter of the forward, the we operating income anticipate fourth sales

a to for modeling few I would purposes. items like Lastly, flag

million we full $XXX shares. and currently share between interest of a XXXX, rate and million of CapEx XX% diluted $XXX million, $XX million, includes and be and expense which million, to $XX tax D&A $XX count the XX%, For to be $XX of a expect XX CapEx to $XX maintenance year million total million, between between million

With that, to I'll Scott. turn the call back over

Scott Thompson

Bhaskar. you, Thank

this We're it our and team us a done in outlook near You the job unprecedented reassess time your quarter. have forced great term. to has and business through living

that sight us of built for not momentum tremendous that to pandemic prior the a we've However, COVID-XX progress underway and company. was it's as to the lose important

that a direct growth vertically exceptional has leading, believe that We a growth. of we initiatives. integrated is that global long-term had company and Sealy passion reflection focus our Tempur the have market is on

our distribution the EBITDA. our increases in highest four-key long-term bedding markets Three, all we with corporate Two, marketing. recall You'll drive powerful fourth, initiatives brands promote optimize serve. in that develop omni-channel first, are: And products compelling quality platform. the worldwide

has four us crisis. has focus these well on recent we into achieve this our as allowed head Our positioned results to initiatives us and

to that XX% on North actually wherever this physical America shop, to up they crisis sales in and a prior momentum are them we and we're robust We even strong and trends January accelerating and consumers stronger even to emerge with other with elaborate than I model I'd shut and only February our to reach feel today, that a in we had COVID-XX. Asia me that side. entering down. Two, the Europe us can operates distribution can when growing on stores allows reasons e-commerce few business Let not want weather confident like but omni-channel highlight why very the storm,

have and products in the in the global technology invested manufacturing. best heavily We our industry, have

luxury We have all with iconic points on brands the price a focus spanning segment.

liquidity. have dedicated people solid with challenges. And and have balance We most a sheet overcoming we importantly, and a talented history team significant of of

I joined for their fee various before remainder elected of open to the Tempur and to pledging me the Tempur XXXX. funds Sealy the the the that and members children Finally, charity, executive service in Q&A, announce to have company in Foundation the Red board have need of I'm team to Way pleased up Directors call Board forgo to these and Sealy donations for supports to of contribute The Cross. critical families. providing chosen charities Foundation, United the that has

a the of of that to we time as of company communities. are collective I'm responsibility our leaders uncertainty, actions Tempur this support see proud Sealy to the During feel reflective

up With that, operator, for questions. please open call the

Operator

line our Bobby from with James. comes the question first Instructions] Griffin [Operator Raymond And of

Bobby Griffin

impressive. really morning, a taking first and my for Thanks questions everybody. on quarter, good Good congrats

Scott Thompson

you. Thank

Bobby Griffin

Memorial distribution follow-up is, about as that, maybe weekend? And talk little what health around I'll just a about bit business then the wholesale ask customers plans hearing customers? go from expectations you're and second small part question, in a the it can particular medium-sized with can the and you these of ahead the to your talk for network, just you Day first My and

Scott Thompson

Sure. question And retail I've U.S. in targeted seen customers. is your

having the up. to a about that includes good February if not, as and our I'll that the having U.S, you're just back retailers retail hit it's Look, customer see and U.S. the from very got queue January smaller So were They talking speak can -- quarters then you like robust hard, very did, hard. hit growth. both numbers, customer best recent one that late were probably locally. the got they've March, regulations, When would we I think years. they got And and statewide had of they and in they in general, in closings say then and confused that governmental

began they to they loss. hear to a it unusual was these certainly their a it. trying very of and retailers cover adjust, online then doesn't they to to coming page, very period, there committed a could were people, creative, might for they really And close business as to small were to weren't began they of few web period it. lean stores, but When what total not with They're a talented became They sales. out is stories week do. brick-and-mortar us before online, forced quite their which figure so frankly, have base, three and off to to see times, had And disruption And brick-and-mortar two into it over feel it we their nearly are it. committed times they retailers

something. think do I But learned they've

retailer now they they to be be to stores Internet. creative successful. schedule very committed is and there'll setting even customers appointments, They retailers closed, that think became that found up though think personal began XXX% more with when for. And the to also do have I every had in they better appointments I

after will I continue that's think that technique the even crisis. industry in this a

a health difficult their players. that's obviously, small. there's a is, of They're lot that because, what analysis On very

so certainly unusual in They've materially. softer, base. stable. is You large don't been I relatively really extend, days actions. their been any or little capital bit a I'd far But haven't would seen And our in in have know collections what receivable to expect tell and you but we not our so March April

be they think to a able with of right take XX say they're little smaller I'm going stores now, the be a current days. and I we've goes don't going the to of to ones, getting, good been okay, feel maybe news opening fine. that bit they'll that crisis So, But but the

Operator

from Thank And you. line comes the of Hughes next our question SunTrust. Keith with

Keith Hughes

April on the the as congratulations My quarter on My you. is well. question Thank numbers.

how the revenue your Is difficult substantial April? you've far. been has about in there that price amongst declines talked your differences so on and You brands amongst seen here business points

Scott Thompson

Sure.

do relatively first easy. because Let's brand it's

our know, the the distribution then gains, of adjust new you Sealy way just distribution to you no U.S. brands compared is Tempur, If we're of the the heavily there's as generally saying, another for difference in and new in distribution performance our more Tempur-weighted. overseas

from standpoint, a brand not distribution I'm between So it significant for brands going say two you the we're seeing to changes. adjust after anything

it mix, for to, mix of lower lack better a go seeing merchandising to merchandising products each mix, you and Sealy. in from perform to merchandising and within brand, within talk When brand, call Tempur in generally the go the standpoint. the we better it, there about both is down We're way ASP pressure a

the share you our crisis, very Some of before think ASP situation than probably of because But that it online lower consumer brick-and-mortar a products in-store confidence. obvious an economic is lion's the an ASP RSA-assisted study in be that distribution would sale. issue of and distribution on really if is that's I the

some stores going is feeling from open, ASP going standpoint. we're question, of pressure the which yes, the that. forward? merchandising is what part which I what's brick-and-mortar online, on But is I So mix you're know, depends brick-and-mortar how going to But happen important don't to as a obviously, what's stores don't perform. with get really it know the the

Keith Hughes

you. Thank

Operator

And next Curtis the Nagle line with comes of America. of you. question from our Thank Bank

Curtis Nagle

taking question. for Thanks very morning. the Good much

on guess very I DTC the moment. online; So, DTC. change to coronavirus the to your doing thinking I at turn obviously, wanted well does maybe

there trying both is few chain. to isn't the little the But been want and guys maybe more lean bit should about about that? real this Or guys as control well, heavier and should to we think heavy You word, right it? have use past Do done the think how bit you a we online maybe how over to And but shifting have over you little supply category into world the it's a in DTC? more, maybe stores. years, even opportunity Sealy think investors

Scott Thompson

Okay. DTC Thank the you let you. while. Thank little for And talk me XX for a about questions.

First of all, to let go just Asia. me

Asia and been through before. had this SARS, so they've

happened to so customers after studied And if we see SARS in or what in Asia online there's been really any there wasn't. shopping change something,

are think the clearly during question, I stores So there's short-term online the period, has that exploded. the while closed, no business

As talked online after very I've in done doubled. every U.S. and more well. overseas, quite just I business And our said, about frankly retailer the than online March has to XX, has

looks have XX% stores have, we in it. research the opened, until the buy SARS we think or current customers tells a that's they be don't whether before really it'd bed research what like. but But try whether although us, are that fresh, Asia to plus don't we anything I our know out of it'd be this after want

that there. is think shift some there I maybe So

currently of So maybe believer I'm a bed it's it. to they customers try it a goes a But out want huge shift. buy to that before XX% not

there's Internet alternate the give from a probably the bed be the back looking right standpoint, back. think will preference Once but go and open, give to wanting I we're we'll their still some people trend. distribution, now for a I to I suspect accelerated think what it probably probably most stores is the store. of And feeling

it's that channel. And it just now profitable Now coming competitive almost ground best about you includes continue kind about to be in obviously world when and online I talk very to online so a there, and online, companies of the probably we're from of and start. I brick-and-mortar, DTC, wildly and expect talked grow, one a the we'll bedding

When I Coast we'll there. the stores, about that to obvious and still on the generally you May all in working West suspect get there. stores Tempur on are We're are closed the are them for XX. half The of reasons. by growth stores go still growing Northeast We're open closed.

So are the store -- moving forward. stores Tempur

is change of as a might mess delayed, right build do because by guess, any The out us, it's opening little things. quite and those stores not you pace but strategy estate a market to of and be frankly, real kind or now, the going hard is to of

be on strategic execution opening bit that's So, the again, a in real issue an But stores. issue. we'll probably that's slower -- not probably a estate, little

The invested Sleep more those online, what perform and And at I that in how they stores, XX next we they're will Outfitter so, really closed, opened selling the is And exception and or get suspect strategy the changed based days their Kentucky. the probably hasn't we'll with of expand. on are on on Sealy, want return few to capital we depend pace which specifically. a beds here

lot margin there's there. of job lot really who e-tailers a And online. not are Sealy of But generally, doing beds well, I think the selling that bed are retailers a

want effort spend So, much I there. too to don't

to So, think I don't guess, it's a I anything long-winded really changed. answer

we'll the have. be. be allocate I wants I to we'll the wherever capital online customer then manage continue to see just think be to we more we wants way or But the But customer to want think if there. direct, wants we be to it

Operator

And of you. our comes Thank with question William from of next line the Reuter America. Bank

William Reuter

Good morning.

You sufficient even referenced that? feel thought I you to was in debt. raise. sounded size the guess, like of have a some sort about going it It then potential And when that capital secured be you that have to That's the like how context, were after extend? in been scenarios, you liquidity liquidity will for if it. raise, Thanks. crisis you've different long planning of

Scott Thompson

and the that sounds when of is flinch because equity we like say on capital raise And with anything doing To capital capital basically, that it consider because a not syndicate, bank bank kind make not -- business. raise, equity some we're -- line Great you to our should thinking raise. normal we're of from question. clear kind related All a is about it traditional I our like instrument.

we're term scenarios. straight quite plus marketplace bankable a proving LIBOR exotic nothing probably item. and use not this -- expect debt It's that to debt, about $XXX under frankly, we most money that would a million probably X.XXX%, in to is It asset just

So again, weren't a we're but this we is it weird a in. about to we world normal talk business. wouldn't it, in even probably about we're in, talk if in And world like seems we need it

So Bhaskar, close... day-ish, normal XX straight debt.

Bhaskar Rao

Yes, that's correct.

Scott Thompson

to The we buyback and difference we're thing restrict days. very which, that amount we any of talking only to different during compared lending is period, XX stock did do appropriate, thought in it, current was about the it the were debt material arrangements of that's straight that anyway. we Call as quite going our frankly,

the that's So, capital raise.

on? much on money long medical -- we crisis the have goes that of question. a do becomes kind It depending how How

tell me cash burns any have I if don't pretty You then quickly. the sales,

me, know we'd If sales, as dependent it's frankly, -- reasonable think XXXX. don't opposed based we to I produce you have on And medical think, expect I operating what expect to today and quite dependent, we product cash. or flow tell dependent we in we operating -- again, produce cash

strengths talked his structure, which company the one think about Bhaskar cost of section. I variable the of the in So, is

cash. reasonable cash, If be not still it's sales number, though us we'll you of give be even eating generating some will kind down, we

we're a generating stores other money, we operating expect frankly flow. that, the the like be do cash money Bhaskar? burn we quite look, around bad. because second open world, which, we expect significant run expect, Fair, don't to analysis as very when So But you out to the second of don't after some the we amount of companies of where position than quarter, quarter to be these in

Bhaskar Rao

of the $XXX just not mean, I be million fair. about very $XXX $XXX of repetitive, million cash, million we that on liquidity, have incrementally, to is revolver. availability That's

the the year. flow mentioned, Scott operating cash of for we got balance As

So, the bank. that the we the, we're about from liquidity insurance feel And at. before we're call good that's where getting it,

Operator

comes Thank Atul you. And line of our next UBS. question Maheswari the from with

Atul Maheswari

Thanks Good morning. a taking lot question. for my

Scott, So, mix a clearly down to beds. there's lower shift ASP

a any recessions? you after beds? will currently and from on entry-level open to than think quick stores prevail, seeing on follow-up even based the that and rebound slower conditions then have what do experiences simply be do have in you're So, previous Do you've And your that bedding higher-end had the past the thoughts the recessionary I comment. you

reasonable you You level there's Thank when stop that? you. of sales burning what said that decline, is level quantify? a you'd could If cash

Scott Thompson

start, issue through the now, where can't of you tell hard are And the where online. got because open. issues the I stuff again, based stores the is Bhaskar question. take then I'll I've because, and with we running part just Yes, I'll distribution really ASP we're let right the aren't on

current to information question. So, the not is answer helpful

is recessions, same during it If for thing. down I to I periods really okay, past that and look this normal way But is work ASP okay? a then this period, their is those suspect strange back the up. at go

look individual normally at coming. checks I gas in that's because big, it, more When on a an big way government huge down, and consumer pocket got impact has prices are customers. money their They've

unemployment. people, much have are to unemployment making quite But being going working. we're So, with money they were it's making more furloughed frankly, that than

than that They entertaining. -- compensate don't costs. are really entertainment think these they're money to that not I lower they out spending not mean, certainly for them restaurants; government going to more checks know working. how So, because going to I have are that get not about they're

going to that's be So lower a amount.

a And the have and consumer's I sales trouble. period. car taking this generally wallet the of chunk in been real car sales payments during car think are new big And

So, I people going look ever had their than customer a when going customer think I during okay, and the pocket perceive really in they've is certainly pocket retail the of more on? recession. to more money say, money the kind and lot have than at most in a what's

this the and consumer is a not issue, the the that not issue. confidence the it's confidence is And going second is third confidence recovery So, assuming financial to I It's think the consumer little quarter, in quarter. starting I back. really for take relatively bad, a robust, get think issue to a consumer while

that question. And so to ASP all ties to your me,

sell good And so a that whether low whether recessions past online The have will last retailers, be at ASP. Selling really would a barometer. for I know don't or not high they're to ASP is at successful. thing retailer, a are work bedding is long-term to from in-store retail, if beds say I a they of business bunch for model

think the death have to they're will. business it's to to what's them Right I they life and we I a about ASP think matter and was ASP as So, as encouraged move up, got the are a the just sustainable profitable for Bhaskar, there But now, of move retailers, part wanting they've they up. move question, become pushing a of want plan, volume and And to once ASP out. about? second up, that

Bhaskar Rao

cash. relates take long deep to the -- that. as how how I could Maybe sales about the Yes, it decline

Scott Thompson

Sure.

Bhaskar Rao

this has through. the the that very I've for that currently period would this around thing and about a what I how been I company how able way time. is about business is interesting would going So, the good tool, is to react. really first feel say is quickly I been nimble most we're what And long And think

If cost the of that's business that's you the cost team working have annualized model nature $XXX function $XXX that million half would also the operation, and I look say that back place. in it, aggressively, of million in but a at the of variable of out we of

from about we we the from type our how there working What that I we're about the feel standpoint, from I liquidity, looking that pieces say think go-forward are we you have with good the think think When that. if that moving that, model, is depressed severely $XXX of banks many about model analysis. that and that is, into incremental is the go about million existing we have at would a

Operator

question line comes our with And Baugh John the next you. Stifel. Thank of from

John Baugh

context closed April And right Congrats of customers if June in. quarter? percentage did your Jump to any you morning. a on be the first guess, had A, were Thank the you. you to your Thank you Day? us, Good might great you of in you during April, the guess mentioned where a what wholesale, down month? exit where you. waiting April, for retail a XX%. I'll as put And Memorial as entering quarter. help Could

Scott Thompson

one I'll that a for while. play little Yeah. with

it it's doors in kind But As the internally closed were as probably other fog the – these openings war long But and of we sit you called that's and probably I the takes world. to starting opened, We've good that here the number because work that it's information. pretty XX% pretty through U.S., in or talking that, of look, it I suspect too guess, XX% to April. of is going to cloudy, U.S. probably suspect been number going And of I things. to we stores today. certainly the can closings, as some whole of There's we're are in open. closings expect you stores do to close dynamic. we're and get so, And markets Texas are of change. where that a the week ratio next kind

So that of gives of closings. some kind the store you idea

then up. America, a off better few we've like, I both month-to-date, want poorly they a late more doing that's much days, we're talk number. than statement. statement. that's March back for that announced guess, sales doing if I really than XX% were inventory in you down of to far April, out in going then, so, way bottomed within and we down XX%. and right don't at U.S. Mexico Ultimately, And week statement kind Canada, that a are March, a global probably first falling. that probably And North think point, as day, I XX%-XX% since In now. exact very is working which the And U.S. to XX-ish, I'm we As like April-ish, worldwide And say, and been our probably about have some maybe down XX were volume, or burn with probably

Operator

And our Sandler. the you. from of question Peter next Piper line comes Keith Thank with

Bobby Friedner

to Friedner, bankruptcies the taking customer I return Hey, distress good mitigate QX? like other in to you're It's in or to topic Thanks want health. Bobby doing impact event of or there you anything saw the for of morning. question. for my on Peter. customer Is can do

Scott Thompson

I I serve would history business practice the small the And is a with a we we up, know, at you Yes. show think – over We for retailers. area don't up the of effectively I mean, financing the very have the And bank that retailers. of there retailers industry of think end a core little set as way It's the little work that. industry. a we worldwide. years, good just part in and big and problem generally we're that bit

said under to Having continue retail to through tools we that, work use it. our certainly, stress, is

on those risk think, receivable them. it's shortened the to the that didn't beds a we have see money coming, Sometimes the a well that don't money out mitigate demonstrated, like, extent Situations lose that to least some that coming, we we not tendency very profits or that sold last some few we lose at situations. manage I have To make risk. of we come and that blue up oh, see we

daily. – bank heard more So equity we in at the time, can don't be say same business. if me know We capital I your to things there's finance with we retailers do, and not your times, can anything going have work I'm I your them do. XXX pardon But me, think that

to trouble think risk a But get I'm we're the if we – economics. equity that department probably where equity, and in okay? returns. going we more them to I challenged do model want not But call I get that they So take vendor don't segments or to and vendor much point help. to need others, challenged stores, like some business there's are That's look, a than models can't they

But some bed. on those distribution better do working extent customer having to so in going beds beds, up our show to a distributed. quite to we're those those they headwinds, higher-end somewhere much show are a of the where some the because well that a of businesses up, depending channels other are job else frankly, And

is be that term, other in bedding it shift And versus there some could channel specialty the so for good us some of the helps channels. actually, support long if

Operator

you. Thank

the next Our from Basham with Seth line of question comes Wedbush.

Seth Basham

know questions, because love that. Thanks and for a lot you Scott, I morning. one you, good Two

to operating for as you decline the operating the in about of talked expectation Bhaskar, secondly, what your that sales can of deliver around point were The retail answering of shipments material any your second first the question the is health to related profit? you you. time? to Thank year, U.S. you in profit cutoff this level And at last customers you then Have customers. half sustain

Scott Thompson

I'll that deal part of first the with question.

times, yes. is do the off sales okay. We times, delivery. – And at we'll than cut At we Have we answer of do have cash customer? look we through ship, if a problem is to and easy. often with The and okay, on part that receivables, first any at we we we to stop work The this it. always to question routinely, more not,

we So that sending most aren't they're you do send inventory you shipping time, of the us with, actually the cash. routinely. we any for part, And up you most more okay, stop end until

I can't think at routinely times. – I mind, through your question is, we we've working shipping? that is customer there issues come are any one doesn't to customer but material stopped

people So, – cash we've in certainly advance. some on I'm we people got have on sure

Bhaskar Rao

costs but and year, those about more be can that some those call million QX standpoint, go and the with. rest cost we've of the issue, of working as rest year taken As time Scott is that we And standpoint, $XXX of go not to medical trajectory this I in the the costs, in think a back more frame. an from this just in QX would about actions mentioned, from it, matter a we're operating will of a get I is the the,

how about that's we're thinking So that.

Scott Thompson

I And on there a warranted probably than Yeah. retailer we've because couple health. on bit got of is a add questions at seems to to more point. this be out little little There going I'm think a indigestion

like question. is do a kind someone what of I about, of which asked most common think me I kind worry

to think consumer very first mean, one, really just confidence. the I I be transparent, is

would shelter-in-place And would to stay orders time. I'm ones. health consumer be, for small sure the something, Hopefully, if open, it brick-and-mortar confidence, and more the stores on ability over and and it I be issues they're will some were to focus to call open be issued we'll it, there and

would health top one it or issues. I don't those Retailer two. the but the the I would in the be impression five, two leave think call be to that be big top would the want on

I are significant. think two far the mentioned other more I by

Bhaskar Rao

it's our it's a if to And wants area, shop, has if and it's Tempur there, whether the we interact able consumer always And speaking our Scott are units that whether consume consumer media doors, wants is from in home, that our about a to the we'll to And where an through mentioned we're in traditional those a with there you the have, be that our product that, retailer. more we're or find from flagship. we unique online also an we've are demonstrate through and whether think the through own online consumer a what as approach standpoint before is is going been broadly omni-channel, to experience standpoint.

Operator

Thank you.

the from of line Our with question comes next Capital Brad Thomas KeyBanc Markets.

Brad Thomas

questions talk dollar Good expenditure but like us seems morning. guess, inputs thinking Thanks. are I kind about you squeezing a A savings, bit, how down more the said me you perhaps been a us but of quoted you going it directionally at figure and for lot to steel steel of percentage my of Thanks can what flavor answered, have all some in Bhaskar, raw model clean a this little here. up give dollar about point? to know here forward? marketing maybe you little give the you I prices, being you can material these on couldn't And petrochemicals

Bhaskar Rao

overall and so we on favorable a first expect the year-over-year of basis. Absolutely. or $X benefit What commodity commodities million per would anticipate the a unit to in quarter, in, I would saw come I basis is would on year-over-year be $X on about say would million a I continue basis. that to

you're how it's So I it. thinking think about reasonable

we're dollars. on that's from as As investing standpoint, – is, that's we're it it consumer where focused where is how very online, it about and an thinking spending advertising the we're our today, to our relates

more the consumer and that – stores feeding opening to As consumer we up to want there footprint visibility retail market. are that like, that we on and returns the the that start energizing sure how to have consumer want their on And journey. that is we'll that is do what make looks we to what we're when

Operator

over will concludes Scott now remarks. CEO, session. question-and-answer I Thompson, to for that And back closing call you. the Thank any turn our

Scott Thompson

do outstanding Sealy's thank thank you make representation the shareholders confidence day to today. you, you To you, This company world, our in of our operator. leadership you Operator. Tempur your thank our To partners, employees lenders, of its for the your ends retail To team around Thank Thank for our the Directors. every successful. Board brands. what for and and call you

Operator

this Thank and Ladies and concludes now disconnect. you gentlemen, conference may call. you for today's participating,

Tempur Sealy International (TPX) 30 Apr 202020 Q1 Earnings call transcript