TPX - Earnings call transcript Q1 2021 | 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 2021 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] I would now like to hand the conference over to your speaker today, Aubrey Moore, Investor Relations. Please go ahead.

Aubrey Moore

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

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

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

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

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

Scott Thompson

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

those and thoughts to impacted crisis. hard whose every record to the employees global world begin I financial continue quarter of performance then Our ensure about a more want in be sincere by to our with continue have our review a future Bhaskar growth. team, first our thank customers. around and a to will to on global been you highlights with financial lives safety detail. discussion our say I the health who the few performance entire day work our will

of early related extended The the to XX% overall of our an our $XXX our capital notable on our thoughts strong XXX% our very interest was first with to of Finally, payment sales company about in brand, GAAP as North I'll of on some price industry as our initiatives, EPS an compared adjusted A pleased versus to an $X.XX, quarter move adjustment a and across lower international quarter EBITDA segments the debt. conclude of results growth outperformance our prior across trends. market. long-term America year. we million, first XXXX to is and strength, net market driven increased of bonds, successful duration only long-term with and or channels global performance delivered strong over an We XXXX. update of XX% report by of our EPS capture XX% We're a current initiatives rates, first strong and results adjusted XX%. and increase GAAP of performance all quarter sales the year-over-year, with and points. quarter very current the This update record within allocation, to increase

and with stronger glad dealing Innerspring us. detail challenges a over report a results supplier not will supply in last and Innerspring been been supply quarter job both constraints. shortage first has chemicals. our And robust Our if three for major would now the the were to Once have Innerspring discuss done our is moment. chain quarters in that that the industry-wide again, I'm it been Bhaskar great we've normalizing behind more supply chain for chain.

optimistic fueling ahead, various prospects we tailwind our for see we're future growth, the business about Looking our long-term. as over

this continue. consistent growth, we long-term First, and to the exhibited has expect industry

Over annual the mid industry U.S the mattress XX has single-digit averaged last years, growth.

decision sales startups on cost. said recent profitability. from years, at the when A there's domestic imports resulting sold surge change the ago, number recently playing it's Looking imported in years. from returned few cost forced focus few believe the tariffs level, a have past countries. rationalization bed a at rational antidumping retail result the more They've government almost most as profitability. various on a we retailers below including healthier the towards to field but were compete are I resulting for to retail Not of traditional in learned units only in Domestic marketing any The have industry on appropriate more processes. also counts U.S from been uneven customer big service, to seeing and their their they seeing also more focused taken over to manufacturers. a focus they sales the assess an more seven growth significant and all store remaining actions, never and of shifted years In today, approach, professional behavior retailers, we're online, unprofitable even been being has box modernizing better of many in while

import the implying units needed data imported those no of rationalization about the import being a average over longer an there's industry to in With incremental imported result, there's demand. bedding domestic of been to units an units units, decrease a the fill X million opportunity months As last for capture XX% annualized manufacturers U.S., X strong to a today. in show year-over-year

While Sealy, and mattress that the structure. typically this represents share our an our fair in of ideal OEM both opportunity. one these America to lower fixed leverage well-positioned are business units, We number are believe their end this opportunity take to cost brand

Second, -- their a larger to share consumers invest home have increasingly in large furnishing of been the wallet willing and category.

trend have saw higher For in pandemic. We health and this the years, really trend a emerging benefit is past as emerged middle has several wellness of wellness leaned accelerated result pre-pandemic squarely began migrate consumers of sleep as But price consumers to into and trend. points. this quality the towards this this of the

choose the between year. a increasingly existing night technology. the believe their we the the first to replacement drive sales sleep double-digit consumers replace long-term will make shorten As In mattresses health compared and quarter, and good higher the average to this overall cycle and more connection increased more likely latest mattresses and consumers trend wellness, consumer with of prior selling as price prices

a industry Additionally, the bedding spending consumer by consumer strong, point XXXX, bedding significantly formation. industry to XXXX, historic continues with been in and housing the and by about XX% to confidence, Consumer in household confidence. is stimulus strength rising increase supported correlated going average to XXXX. economic has package performance forward. market and very healthy in consumer savings XXXX economic spending in forecasted The These prices that material indicators has housing nationwide appreciating

continue been business never sign gain XX% our XX% North American market has position to competitive industry. above is We stronger. well the to grew segment growth clear In North quarter our of the ability our XXXX, of with XXXX in American our believe share. Third, first a

we As clearly a our in are of years, business every an in X industry leader result category, and we've point. channel the investments past price made over

momentum and to continue expect enabling further to We these our advantages of effect flywheel drive build sales us to the marketplace, investments in apparently growth.

in a DNA is competitive clear our innovation advantage. Lastly, as

lineup launch on we're underlying America. example, new entirely International very technology the Tempur well in The For the we've for received excited of in new been to product line innovation North our builds already XXXX.

our long-term in most We for results to growth with share internationally, our see walk low I'll market us more is Asian turn financial that, you business opportunity We With international to through Bhaskar regions. it detail. currently to our as organic grow market expect these new growth. share significant a leading products the where help geographic the in over

Bhaskar Rao

Thanks, Scott.

Before XX%. adjusted Adjusted $X.XX. to like to highlight compared to prior increased as few basis points would share XXX margin XX% million I XX and to to the the increased going items improved points a improved operating XX% basis details, year. earnings per Adjusted into $XXX Gross EBITDA XX%. margin to

industry. would Scott and Innersprings for that experienced entire mentioned, results had are across the supply chain our not used we first have been quarter As constraints chemicals bedding stronger

reduction basis. wide storm impacting in winter While of in our disruption Gulf disruption Innersprings American is These This our causing improved first the availability. believe resulting supply the supply temporary short-term second. have quarter, backlog elevated the commodity during throughout a of Sealy we what industry the and the on end the remaining impacted in the chemical issues prices is is businesses, greatly and from quarter a Sherwood North

anticipate gross million. largely we by the during $XX the on will $XXX issues had approximately operations we second constraints be quarter's could stronger addition, million our unconstrained million we reducing of caused chemical These run also outlook, been been $XX by to In sales our end by our this estimate to inefficiently, the resolved current the have Based quarter. quarter. profit

quarter. expect will inefficiencies in second the We same the repeat

continued since supply through inflationary these we pressured of our constraints, We but beginning been mitigate quarter we the have as XXXX prices, working actions high the are quarter again temporary. increases Commodity storm the headwinds. to in environment fourth have to also the winter increase second in implemented believe last a to key addition for and pricing chemical known of In inputs. prices bedding managing of update, commodity XXXX has the

if we not We Based be will current we our chosen which for to the negatively the be to by do $XX now, impacted absorb in predominantly price price. approximately on increase but cost future expect second not offset commodity the outlook, will costs actions by million quarter, short-term have in take normalize.

XXX basis sales offset mix was XX% driven was the wholesale channel a quarter. first by improved channel inefficiencies. an North in The gross the expense channel reported driven improvement North margin and points adjusted primarily direct to year. basis as gross improvement results. improvement points increased American by to the XX.X%, Net and a quarter North partially Turning margin. a the of American first increased and margin robust increased improvement operational in leverage This basis, XX% operating compared was operating brand to the XX%. prior On record American XX.X%. by XX

international. constant increased a reported a Net sales to Turning currency XX% On basis, XX%. international basis. increased on

Retail COVID in continued with since period during strong products market strong And demand Asia international by the lockdown. pleased We driven the were and period our orders Sales consumer stores first shipments have Pacific the U.K performance well for of reopened. Europe have fact, Europe performed anticipated quarter. the our are a during despite as surge the ahead reopenings. in seen store in during demand in were we end the in

of basis an This to to and margin As was our leverage points prior Asia venture, due was gross on the performance margin as compared the expense and XX.X%. international improvement costs. operations XXX year, favorable adjusted improvement was improved basis margin. in by The prior improved mix gross commodity by productivity improvement year. to Pacific improvement increased our partially primarily XX compared joint our of points operating driven to International offset operating primarily XX.X%,

first cash flow end quarter billion. sheet cash At turning items. first We debt Now balance operating quarter, less record consolidated cash the million. generated the of $X.X was and of to $XX the

cash slightly of Our our range first of Xx end about our the X.Xx leverage to in below XX credit shares total X.Xx, of ratio share of from $XXX last million We repurchases our This strong to quarter, target $XXX was Xx. over and flow brings million. repurchase under utilizing ample liquidity. the the XXXX quarter the facility first down our at and our months

year XXXX, For least to expect outstanding. shares of the we X% full repurchase at

to of $XXX EBITDA currently XX% $XXX XX% low $X.XX, million, at be EPS prior guidance. and This an of increase be expect the to year. We and XXXX end. million midpoint. growth between at growth exceed to full $X.XX and rate the implies stable high year assume adjusted a We million to both are gross between to and turning sales $XX margins Now

also within improve to This as brand following be operational incremental OEM margins investment ease by products discuss second record Scott contemplates mix headwinds innovative new gross brand. the and expect and constraints This Sealy quarter. our our in We advertising that a spend offset moment. will will in

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

between $XXX and expense total expect currently we $XXX which of $XX million, XXX $XX of be between average XXXX, full I Interest the Scott. XX% will that, tax between diluted count rate be shares. million D&A back and year a $XXX turn CapEx $XXX million. on a and to $XX full over With the to million and million. includes of year million For million million, CapEx maintenance share to call

Scott Thompson

to job Great Bhaskar. you, and you team. Thank the

quarter Our the first us powering our corporate that competitive positioning of earnings jumpstart flywheel record commitment Sealy. effect initiatives to long-term guide result action is at in These our initiatives. are and a our the Tempur momentum in

and respective first the We're the and Stearns portfolio has snoring. incredibly initiative reported market addressed their have success markets the products business our issues associated categories. to that ends long-term and Sealy poor is proud never biggest bedding products Our sleep, two both pipeline sleeping key Tempur fact leave the stronger. all hot best with innovation of our we with In the in worldwide. products. develop and & serve product of TempurPedic, successfully in And each been our Foster starts

consumer Smart we've this Smart detects Sleeptracker. sleep tell years, address to thrilled with we the hot and issue, the we the attachment only a continue and the to the our on rates. second technology. of Ergo retail This sends third-party developed key Base that technology this via to snoring, the response are and rate with is The first citing automatically North Over quarter app. also coaching consumers product, Base personalized cooling difficulty sleep partners. past to snoring. improved market personal It they our Sleeptracker the addressed health rollout the system To and proprietary completed American ASP to metrics, Retailers of with us adjustable responds monitors sleeping analytics

for closer an critical As processes. and the insights brings and development the our consumer sleep additional from benefit, research data product to this us provides

across one of portfolio brand and last Plus Chill the and Study. We're our according brand brand was America's year mattress and products, most new invest Posturepedic innovate to superior was are It continually year. America's U.S. Surface-Guard the one Turning updated the Posturepedic The Sealy, BrandSpark selling achievements XXXX It refreshing models our of -- the the Sealy line the most rated in we mattress We Trust our number with launch this technology. Sealy in to brand. number of support central mattresses proud the Sealy American offer Sealy voted recently lineups. include and and mattress trusted

Plus We in back to the the products Posturepedic Sealy's and as will brand new about expect U.S. year. the to expect rollout of excited the in these the complete the and shipping half end Essential mattress lead begin mattresses and the in further Posturepedic the they one extend second of higher number line We're quarter,

projected increase in This of future. $XX million. demand $XXX our marketing. consideration. support growth combined Our compelling us our and second a shows driven brands is history, even advertising is Consumers with and has will trends key to initiative provide an for be to and the the Robust with strength purchase global research order in additional company's by million our market the of the investment intent levels the strong, the brand largest more momentum for record advertising consumer investment XXXX

of Our Stearns our products is driven throughout portion their top & A media investments dollars brand. year. our our celebrating being XXXth mind XXXX in remain of this data The anniversary purchase brand dedicated best-in-class journey. our investments sales advertising, for advertising towards consumers its is force, ensure Foster

retailers the products. amplification will products, a for story and and consumers have and new the benefiting brand's of third-party We consideration Innerspring high campaign heritage the awareness company. and raise the believe hybrid luxury that quality We highlights brand

customer largest optimize initiative omni-channel is third powerful partners. Our to shop. wherever our platform strategy is to distribution of our the be key wants omni-channel to The pillar our retail third-party

find consumers build mattress to our research to products XX,XXX to XX% touch include continue a and ensures is doors. critical consumers retail of feel they and our want our footprint person. experience to This we've can our We added as now This that footprint, diverse that shows easily before about broad as over momentum in buy. research retail third-party and

relationships We in our with present our robust have manufacturing ensure our to solutions, program, where continue our market our and Edge advertising and well training, we to expand brick-and-mortar and capabilities. stores. how logistics and and products direct-to-consumer as retail innovative strengthened Retail both retail with sales leading consumer as online depth To are when want customers insights, shop, channel, own

sales quarter. same-store And store. in great channel company our stores, comfortable consumers traffic owned in resulted shopping had we direct-to-consumer more growth. double-digit a this Our saw In felt increased as

growth our XXX%, experienced compress we first likely compared over includes comparing to growing favorable the rate that industry. as Our We even still I in XXXX we begin get lap acquisition grew the diminish prior web of as rate at quarter growth web customer years. note time, expect sales to the do digit same products, sales which rates growth to to web to costs comps our bedding in the others the want digit triple sales hard. triple XXXX. are a robust on very favorable At strong

and run over on Our highly business is profitable. direct of worldwide $XXX a million rate is

years X last compounded the of our over annual rate fact, grown business XX%. an direct has In

of We as the market American initiatives of OEM our grow is believe OEM is the share our of sizeable one market recent a the expansion disrupted Another duties has North market business. antidumping bedding enactment opportunity market.

to market. this advantage take disruption of We the service well equipped and are

quarter business run expectations. performed our slightly well the OEM in Our of ahead

to key initiative Our increased profits. drive is fourth

the to us remain long-term. and over line We profitability. control, us earnings growth improvements to operational have in expense to This initiatives and positions and been deliver optimize the with record top enabled balancing quarter drive committed earnings has to

Turning to capital allocation.

our cash million the actions structuring opportunistic operating capital as quarter over key of balance amount generates last million to of a months. by over We've Our significant cumulative cash sheet. flow demonstrated flow flow our of first and a cash business $XXX $XX taken XX optimize

Over few and expense of annual years lowered we the interest the X by long-term last quarters, by approximately million. our our extended run rate debt maturity $XX

repurchases We Xx to our through businesses as to our share advantage. Xx. as chosen crisis. financial range capital Under approach also we view health strength an We supporting manage competitive competitiveness. stay leverage reduced to returning opportunistic slightly global a And acquiring value to on business, strategy, the target our flexibility below ratio basis, the and range a run global via dividends that enhance our we balanced shareholders and allocation the and we've

Over we've the shareholders of months, expenditures which as investing approximately share of over dividends. the $XXX our allocated $XX capital last Capital $XXX includes is in follows. outstanding X% paying million. million, return XX shares in This million $XXX cash period, million over to approximately during repurchase,

of comparative temporary likely built We year housing low. most making is the numbers, acceleration from a Given given repurchase now to the we've outlook, lift prior also COVID-XX prior which stimulus the the economy, useful confidence and momentum, our made our we fiscal quarter. we a did checks on relief impact COVID. first touch is share latest trends. order view the current COVID accelerate this progress we have related and anticipate quarter us. orders the market behind firming as X-year on to to that Also relative the In and accelerated our This comps long-term in basis, our robust want upon briefly U.S., unreasonably

stronger. has what of ups that, months. meet close approximately reopen the have foundation we stepped about are strong those period it the the the and call versus I reopen. markets the during a questions? and future up year's challenges XX and downs allowed to Company-wide, groundwork how operator, at established XXXX. of holds. I'm previous incredibly over that last of volatile sales that the second There and lot team even With open us you the the over are growth become the been the first excited Our quarter of quarter presented targeting we've about for entire laid unprecedent please XX% a will international proud and to The second quarter up the internally team trends pandemic are

Operator

[Operator Sandler. with Instructions] Keith Our Peter from first question comes Piper

You may proceed with question. your

Peter Keith

great results, and morning Good guys.

Scott Thompson

Thank you.

Peter Keith

guidance sales You may what with ask It's little did guys input But want headwind was your the I earlier the cost a extra million uncharacteristic you the and significant. -- have my just bit was in for raise as ad to much. that million you spend. QX Plus answered guidance rather highlighted in $XX guide. up year question also to take $XX of

question year to by of ago? that So the early is may you so far guidance much months from confidence the what's in have a this changed the raise giving context the the couple

Scott Thompson

we worldwide and everything. operate where Sure. mean, guess Thank care continues you can the stores look, for I more recover We've in from the become, to open health economy comfortable the question. close. Basically crisis. an I environment that

I think to everything last compared we we see to stronger. you time reported most feel

mean, in North at as the business slowdown look didn't America, increased the we we you If And expect. -- we did see open, a sales stores probably number. like the I XX%. Great online

it's Yes guidance the no, the was such to it move raise needed try in middle we strength And guidance guidance the So, standpoint, the up. a felt to of and feels the that like of fairway. the -- from business we underlying keep good. we

Operator

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

question. with proceed may your You

Curtis Nagle

Thanks very Good much. morning, guys.

Scott Thompson

Good morning.

Curtis Nagle

taking the here. So more morning, the Maybe a kind of -- good bit on focus long-term Scott.

you've got North of getting about a balance, How the big. the focus should we over the to could obviously, America about the here really, that product do and terms kind growth of in what's new guess sustainable right strong. launches numbers think think growth world. pretty a versus and lot But now What next international are rest off like suppose It few be the say, I sounds revenue more charts, thinking earnings you really years? a and is just So is that? way are of you I how

Scott Thompson

period. X-year Look, question. Great a Sure. probably a international has over opportunity qualified larger

see focusing Our And on international comments, think we're to is while. share I the balance little years. going can take prepared over a internationally few you next our It's small. of from relatively

core spending shift lot spending because the we Goldman it me, the at rate, in question about household think is from we've when talk their wallet call And household guess you I will the look, the we've data been studying we of on interesting. experiencing. obviously is growth was consumer is share get I on category. that to world best been the looking consumer And a

was an I think from from at growth growth. last spend the it year in was X.X%, much XXX stealing and $XXX category in look home. past the X% X in a to American billion, up total on about of We're It at from spend XX% really for as couple as years certainly home you by up XXXX, which basis wasn't I ticked good. as basis couple much a it data, and XXX was is taking But North XXXX compare was XXXX. about chatter, or points the up least I then investors. if a as dollar we thought, standpoint up that year, And of points, yet our it on upward a and trend growing of were

standpoint, our initiatives, yes, little see tailwind clearly and quality from wallet. our of share or bit a of say, shift of So OEM a growth is advertising be new direct, our a an impact the But what products, it got you I'll to the it. whether it's lion we driving from of the performance

will sugar bit a initiatives And a just those we And don't bear to high. fruit. of so little confidence continue that gives really me have that

then, of XXXX. bit still, it at look XXXX, in during the percentage XXXX, income, we picked the But spent less too a little disposable If home up in in significantly it you mean, I period. a U.S

the foundation industry. So I solid a more there's think for

the The advertise you've I can billion that when and we've industry And market addressable $XX thing seeing, the other the certainly we're that is drives market. healthy, think worldwide. retailers the is look, seen defined

acquisition, deployment growth room got kind in some it in in frankly, be cash other the quite grow our share or some we whether of initiatives. flow, various including, areas, think of be plenty I So of repurchase, or just to

Operator

Thank you.

next Bobby James. comes Our from question Raymond with Griffin

proceed your may You with question.

Bobby Griffin

back Good years. Congrats wanted results. company of everybody. here for Scott, on clearly just couple for on growth morning, touch international I the great time exciting the the for next to

product standpoint, a next on should lot as production on people capital we distribution about You've growth that should we the in standpoint or or ground the few forward to for considering expense talked the other side kind going even years be any standpoint investments from Is the well, the really investment. that fund of a consider there model?

Scott Thompson

so. help that I be as mean, far meet a I The don't the our [indiscernible] sales capacity some think with standpoint, an production advertising the from objectives. there because enough as we priming adding to from Bhaskar, obviously will as come, people. me standpoint, plant has

always, And standpoint, will from domestically international. area, a talked we'll work help capital So, acquisitions in supplier retail we I standpoint about don't allocation, as and both like to continue in think and our look continue so. Obviously, a worldwide. that to at we from that can us both

Operator

you. Thank

question from next Keith comes Our Truist. Hughes with

proceed You with your question. may

Keith Hughes

the there My Thank fantastic is in international you. well, some segment. results question as on

year, to are that above the the bit If above in you be still below. you'd look XX% would growth year international about talked at the well little rest segment company a for of the

Scott Thompson

the early the in you largest to group. will No, that going be will consolidated international is hit in we're initiatives rate group And portion highlighting think XXXX. drive is North America I the XXXX. of growth below the for

Keith Hughes

thank Okay, you.

Operator

you. Thank

question comes with next Our Basham from Securities. Wedbush Seth

your proceed with You may question.

Seth Basham

businesses. strong around with a share and on Sealy Thanks lot congrats is the and question My results. a

commodity seeing pressures there they relative confined from primarily those businesses standpoint, to all, are of that to First TempurPedic. you're the

the in the areas do entirely much second those capture sale you are the million Secondly, to left and in on $XXX the $XX the to expect them pretty quarter? table primarily

Scott Thompson

Thank you.

that that America, of sales, So, in all little and it I to let's would maybe $XX call North Sherwood the quarter of in Sealy million in first mean, in $XXX talk million a primarily impacted the been sales and foregone have constraints first about bit OEM.

I think it's interesting.

doing you than it, If adjusted sales, I I XX%. you're or XX% to our sales know, close getting rate unconstrained, number, they North into growth probably put, to X% rather XX% sales American we've those guess, guess on don't I been added if

we is had a the with. that hit just So build stock commodities build don't they to They I'd question certainly the fill [multiple brand, I speakers] Tempur commodity make increases, plenty hit order. Tempur to chemical of start Bhaskar What Sherwood On everything. his and Sealy and guess the than supplies standpoint, look, for rather the else point but missed? also, hit was from in Tempur brand

Bhaskar Rao

to $XX $XXX going that does million How back. come million to

Scott Thompson

tell you I don't I me. mean, know.

Innerspring from standpoint, mess I their think it think as from quarter. we the effects sit in the were was great supplier the from report but in major we'll was although because a first earnings. of chemical did of people prepared quarter constrained first quarter learn the feel And behind us, next weeks a on disruptive really the the the a Innerspring lot and as in an Certainly first more And our going event we're other few the that we that's event remarks, of still to we force a was freeze over job. it. some

Some in second the quarter.

that impacted our also I an think Bhaskar from plants, called out efficiency standpoint.

had wasn't very We're but look, quarter planned goldilocks. -- quarter. quarter of had we proud I first was we although sales, it missed. a first so the We mean, inefficiencies. good the certainly numbers, And

come into didn't X. Our increases pricing April until effect

got quarter, allocation. So quarter. we first quite closed, the in were frankly, eating for most Europe we on was of of customers commodities the Part

think we are any that although was it so good, goldilocks don't And certainly means. numbers by the

Operator

you. Thank

Our with Jefferies. next Jonathan from Matuszewski question comes

proceed question. your with may You

Jonathan Matuszewski

you Base, question. a the the Scott, you sleep that little taking Thanks rollout elaborate the Smart in your you closer you informing for data consumer the innovation mentioned to complete? bringing pain storing the now solve latest consumer Could bit my with on thoughts in temperature And points future? of Thanks. beyond how What's from and terms efforts in that to more? is data? surprising the

Scott Thompson

Yes. great And have expected kick It's we But the Base, better rates because Base increased for it marketplace. with I'm happy to and have a going quarters retailers kind attachment question. long-term launched to increased extremely doing the is our in a it than few ASP. we are of the

are now We and data. are analyzing data the partners just the gathering our

point I any can be to crisply I it customers. to probably to But I'll really particular over think answer able that a answer it's And we're the so more about insights. And to thrilled early today. question time, getting little closer than

Operator

Thank you.

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

You may question. proceed your with

Brad Thomas

ASP, that drivers My around and future. much a terms is, you favorable competitive pressures of how destruction ASP. Hi, taking might lot that that in of the quarter in risk But or the here. to asked question was demand up the price much you're thanks. open Great have how question often clearly were

different you little more Scott, the mix ASP right attachment about And you're now? and how I drivers and could was the talk so hoping trends a and of just rate, between about bit price feeling

Scott Thompson

standpoint. and strong the Sure. a from quality rather products, quarter, retailers out explaining great customers strong, I bed quality lower of wellness, things. was obviously commodity quite think quality of price bed. the I industry through When and benefits it very mean, ASP and field a doing last ASP in higher are a to than pushing couple the is, Whole was the of a frankly, goes health job

that's of So part it.

really, from a bigger much. From price think, an wellness ASP standpoint, driver health is competitive too probably feel standpoint. all don't I points. and We're I factor at the I really the guess that

any price to play pick those choose can brands. which with family from of where at we points bit the optionality we within gives And a company, suite can point the a competitive quite standpoint. us of and of a put we want So, price

think being are their move commodities move pricing. pressure, everybody in I up. others. as a up, lot We've don't guess others So pretty feel I I rational seen much from of And price

As chemicals. that It events, those pass on that on chose to his remarks, this that that commodity have this is is related then we we a on directly based tendency to But I when event. to now not called kinds in prepared we call quickly. commodities. out increase a things of history, short-term And come back look spike have do because very what and other or hidden Bhaskar at hurricanes weather on

a increase that that's on appropriate customers. to doesn't price our so seem to And pass

Bhaskar Rao

ASP, thing and well. the the within Sealy They're think mix not up. however, add One price, is as mixing to you growth there as the only is within about as that it's mix Tempur

purely driven price. is by the So increase ASP not

Bhaskar Rao

constrained. in call what is, we've done brand Yes, I it's XXXX, good times, a out that which this watch should few quarter, was we it's guess but and the Sealy

unconstrained, would And so. work the last and we or than months that so probable it's haven't it that we off price know, customer Sealy meet Tempur the over brand gets faster been that as grow demand and you X to as backlog point meet able

Operator

Thank you.

JPMorgan. Our question with next from Carla comes Casella

with question. your may You proceed

Carla Casella

all environment seen. and given others sure the that's [Technical whether supply that at have the you changed difficulty] I'm chain M&A

Bhaskar Rao

every overview. and I M&A kind just week environment, of The to changes guess an

Lots the liquidity A sector, players our so there. page. on the out both companies, marketplace, of isn't pricing supplier retail smaller a standpoint, we're from there's generally of of in a rational. lot So sometimes smaller opportunities lot standpoint, all in same

we've right the your I supply looking if aggressively that those we us chain so partners make long-term. of And at supply relationships right the of kind we've supply is to and long-term, are talk would continuing making at specifically, sure we question, which to I say, kind our the the a everyone, are and sure think chain kind robust. direction -- got making opportunistic. back that look of our have And of chain you about we're hold patient relationships and all sure

Operator

you. Thank

from Maheswari with comes question next Our Atul UBS.

your You with question. may proceed

Atul Maheswari

second, your And sales? morning. to Good then How in my much is way? related of any question the stimulus able did to for that Thanks the guidance. which taking you Are first question. benefit quantify quarter part

quarter growth a So of the rate back the for double-digit would the XX. is revenues, up the assuming guidance in imply year second nearly half

there's hopefully as -- in back of the on home and then. lapping very are economy half less comparison consumers the there tough possibility you by reopens just the focusing So is

this in you So the confidence level at achieve giving what's that the can Thank point, that you you. half? back

Scott Thompson

you we through no Let out questions product. the that questions. to question call Generally, down that just our XX lower very in has at if one, checks, when you're instantly stimulus because almost there's me The that's on retailers been writing feel the in rapidly been Bhaskar ask wanted in -- see as U.S., retail. go them tactful getting stimulus checks

standpoint, a it's what a don't we you little guess but think first guess EBITDA it and from it out. to quarter. stimulus is much wanted can't -- So the bit My I call certainly an checks helped is probably the drives

going is of the they else questions, up Let's away, forward What on not just the they're say expectation and I'm But away. go continued Bhaskar? for was our more checks employment. than is growth stimulus and his sure improving make list economy should going

Bhaskar Rao

Back half growth.

Scott Thompson

event everywhere Interest Consumer some economy, up to us look. and are good worldwide quite to consumers derails looks to confidence continue shape. rate a be be bit. damn rates the U.S I it growing right? barring good, control. pretty Looks The guess, that like frankly, in quite the in seems in was we savings

So I a like said barring that some And feels all good. we problem see there. event, don't

seeing bedding about, what have my call Goldman markets fact, when gave we China, closer been big that ago, be they're to that normal. or worried shift in pullback reports. call and importantly, markets better. that at you're we'll we'll to longer, are in probably got we We're doing have even If furnishing effect gotten a and that perspective whether Korea I second have not expenditures. economies more and close some the numbers you a But wallet look is normal, And quite but probably those from pretty be not normal, these open

lot winded a don't we a So long black answer say of that's clouds. I to guess see

We maybe know, are don't we to what worry pretty and So good know but we what see things see about we about? us. can don't what from worry or do

Operator

you. Thank

next Our comes America. question of with Reuter Bank from William

proceed may You your with question.

William Reuter

the that you about Hi, my million question number is mentioned. $XX

And inflation believe including then than as materials it increases, not pressure think as the ocean we half there for that will a about of do encompass make round year? whole, was a that round subsequent that just another price think but gross raw of on 'XX back you that will I is be more margin freight such etcetera. the

Scott Thompson

Sure, good question.

seen relates we or quarter, that offset not is $XX by be as it during second. not will specifically be during to first million, impacted what the have that price So the the

specific to while. in a again, coming is that, say on that The out that we we're increases temporary the going greater me inflation see than commodity the The the And that offset not therefore, million $XX 'XX let there winter out in seen of 'XX see storm out putting it. directly second we've is we quarter. believe majority then what for a $XX should temporary. of call So with associated million to are the price that we from

we it to a that extent think perspective. is that go-forward little the will that from consider bit, as said we price hangs all about However, around a

to storms. what's is associated with predominantly chemicals out predominantly its relates it associated there, the disruption of As coming in the it caused million, included the $XX materials by

Operator

Thank you.

question next Capital. comes Champine Our from Loop Laura with

your question. You may proceed with

Laura Champine

the Thanks to for chain in on a It's question. dig taking little issues. my bit more supply

what's a we've issues normal Tempur all mentioned of purchases to chemical result think You of and that Sherwood changing order, in Sealy stock the terms builds chain practice build supply brand to for is of supply? as that of at weeks seen? whereas And your the the I some

Scott Thompson

Sure.

our stock from this to have event that me size our of expenditures tank more years, give let few the team have operation safety just to all, they for kind call out capital over requested to of standpoint. First chemical the last a increase

made about depends I'm say investments certainly helpful demand from some. at So general been probably to period. XX and their obviously be going request, supply, those days But a … kind demand Obviously, talked of a it chemical this were on we varies days, standpoint, and Bhaskar, target that during have would we so

Bhaskar Rao

Right.

Scott Thompson

up a we coming but I anticipation guess through and inventory operations, pretty went out we last from inventory. have in lockup. it the you probably, chemicals, of purposely day in again, supply And, then thank … of was year robust May also

May And like last June. so been Tempur's, I inventory or think last for we've starting, carrying more

Bhaskar Rao

Right.

Scott Thompson

XX And days. I'm north that's going to say of generally

on works And that what on chemical stock -- probably good this a pretty we've cushion in shelf in from -- as more has from and been like for standpoint. planned a event. during would hurricane the had period Innerspring and constraints where that thus, have combine Tempur a So would we

Operator

you. Thank

Giannelli Goldman Sachs. from with next Our comes question Jenna

with proceed question. may your You

Jenna Giannelli

there's it as same of think been degree supply Just tailwind about million chain know that to going the color. I if supply out we just sales been few $XXX million one gross potential could The be But about can, my you. come helpful or it potential a with In was has on headwinds? of and forward? we dealt similar start chain. the more taking we've headwind in quarters, to question. perhaps the Thank the for Thanks as $XX margin clarification. $XX what the a Hi. I million to prior as

Scott Thompson

Sure. I'm going to say slightly were the constrained sales, think I less.

million sales the out been and Sealy product, Sherwood think and I first like the a from million third second about that’s million probably it's $XX $XXX in and quarter. more again, to $XXX calling in line, quarter we've

more been issue operation standpoint. So standpoint obviously, slightly second, less has been got this difficult plant plants probably from we a chemical combination a a And third I'm in the because say sales quarter, of the to hit from the the has going worse chemical disruption than … the quarter from and spring in issue more probably the issue.

Bhaskar Rao

That's right.

Scott Thompson

you it. don't … need frankly, you when because to it's you the And hard what foam if it's Tempur need, do disrupted, out figure [ph] to get quite and Seeley.

from been the worse or want call call from -- by we it's operational So, out whatever probably several standpoint versus to quarter million run an sloppy a this …

Bhaskar Rao

out as faced. called I it we we second what said to complicated is the that We've have a we'll in implications we second we go million had I Scott, the was do that sloppy see $XX But would as sloppy -- chemical quarter. worse, versus those bit out by get the of as well. quarter anticipate shortages of imagined we away would the you we've about what running as And say seen. but

Scott Thompson

on the is first quarter Yes, next year. compare the for really point

closed, the group, much in on which open, country. constrained didn't that we on got price operations the go depending sales, effects into sales commodities our very April X. And America. you the customer you've got You've were North the some sloppy, closed, open, till for customers for because allocation [indiscernible] play running have fun got European

that lead next some are first does to it year. there believe quarter So you tailwinds

Bhaskar Rao

XXX%.

Operator

And Seth you. question Securities. our from next Wedbush Basham comes Thank with

question. your You with may proceed

Seth Basham

How then [indiscernible] margins, thinking had over just the inefficiencies first the we very despite quarter guys and in the you a the follow-up of we the again pricing these rest acceleration seeing Should I second the year? about given In the strong cost being commodity and of lowest relative should quarter, back well operating about about think the think margins. the year? incremental operating XX%. headwinds, had half

Bhaskar Rao

Sure.

GP. intend down way challenges, really the to to I standpoint. the from about I we about, think think of nice gross one it support is I of second long-term, we call would it year had profit perhaps And year brands an first slightly quarter stable just would as about broadly to I think full all Just on advertising in quarter, again, our it, as full some so as the think continue do diving speaking, always to operating the on think as stable -- margin, basis, I items do consider a into a let's about the given we

So rest of think year. we'll that investment as make the about the we

Operator

like remarks. would you. over I'm turn at any Scott I not call Thank for further Thompson back now showing time. And further to the questions this any to

Scott Thompson

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

Operator

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

disconnect. now may You

Tempur Sealy International (TPX) 29 Apr 212021 Q1 Earnings call transcript