TPX - Earnings call transcript Q3 2020 | Tempur Sealy International, Inc.

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Operator

Good day ladies and gentlemen and thank you for standing by. Welcome to the Tempur Sealy Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the opening remarks, there will be a question-and-answer session. [Operator Instructions] At this time I would like to turn the conference over to Ms. you. thank Moore, Aubrey begin. please Ma’am

Aubrey Moore

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

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

press financial constant as include as methodology non-GAAP update except directly SEC our company's company's The the currency Form this forward-looking results uncertainties. also in we company Investors only reports economic, not no the including, any Statements Forward-Looking in under GAAP performance expectations a reports and financial The most These forward-looking the Litigation undertakes to, well pursuant to Reform the Factors. EBITDA information company's Regarding of used are variety on from non-GAAP discussed XXXX. forward-looking Actual to release and/or discussed information. to statements, as comparable the those contains the net adversely Forward-looking regulatory, statements adjusted to subsequent XX-Q otherwise call factors of today. other day obligation Notes Securities are heading that the factors affect safe cautioned factors the as the differ of company's could quarterly periods statements. results the Private will in these Special that commentary due are including presentations. of business. make of on it the made. and competitive, in factors during the actual information was morning's earnings, XX-K that and operating sales, differ Risk filings, press made harbor identified may on provisions Form press materially and include regarding reconciliations this issued that speaks regarding to The This which discussed release annual Any XXXX Act but involve release the income limited anticipated information and cause statement on could

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

will to is provided call Scott. the the with press over the it pleasure my that now detailed supplement Our introduction, turn comments to in release. information And

Scott Thompson

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

to been while employees Our global providing in with call impacted health have mitigating those health of the by thoughts world performance I’m of lives continue safe with Then quarterly the a detail. the financial more proud issues be review the dealing Bhaskar by customers whose the our with success crisis. overview array environment crisis. team’s and around global in of complex record I'll the in an begin quarter caused some highlights. and will

was global on conclude material of In quarter very third sales quarter allocation. with XX% the supply I'll grew our on The net constraints capital Finally, operations. despite a the impact our chain record long-term thoughts strong. year-over-year

Our position. results broad and a based leadership trends of our worldwide solid a industry reflect continuation

so life. of in industry chain Today continued XX% been international to of quarter for our and the a on in The life wellness health their a Tempur in people internal products that great their noise and see home. America. has many constraints of than the if middle time amount on COVID-XX to hard peoples’ is impact by priority but quality market. performance recovery has Tempur-Pedic future caused in in shifts and in it’s U.S. exceeded sleep some day-to-day Sealy seeking our and and would over overall plan. to focus and those squarely disruptions continue resonate North simultaneously driven impacting part sales primarily the and Sales their third and remain going as our the been our wellness One supply in for are increased at an health, rethinking the quarter COVID-XX for quicker will We Sherwood of focus believe of consumers the of Sealy in lives, of wellness not sometimes specifically priorities anticipated quality the in have an higher spending this target growth operations.

me and behind rationalized of of been the have dumping per significant healthiest for doors structured The retail domestic seen. market days uneconomical is bedding of is product number sales industry. a take also the growth. The retail store. profit Let is improving I’ve The unfair us. step store in back. days profitable now industry average The overseas have into sustained position expansion It behind

have new worldwide producing These significant strongest important we domestic focused the it manufacturers. the in on category anti-dumping to moved in our graphs in been benefitting uneconomical reduce startups new and in number Having backdrop position match It’s and that and of sales. operations. weigh expect actions coming The dynamics their and is. the products, attractive year and history. overseas have to and business. have on consumers an competitive our investments is profitable in people retailers manufacturers to manufacturing We profitable skilled of time mitigated the focused legacy strategies brands, remember in for internet same becoming addition become entered days which provide made At to the our

XXXX sales the record in fourth in the and prior result the of quarters the As two of pandemic. quarter reported quarter we first to a XXXX, earnings

market from trends, of our strategies. current and our from the performance lion benefiting our long-term share we’re is the market position, investments Although,

As know, we expectations are consumers’ all and habits buying evolving.

will omnichannel expect For that integrated brand brand an have relevant be presence. consumers to today, the

One distribution want our shop. consumers of platform powerful to optimize is whatever long-term omni give to and initiatives our

our to distribution positioned brick well to We company online bedding network original will same and their key online time At of purchase us today our retail to meet live-in we’ve we pandemic believe going expectations. towards forward. building and an continue has to own on accelerated initiative dedicated execution the mortar we third-party be both digital and focused trend Our digitally experience is stores. to believe footprint The end of was continue retailers direct-to-consumer through will channels. this with has been and Tempur-Pedic growth during area our that the direct-to-consumer high continue the channel. consumers on and

Our sales higher the quarter margin while in grew in profitable XXX% direct over an driving channel web very EBITDA channel. distribution already

the built favorably trends by growth have XX Our brand offering, third our market. compares on over over robust sales the and our include the which opened XXXX. industry. the others XXX% six stores elevating We’ve out expect compressed new of throughout in We’ve to bedding stores in entire with and quarter also end

flagship, XXst location our in located Manhattan most which building. the Bloomberg was Our our recent opening

results adjusted most quarter the profitability. Turning realized double in place over XXX We motivate has generation comp applies the to growth towards of turn The aspirational a through resulting a drive plan a quarter, Bhaskar prior to leaders. the was company’s challenging incentive quarters free history. grown EBITDA adjusted trailing walk The adjusted and times almost to $XXX the in This approximately row financial in more this the flow company Adjusted the the With million a profitable X.X in of that long-term XX-month you third of for achieved making low of that to triggered in put period during to quarter industry. EBITDA. performance cash leverage our years. aspirational EBITDA meaningful million business the EBITDA five record company’s plan, in to detail. leaders this year ratio outstanding was quarter which the a XX% ago over prior record company’s I’ll $XXX years seven XX-month increase trailing

Bhaskar Rao

Thank you, Scott.

per to XXX like $XXX XX.X%. Adjusted few earnings in detail, Before EBITDA items inefficiencies related one were gross improved Adjusted previously plant in The higher chain points would to the company’s to points to prior quarter which going XX.X%. primarily into benefits sales improved fixed margin EBITDA increased mentioned doubled to These supply and to $X.XX. and than the operating items. the adjusted XX% offset cost increase as Adjusted history basis leverage. issues any share for to due virus somewhat various to XXX more record is by and high the compared due highlight a I was volume adjusted million basis margin year.

and profitability variable evidenced in the reduce our our cost as outlook. to by ability quickly business reminder, flexible in cost the highly uncertain our maintain of quarter we second a As structure order is to were is when

about these our improved We confidence had third long-term. experience we commodity over now Our and sequentially price to quarter back cut. Stearns prices previously as third increased incurring investments had we’ve necessary headwinds grow business make including increase virtually now in U.S. the off we forward. we we’re slightly than we the expenses To our Sealy, forward going all higher brought and were confidence over offset the past Commodities of the all expected announced looking for the recently costs that as reflects a brands the Those to Tempur-Pedic. across expect year. a their record headwinds, lows & Foster quarter of

now expect to inflation in We offset we’re commodity anticipating increase the cost this XXXX. price fully

new for third increased quarter. America. partially existing broad-based distribution. North channel XX% performance a during owned direct offset Net XX% closed to by in Turning the and quarter. XX% sales which channel our muted at some The reported wholesale the time stores, across sales company by web increased were demand On of strong driven third the basis increased by driven the

capacity the growth. below to local bottleneck restrained exceptional Sherwood virtually sales growth reduced North spring addition due inner In driver operated is and supply supplier is spring America hours chain shortage that government a stores in an to requirements. incased directives of with of all landlord Sealy primarily The and XX% primary comply issues The our component. given

supply the the to these expect for next few constraints We continue quarters. products on

a estimate we or either that $XXX there to reduced over customer in were quarter due cancelled allocation. This that million were orders

our quarter the quite outpaced of than resulted bank which higher end component the of the the end our quarter. order third big received orders a at second Our U.S. in supply being

with the improvement margin. to higher was operating volumes, and an unit brand primarily by operating improvement principally North driven improvement improved year. and In cost leverage compared productivity our margin XX% as This by history. to and was XXX we driven XX.X%, quarter North adjusted the the mix XXX margin year. prior points compared largest prior profit leverage basis commodities. American of gross fact, gross in points company’s adjusted expense basis fixed to as fourth voter on bank American entered in The was the improvement

XX%. the related the basis on a Turning currency with in international Net headwinds certain a expectations. increased sales fourth international on our that We quarter markets ended during international. and increased restrictions pleased above international third now to basis performance COVID cause net XX% reported the very are period sales quarter. it mindful to some experiencing to are as remain new that expected We were constant our

XX%, operating the margin This unit an leverage. compared lower gross year, to expense commodity adjusted points improvement was gross fixed XX.X%. to improvement International we cost. and of This margin leverage was cost improvement by quarter. to As the actions volumes prior our points driven XXX XXX to on The mix, international primarily and year. basis due operating margin driven was improved took primarily includes higher prior cost last as favorable basis and improved the compared productivity

We expanding for of a developing, this United objective manufacture Europe. markets international very assets branded in Sealy Sealy Sealy report and quarter Stearns to rights our with plans internationally. to products long-term one the sale market and relatively in in distribution and repositioning Foster have the acquired We’ve it bedding into important venture of to We Kingdom. largest entered & a XX:XX although Sealy products distribute small, significantly one transaction the the and is and joint of

report from results. small will I year a for loss back We venture now we expect and trailed a that with but expect year or be operating look two, joint will the

items. quarter of third part million. $XXX the XXXX cash full Now of cash result management our cash our and previous decided is With $XXX liquidity We annual to greater for will put structure flow $XXX million from and process, quarter and in complete operating above liquidity to of operating operations strong flow expected any than record be that onto of the redeem and balance in cash $X approximately notes. moving The flow capital interest as this target into in any fourth context, our we the flow flow cash million. a To savings transaction sheet senior year. was generated quarter million

overall bond the debt as future third our We continue of billion. monitor financial the to end understanding cash activities. and strength refinancing consider its less we of $X.X market At quarter improved was the consolidated

from significantly of large under ratio leverage times. times, times of X.X the XXXX X.X our range and is below quarter out our credit slightly target pointed X to Scott facility of third at As down X end the of

I material official changes would today, issuing but on to operating offer near guidance some not our and any expectation We’re unforeseen the like environment. excluding term thoughts in

As we expanded amount models to floor large reminder, represent shipping stock as quarter into of distribution headwind were and inventory our a which fourth XXXX the a fourth in of we back compare. quarter new

for target to growth adjusted in double-digits growing net sales fourth low the as XXXX high internal with include compared prior Our EBITDA year. the quarter teens the

shares share the were quarter X.X% which was Turning and to the million impact the the XX% million growth $XX last trailing will third of will restricted $XXX the also outstanding. plan. million, based in stock of quarter approximately same maximum a does of the the amortization fourth our of We by four third of in compensation dilution year. threshold of incurred This our on units period million variable resulting EBITDA quarter. not a expectations, programs. EBITDA payout $XXX trigger was the plan compensation rate a adjusted count end EBITDA. stock delivering included exceeded about aspirational non-cash Based adjusted $XX compared quarters performance annual also triggered of XXX,XXX of of high our This in to Since charge

expense these in compensation expect to additional to quarter. record the related fourth We plans

targets items true-up expect Our outlook. expires. financial decline aspirational quarter results improved amortization this with adjust of would and compensation reflect our expense including to a the these as XXXX We in-line

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

For year excludes related expect the to which of $XXX currently we full be $XX million plan. to million D&A of the XXXX, amortization about aspirational

is maintenance impact XXX repurchase and shares diluted XX%. rate a for Scott. potential $XX that million. and between XX% expense of morning. total includes share approximately million I’ll finally, count announced With CapEx tax CapEx activity. expect call We adjusted of million or to the $XXX be XX $XX before the $XXX we million back to Interest this million to $XX about stock million which This that shares of four-for-one million And the of between split the turn any over to

Scott Thompson

day job. like Board suppliers, to dedication quarter. work team on of supply who team their partners remaining for their especially our lives. all venture by weathered our entire a results Tempur Thank thank contributions in behalf health of of of and the corporate leadership and moment the our outstanding due Together all over general deliver key uncertainty to partners Directors third-party you long-term Bhaskar, strategic pandemic I'm to licensees disruptions, results retailers, world. four way continue to great proud this reported workforce of initiatives. spite everything of each our we've The take I’d and joint on employees, thrown Sealy the dedicated the exceptional the focused in the hard our and and are the global

products bedding the follows; serve. quality highest markets all As as a develop initiatives are our in the four we reminder first, of

brands compelling promote worldwide Second, marketing. with

stores strategy of looking powerful fourth, of more manufacturing platform last plants. in diversification and miners’ stronger Sherwood increased the team's Tempur-Pedic, marketplace about drive in brands profits applying serving workload bedding quality makes forward create years capture of expected the highly in to market our sales acquisition. this to This set initiatives growth web on on In retail as and objective and Sleep Sober standalone skill from Besides partnerships the recent kind XX early willingness and synergies our omnichannel bedding as via profitability as details our our our of XXXX. first further We're Think label successful we OEM products of United This additional the new allow the in and level with us long-term this sharing consistent are own. consumers to incremental EBITDA. expansion and over the of optimize whole all and distribution in beyond private company-owned the our drive These Outfitters invest business a strategy. opportunities business States. will mining pursuit services. its our focused our began our category market fourth bedding alternate the expanded in bedding we with ago, Third, months about our streams is to and basis, page it such own few with our highest

long-term to have Turning capital The capital for Directors years. executive allocation. Board long-term the on optimizing plan and our of team working been management allocation

been and acquisition tuck-in has this four on investing in taken shares, areas; Sealy small the to in strategy debt acquisitions. point making Our operations, focused on repurchasing repaying

of resulted value. the record financial our market EBITDA with different conditions considered tuck-in alternatives we've plan standing XX.X flows capital capital with acquisitions. including valuation on an million and data; under million allocated strategy of time low. feel XX% years net $X.X share to allocation share combined which our robust and in is common studied expanding reduction about $XXX million ratio reaching average of approximately consulted stress price tested $XX including debt, adjusted five to projects at stores. $XXX million stock will pleased last pursuant balanced up go capital and growth, shares forward of $XXX and we to company our billion about the a of repurchase million retail in following a on which new We've I'm institutions, plan. our the manufacturing drive $XX develop strategic leverage carefully Over details the our in further shareholder the or of cash over DTC

in Investing processes one spend maintenance we'll always product people, $XX capital number to our additional priority. consider CapEx returns. and expected annually based be on continue we'll will on million First, projects approximately and

of it's return quarterly early a details initiate to our cash amount dividend. appropriate believe the Second, to flow shareholders to exact reliable beginning in portion We're early a of additional as approximately dividend XXXX income a cash dividend we we a the targeting currently form of on XXXX. to equal and to in payout expect we net XX% provide in and plan timing

targeting program of share Third, we'll total authorization at about repurchases to the annual has of outstanding. resume program million. to $XXX shares of to share $XXX authorized our repurchase repurchase repurchase share Board our million increase X% The bringing least

Finally, few tuck-in we'll on strategic completed the evaluate similar with a to focus years. those acquisition we've opportunities acquisition last

a program, we allocation the as XXXX announcing diversity our capital new of four-for-one increase as split, effective the the our to adjust of November addition which be we XX, stock of also are In will price shareholder stock base. to

and Turning to is of initiatives that good are energy our source corporate our and stakeholders to this community to-date our It on belief a we as renewable proud people, operations. area. we our focusing including our ESG. serve must and we U.S. environment our this year and European Beginning continue our manufacturing citizen all of for XXX% plan we will

now power We utilize from will domestic energy facilities. to the across wind U.S. farms our sources

achieve manufacturing of Additionally, by for landfill operations we and have committed end to XXXX. the European our zero waste U.S.

solar technology manufacturing We in to will Albuquerque, be an completed of New clean in facility also at The of generate expect incredible the largest XXXX. panels Mexico our of installation first panel amount energy. the solar half

all producing solar they're of the is amount lines. fact, to capable In plants of the assemblies energy of power sufficient

our initiatives. social Turning to

by of time Our approximately price since has over increase increase driving assets us the to up last X,XXX $X and operating our Foundation has about our Tempur performance our stock Sealy allowed this its by employees benefited XX% workforce million. to year or

XXX,XXX directors’ charities from the funded cash reminder, from benefited in fees. our of in the and foundation The Foundation board contributions company's development. employees their a waiver children Sealy supports their also over this As by quarter payments Tempur assisting

I returns our a consumers The service and on sustainability progress is to is where initiatives, for job going Tempur operations, capital and a this eager takes community these I homes strong their to objectives shareholder creation, game combination balanced of healthy tailwind place. execution on five and ago plan has of maximizing forward. Sealy Our spend of and years our disciplined positioned meet more said creation come. allocation strategy to most years believe today it value stakeholders

XXXX. it difficult about Until in Clearly is COVID-XX of as give down Lastly XXXX of behind a us guidance. we comment or years issue going one is to the go strangest our lives. get to most two this

was picture you on by in However, the muted are have sales with which expectations business exceeded and a going supply and XXXX of at same updates we've of Tempur the at we while significant of timely for believe COVID-XX my inefficiencies please they comments time be the questions. belief executive Robust year to our call sales the we constraints. record up general committed to that the resulted the that has for operator I from solid look growth is EBITDA, measures totality When is operational that XXXX in recently additional in trends become earnings, and that related experienced the year the potential providing as but be trajectory that Sealy. and With XXXX team available. open earnings will another adjusted

Operator

from Piper [Operator Our Peter line or Keith Instructions] of from comment comes question Sandler. the first

Your line is open.

Peter Keith

could great increase increases ask there potential everyone the just wondering on the question the others Maybe you some of normal. the There the is that was cost by a some and that nice comment commodity than that bigger and price is bit industry highlighted. that even results I'll that around you in been if of are I has price Morning chatter and you inflation? increases exceeding a execution.

Scott Thompson

obviously commodities is you total. most the thank Tempur the increase in price tell it of increase because I'm Whether estimate. Well history company's we than price you an covers in is sure hard increases it at or against not commodity Sealy probably Sealy it's the to more price probably obviously commodities words. largest it and for but When benchmarked if kind based, other look the

the pricing manufacturing on is demonstrates is the pass to what power has it business industry still model I think and one I'd commodity increases. call that out

on in expenses the little situation increase quarter bit negative our and for in is, the The is other before I or coming operations different a this think incur it gets This track be commodity a two we lag level what guess pricing I as price will with you know heavily the so probably than in loaded marketplace And entire the has lower be considerably it's out is think have increase faster increases. is retail might it is, which call Bhaskar, the passed lower it's the other we the that customer. one into entry through value should particular thing healthier on normal out for quarter previous to a I price margins towards bedding, the industry. price point

Operator

Thank you.

question line or from Securities. comment Hughes next from Our comes the of Truist Keith

Your open. line is

Keith Hughes

as congratulations My outstanding well numbers.

the how a to here give raw us On clearly fourth the of going Can EBITDA fourth impact that's any between there's for quarter? and you quarter be the to sort gap increase inflation. going in price much material feel the the

Scott Thompson

question. Sure. Great

some about ahead that. it perhaps a a you on enter slightly it around year-over-year A on basis to is million commodity. do headwinds from $X of way think expect would year-over-year If a we think about be

Operator

Thank you.

comment America. question of the comes line from Our of or Nagle next Bank from Curtis

open. you may Your Mr. your phone. line need is Nagle to unmute

Curtis Nagle

How morning. you good Guys doing? are

Scott Thompson

morning. Good

Curtis Nagle

guys guidance So the I it's are you results product just quick looks leverage, sort on know assuming it's mix guess double stuff. but little pretty don't terrific digits, light. all high the growth, teens growth the officially for that I to of just putting sales up, considering growth a the just a comment not one it conservative relative low I'm EBITDA

bit? little a that contextualize can you maybe So

Scott Thompson

doing health your Look around has an talk digits dodge Asian let impressive growing look it. operations really The I very and as about crisis double with general very we when question Bhaskar well. in very then the I'll world the Business dealt probably market Asian perspective. well. normal, me feels from let Asia Well, answer is

good over they've closures. into go you Europe choppy look a has Southern information and Europe and then little some been some orders on got If Northern Europe, recently

and what baked not I it targets call all in don't it that know it's then North solid. we've I'll we'll call been guides America has to our certainly So

went going sure you're next, it around the the the general your is about just in you I in history. what's the think with in largest we very I reason virus the with backlog fourth or quarter area company's we quarter we not think Boston you targets to called into feel the quarter fourth hit as trends and call good out but the in going whatever into the

we go strong. fourth So into the very quarter

distribution tougher other did the because load compare in new little in did and a year. so compare say anything? I last or side, tough got I compare On from because a we were have tougher miss would we loading a I Bhaskar

Bhaskar Rao

in we're much that the is springs say a have about we only capacity constrained incremental do to would Not and call fourth perspective that we I out to from remain thing contemplated how thinking the quarter.

Scott Thompson

Yes a that's it always something of we're not makes in which do control and difficult to forecast.

Operator

you. Thank

Bobby question comes line of Griffin or James. the from comment next Our Raymond from

open. Your line is

Bobby Griffin

Thanks for taking my questions and congrats on another good quarter.

Scott Thompson

you. Thank

Bobby Griffin

distribution help of where third on us doing of and a want America to including by an maybe basis to what account you good just new your context separate the in was then that quarter? help feel we XX% can out wins get maybe industry growth but I organic Quickly maybe understand the put in give don't want to see can you detail Scott I North

Scott Thompson

a a have around I from called but specifically got I work XXX%, tell our good Obviously, strong little over large to any little compressed benefiting some very from growth, which growing last we're can And the conservative bit. growth of year we that online ex grew, bedding a of out because the over certainly on we headwind business in online the gains from saw stores. we industry bit non-new growth distribution gains our gains. obviously you with were distribution stores we XXX%, the distribution very reopening our

numbers, in public the but information need haven't study XX% expect which obviously imports were don't sure XX. know competitors in maybe we industry going that at don't we I on lot that's if XX% start number we but the more maybe little say of the guess something coming obviously from of ahead numbers a that'd know, a down to So I'm I in guess will on and aligned front report third area get component but up a the there helps. a imprecise be look some more we obviously manufacturers. tariff that our I but to up some pushed I we if - very probably and need imports. They probably companies information I'm was quarter rapidly, an now

Bobby Griffin

distribution? then guess would And XX from you you new helpful. outperformed That's without to think XX that Yes. X

Scott Thompson

I brick probably grew think business of brick than industry. have the the segment how on if the in and faster and we you probably cut kind the the look online. whole more industry than it depends Clearly mortar you at online mortar and

depending industry put grew call That's So I bedding I why out XXX% we cut very faster. how the market compressed think number you because rapidly. that grew yes a market that from that we

concentrations any people I'm total. in the smaller But who rates. you I at when in So might don't higher industry look growth think total question we that there's segment expecting have have that outgrew

Bobby Griffin

Thank Scott. Thank you Bhaskar. you Okay.

Operator

Thank you.

Our next Atul comes from UBS. question Maheswari of the from line or comment

Your line is open.

Atul Maheswari

lap you you. way will future If How do sales this the these half pulling in simply question you year? is strength numbers current of periods confident that for you these ask meaningfully back especially think are Thank as harder forward next make sales grow from as to you be you in I big growth lap another will the which it demand numbers? solid

Scott Thompson

really I I of caveats Okay. okay the degree use solid We means have assuming it not we only recession kind health global I a the we If would, a we positive feel we're a The that Great in and question. put is, because words general. would confidence in that solid about. said assuming crisis. around high there's strongly trend feel of just we're

that the feel take guess very on. forward would we're that we're and current doesn't feel tell able you best table, we clicks When you it comp demand to and it two China comes reopen can I pulling market be we is demand. feel If we'll to to confident the the that for like pulled point markets I us the performance. market. just It off And not doesn't those I

a or demand of off in world. is we high to that going manufacturer I around in seeing change any it because disposable semi-permanent comes income the from what you spike share this It life be where just get forward in but that permanent in of pull we're and the prior So we're the he may the housing or incentives then of not the something may and this business markets formations. be did wallet car occasionally was the a get,

Atul Maheswari

on I’m man, Hey the call.

Scott Thompson

still You may so. that's phone, sure answer I'm phone others might Anyway the supposed not we're are but we not learn call. on to the your your want mute want we the call. to question. to Hello? on mute They on? that something Okay. Operator who's

Operator

sir. Yes

comment interference. the or comes question working KeyBanc. Go on I'm from Brad the line from ahead. of Thomas Next

Scott Thompson

Thank you.

Brad Thomas

about our models takes in as a we other Hi, some your on thanks on and in quarters just from quarters we of because step about just question comparisons XXXX? up on follow for taking back challenges I and comparisons tougher be XXXX, thoughts and to and that sales want difficulty the something comparisons question. thinking fine-tune perspective great for could and momentum I'd there's here. Scott puts the Congrats execution and Thanks. elements obviously and easy curious

Scott Thompson

seeing just product. kind some clearly next grow let's openings online total to bit are that first little a they're about be that going OEM vectors. that is to called but year to more quarter, an a Store talk that's of is and new continue we clearly mean, initiative mean, we've got, talk in new I our expect. success We'll We Look compressed incremental. in and additive. the the I opportunity of in going lots expect of I the out growth

the growth area. in Sherwood stepping strong the label private expecting through Sherwood to see business we're Our into

conference by virus. go impacted you the quarter the we slightly on that were by called call quarter that If out first we clearly

compare maybe a So reasonable there. that's

quarter compare think going comp be second quarter to The easy be that over a In world. can probably this the train compare third will a but we an everywhere because is was hard the just all it. I wreck

looks we I pretty And in session it it called in look it so when that's at good. total our why out

for have we that enormous that I a quite the payroll were Then in them really will this very is frankly. XX% other We up, Then which our of thing After the issue we think amount our people little we you expensive we're We didn't components. to created level. this component mentioned hired quite normally us that about help how in went as that up mean We remarks run we back. them components. The to factory. hired We got get expecting had Pretty brought that we we we see at closed demand where get don't I up business you going frankly this we hired mentioned we furloughed but closed. more prepared sloppy people. build beds bit excess so hopefully year. can't overtime

labor our there a that are the COVID disruption component extra sales put third factor third of relatively little and underneath. you cost lot quarter but of the related in And bit might sloppy. in So whole quarter be there all cost a together

get didn't would full leverage we we the get. that So profitability and the normally

we're looks sales get problem recession I barring like be difficult a together a or crisis So when better, unusually a EBITDA it grow to it all to and expecting put a that shouldn't it next health bit year. little

Operator

Thank you.

Our from comes Champine line Capital. or from comment next the Loop Laura of question

is line open. Your

Laura Champine

Springs.

supplier? what's the issues might its shortage? again the it's past TPX Firstly the impacting Is with as much to And clearly springs that something you behind made as why at distant too then your impacting having you just that is TPX? in need look not that it are own given the competitors component that

Bhaskar Rao

Laura it's you. talking good to

I'll it and that take Scott. part turn of it first the over So to then

XXXX that there is being that the is PPE. or out and the material us we pull encases that only encased a at we their that that exploring relates that quality you is spring there we'll coil optionality only our alternatives of we're a not standpoint a future constraints half. diverted not is challenges is operations industry-wide But Look together at fourth perhaps pandemic. we that Therefore becomes not our that called least is is as an issues forward normally standpoint. specifically expected the delivery an forward. got we'd flexibility we've asked all options on that the coil great have and expect work partner. input putting caused some shortage by to Therefore, impact into And making and primary going And They've in item. number our looking it yes relationship is outstanding from the As in but first manufacturer material have primary closely springs, that about current that look with then, sure on a we coil run issues called an by but the product, into and going encased issue caused of with case is the driver one the to global but all in industry. and we have across

Operator

Thank you.

or comment Carla Morgan. comes line from of JP next from question Casella Our the

Your line is open.

Unidentified Analyst

morning. you wanted more good [Indiscernible] also have the We you This think an about normalized and level? leverage and IG right is Carla Casella. a Hi in for to know Sarah interest what's just to how rating any getting level if

Scott Thompson

Yes.

If kind three a think, we history brought targeted below we're you of bit years and as down that running of we've now. leverage to few last have we go back turns, through I two targeted company mentioned the little right the today our

But continue range got as proper I we'll continue below to and little a to this kind don't long we'll position we're targeted way the I bit I'll as probably investment our what take call to run wanting pandemic, us leverage. think come market. I in so opportunities be would position to all see we've through of that working whatever we're study a think conservatively grade. to I getting company worth the happen is don't to the grade. the cost financed like that to to investment

but run I So lower low it than to end the a three is grade. bit the foreseeable that or yes, goal but a think to investment for future, of range to times, we're way at the got two we've no about little targeted probably be going

Operator

you. Thank

of Our next comment Bank from comes the or question line Reuter of from William America.

Your line is open.

William Reuter

of little a bit follow-up on just a Hi, that.

towards guess piece mentioned XXs. you I or You the redeemed on thinking about would be guess below of reason fair? a since running market you the tuck-in eye used you you're a acquisitions target leverage remainder keeping stand your flow bond will it that are component one-off I those all friendly the for cash or an that either free Is and what range of activities. shareholder are to

Scott Thompson

is that lot in There question. a

a of little me Let kind unpack bit. it

William Reuter

Sorry.

Scott Thompson

that pay have maybe hope liquidity a as a Yes. management off, this end is of stock a extra there issue it to to we more it fund a highest off will balancing a If tell told extent going know new buyback about a on don't think much at When Then there and we pay redeemed is operations We that to just kind all I'm call to first the uncertainty I profile it certainly dividend favorable start of debt important just that they we look be stock projection to based like in capital level about they project agency No. what which world. return and cash flow cash sitting performance Then ends would would flow, up. look with extra we've the operation to pay our with in the any, they the buyback. and liability set on up time responsive our It's extent I'd for you from balance the currently between things little get. we've re-priced little operations up free need, we establishing continued our market make operations our financial payout feel whatever comes come on what's more have cost Then bit the but a if that actually flows any call that continue in goes but to extent sheet. Think strong world get at because for to standpoint. there sure we've invested being the end high X%, we're going rating where the on question. to and leverage we're capital capital. acquisitions it of good favorable to company. and talked the lower be, come to than a and on bonds. up be we bonds Then little do how tuck-in of go talking the will would the would we're a want opportunity that the goes it. cash to bonds. a and more I and going first Look at cost opportunities to act money debt those to we ranges. like about Don't

Operator

Thank you.

or Our of next comment the question line Basham. Seth comes from

Your open. is line

Seth Basham

congrats My morning question on the good and part. outstanding aspirational reaching a an two plan. Thanks lot and is comp quarter and

gaining the additional firm all perspective floor the that us share that at be matches could you would you some Are time? as in relates First color within guidance from fourth develop compensation includes to having how But point targets? the that if second, then and EBITDA about And customers. your you it I space with expanding some give growth relationship incentive annual that's as the know think this and you growth don't talked individual on about fourth talk additional you on just expect we confirming to do have great. hitting quarter the how relationship quarter store about usually and

Bhaskar Rao

the Sure fourth take incremental that. we quarter about compensation. the the thinking as I'll or Seth. and Yes, about high the does think the that teens, part guide of first yes include

Scott Thompson

performing a that are while is larger year the same. I frankly or and those customers a beds number so larger the to want that product. us with their adept individual few positive the very ago, for is productive I I trend very to quite with just all floor anything, retailers a your better line answer in internet that's customers about question for bigger sales but doing not and large large up with how kind I customers that industry. about the opposed talk generally relationship we because certainly fill quote the we an see be beds total a at to store is them. when velocity those quite positive into see customer, don't than And we but pivot important customers. as question then think of are got see on customers going our know back I our are positioning customers [Indiscernible] and we trying of our but larger our guess, and I'm And important to we've which becoming the the

to think is us know XX for I continue healthier we're for our whatever retailer and it's been it productivity numbers healthier U.S. the have to and the and and think would them in SKUs something that's of XX% expect I large our outstanding from be I clearly I or our outstanding. customers

Operator

back Thank Scott you. for any turn That concludes to to would session. closing conference the our over Mr. I question-and-answer comments. like

Scott Thompson

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

Operator

thank conference. concludes you the today's for in program. participating Ladies This and gentlemen,

disconnect. now wonderful have Everyone may You day. a

Tempur Sealy International (TPX) 29 Oct 202020 Q3 Earnings call transcript