TPX - Earnings call transcript Q4 2021 | Tempur Sealy International, Inc.

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Operator

00:01 Good day, and thank you for standing by. Welcome to the Tempur Sealy International, Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today’s recorded. [Operator like XX:XX today, the Relations. I Instructions] to Aubrey would Investor speaker [Operator your now hand to conference Moore, over ahead. go Please

Aubrey Moore

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

the Scott financial of Securities will today filings, statements will can forward-looking President of investor.tempursealy.com These at This a business. Chairman, the adversely Private the its Reconciliations non-GAAP be for with has SEC. call under Note including company XX:XX open materially results Litigation the Executive Factors. non-GAAP could the XXXX. are Reports Reform Form date Form posted release, obligation XX-K Bhaskar company's SEC Officer. After includes to and Chief and Quarterly This These involve of may The as press it that to factors forward-looking President any Act financial call Safe are and Joining and forward-looking Financial company's on statements. found variety due and information. are include forward-looking actual that update the of Risk prepared of discussed factors Rao, also uncertainties to Thompson, investor me website which commentary CEO; morning's on in on and affect Vice been provisions no remarks, subject company's statements Reports accompanying Statements the the we which Harbor Special is information the differ the XX-Q, XX:XX on Q&A. speaks only Forward-Looking made. Annual undertakes heading and statement Any on Regarding filed

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

Scott Thompson

and Bhaskar will from and a record Good review fourth everyone quarter, financial performance I'll earnings XXXX on us our detail. you Aubrey. then fourth our you, with few Thank XX:XX highlights joining in full-year more for quarter call. thank morning, begin our

long-term combined the industry stronger January. increase consumers. EPS of But should ongoing initiatives of sector. driven conclude retailers the and been health share successful the trend results markets. Finally, for same year. and double-digit we'll U.S. XX:XX advances by an initiatives, in XX omni-channel with in year-over-year, products times our position the with anticipated, and order team represents The slightly backdrop. fourth results growth. XX% XXXX, The This variant, long-term disruption full-year earnings across low-end fourth growth of sleep wellness, was some a XX% to quarter our U.S., period the for our in technology dynamics inventory quarter note spread negatively footprint. causing expectations, outstanding in our adjusted Consumers rapid achieved well in in unexpected Omicron strong the growth versus ahead the $X.XX, and pricing than XX:XX still In of the largely fourth performance XX:XX strong quarter fourth drive COVID quarters. normalized inventory XX out continues record will grew and fourth sales world considering especially international has bode were performance. sleep by impacted quarter. I trends a the last expectations. for last our Adjusted innovation of delivered The we net our orders our end with of overall, per the the major company quarter, actions, improved how our flare-up on In the most fourth of quarter comments solid deliver across in were of segment, the of We particularly below order-to-delivery the

As the XX:XX the trend acquisitions strategic our stock, closing this from and well the leverage, in of while cost the our X repurchases I approximately from million of innovation. count would per opportunistically course, are confidence shares share. our an to XXXX million to through of quarter. and have outstanding, maintaining XXXX, some average To-date approximately were low in capitalize on of made reinvesting repurchased we in be our like innovation. We driving for Those our XX repurchased diluted and business now XX:XX share XXXX, quarter. positioned first key in to about $XX the approximately have highlights testament XX% additional as to review shares leader potential shares million industry of we XXX at expect product we

throughout to ability our First, the service improved quarter. our fourth customers

able million for you U.S. allocation seasonality entered allocation backlog off fourth As our record in customers recall, take U.S. business us due And normal supply to were of to backlog. forced end progress quarter we may expected Tempur-Pedic customers our $XXX down about orders. quarter, Sealy at in the Tempur-Pedic of Sealy a chain were our on October. and allowed the in the significant As successfully We issues. OEM working with products X:XX make to

improved year, direct organic Our and to more of Tempur-Pedic and than normalized strong the of performance driven I operating as the where acquisition a Second, U.S. growth by outstanding compared Dreams. time. order-to-delivery product Tempur channel, highlight is under prior want doubled the our to delivery well, today XX:XX times significantly sales

XX% and prior Stores, had our channel, offset comp to which which growing Retail were in increases performance, XX:XX We Outfitters stores same-store continue conversion in a constraints, stores, over of Tempur also had robust Dreams, double-digit the all solid by quarter partially their of e-commerce years inventory invest rate. difficult Sleep this in company-owned sales quarter. fourth Our considering our

customer. leverage direct to channel to the get We to closer our continue

our and results market years, stores These more based in XXX in leading stores, a last over per three our the number joint the XX:XX Over Regarding conversion XX%, nearly wide local direct on own retail operations. we've we and of stores basis. store a sales now customers wholly-owned format variety in increased of to effective which our through increased vary venture on around efficient the database marketing. preferences, operate by consumer world and companies and

store per in locations sales Stores We we out call retail were exciting and each. U.S.-based million e-commerce Tempur XX:XX each, million have over awards $X see we $X to with our want to potential averaging open market received. opportunities average including to additional over see Retail as I Our continue XXXX, Third, arise. some recognitions

in the that time was one one first third award. brand customer share overall durability, satisfaction in the earned category to Power report. won customer customer one addition We're was brand of is XX:XX variety for J.D. includes that year ranked ranking and same the category, Mattress Mattress awarded features, in row with the for Tempur-Pedic Tempur-Pedic one Mattress number number which Retail contact Satisfaction the we've XXXX customer across also being Tempur-Pedic category Report. Our thrilled Mattress factors our the This in a awarded in for support, satisfaction, number value, to in with you warranty all in comfort, the Retail Online In the number satisfaction service.

of challenges we impact. value and faced our the protecting commitment innovation. being high contribute continued recognition and by is in launch inclusive our ESG by in sleepy the one innovation environmental, is steadfast mattress Success operate. environmental quality financial of product of discuss an the In which mattress in firmly growing our in create Notably, trusted Tempur-Pedic, improving retail metrics, addition XX:XX will to through row in of waste be Corporate the progress our waste we for the long-term commitment of the to XX%. the recognition and This awards just named XX:XX governance Sealy later, XX:XX company. and year it solutions zero Tempur selling that for We percentage our significant in the to XXXX, while achieving we testament our goal Fourth, plans I we stakeholders our business. in brand in furthered our product will the industry delivering to number month, Value Social also Last defined Sealy consumer initiatives recycled us for goals the report. believe financial brand detailed the growth success and the and more landfill operations XXXX. XXXX, at we've address than to also continue providing our number social XXXX to second on from Report. Report It environment U.S. America's online our our customers received one many that changes allow our which important achieved XXXX manufacturing their our businesses, is despite published is communities of to needs. made to little broadly and that drivers importance the U.S. we A that continue

turning Group, Chief as which manufacturing for Board aerospace our by Group Chairman before the XXXX Executive to brings international experience greenhouse additional take Tempur serves as Meredith Board. of areas company, Dyer. over Officer towards Board in per XXX:XX Sealy of ventures. currently goal Chief brings want logistics, bedding global our Madden have among two reduction Bhaskar, finance. other of including and and of and manufacturing report and moment the a multiple of things, Meredith markets, over currently The I mattress joint XXXX. XX NORDAM Directors, the our X.X% our includes years on to Officer our full strategy, call progress, Finally, Inc., initiatives bedding achieve Simon and We Simon to a the and the Simon and Dyer industry XX found also Executive Board, a achieved produced, Simon to sales, extensive market. operates our to new the members about welcome leadership including Meredith serves Director in knowledge furthering years Siegfried XX:XX and emissions our and international international be website. both carbon-neutrality can unit expertise, of progress gas of of information and

Bhaskar. XX:XX that, We the call joined Board to the I'll are them have turn thrilled over of Directors. With to

Bhaskar Rao

the the Sales Scott. XX% Adjusted Thank increased adjusted few to earnings to These XX:XX $XXX and in operational basis, you, by brand approximately results. direct and increased XX% North were by sales year. mix. with the increased North declines highlight increased prior billion. quarter. XX% Net the as in to to would the $X.X a to American This share items no increased American On a $X.XX. robust margin. was benefit to XX% and XX% to million, wholesale increased channel reported XX:XX to a improvement declined the channel inefficiencies fourth offset compared sales like COVID per I partially gross Turning EBITDA related to pricing gross driven favorable margin XX.X%. XX%.

fourth multiple gross of Tempur price level These increases brands Leveraging increased mix, brand Net offset increases last of the sales driven XX% implemented by margin our dollar as XX%. was of by quarter environment. basis, to improved leverage, quarter. improvement gross and American inflationary Now a power, demonstrate constant fourth expected, down resulting Dreams. the to the partially currency to elevated improved the change backlog the in margins operating by The our International. our of quarters XX:XX XX.X%. the operating in North working quarter favorable we turning a On Our power XX:XX offset from primarily expense acquisition impact reported margin. four basis, sequentially pricing from inclusive have sales prior products. driven highly increased on the of International

a across As driving than major a our price points. margin of products in variety a margins. historical year-over-year sells Dreams Their lower of range is change International multi-branded which margins, profile retailer, is a

the Excluding XX:XX to to underlying the As gross was sales International and improvement Asia expectations driven Dreams, compared inefficiencies with in associated year, by our margin acquisition performance the without met Europe our The the margin pricing Pacific. gross declined prior to COVID. XX.X%. decline Dreams, and both across operational benefit of margin internationally

expense Our a was margin The to change driven to moving sheet operating on margin cash the million. cash flow gross International operating of declined Now deleveraging. XX:XX in $XXX XX.X%. robust flow the fourth We balance items. operating by decline and generated and quarter

as quarter enhance inventory to days our inventory the we U.S. Tempur the extended in throughout Our began

times. the first the guidance. fourth operations. of expected in our in billion XX% in The to We the to our We $XX end approximately XX:XX sales share million included approximately further shares paying EPS This outstanding, the cash less to to support return X.X in benefit dividends, acquiring mentioned, turning was in capital. executed XXXX of we million of our shareholders. Now to billion our Scott our build repurchases $X.X consolidated and At growth into XXXX. in debt XX%. and our This $X.XX includes expect XXXX, expects of balanced million $XXX was sales million quarter capital over strategy to facility XXXX, to under from inventory from buyback back As strong XX% Dreams quarter, between on allocation allocated company our leverage investing growth to cash value reinvesting ratio credit approximately $XXX $X.X $XXX representing be XX% midpoint. the $X.XX to year-on-year expected in an of for range growth XX:XX

Specifically, we new to launches invest in incrementally million product expect expenses $XX world. the to related approximately around

believe to upcoming maintaining of quarter, believe made include total is are X% have would flex of have repurchases at the of Stearns as including from we quarter labor expectations that expenses amount we share lower-end we outstanding, a Tempur In our We the of and XX:XX otherwise targeted temporary. naturally consumer, invest the record plan launch XXXX International first seen far. products. repurchases we with Additionally, which share including & first softness we advertising, XX% least shares advertising -- through Our Foster the the sales. ceding thus also and

the this results otherwise advertising would For spend modeling a we items. flexed. have and quarter, in flag few XX:XX like first Lastly, operational would to would I anticipate incremental that expenses

of For that, total interest $XXX Scott. plant; count million; our million turn rate $XXX million currently XX:XX between CapEx manufacturing million; the new XX%, between CapEx share over be foam-pouring between $XXX a we and diluted D&A million including and $XXX capacity, call includes to which in $XXX year XXX the to a and and million back a XXXX, $XX investments shares. million, of U.S. million expect and With of full tax expense $XX I'll maintenance

Scott Thompson

global two that the our fundamentals review was estimate past distribution initiatives and driven driven with to position XX:XX about I'd take years company's growth performance. have half job. These Great category. omni-channel, Thank company over through like that Tempur new of We as you, moment growing last solidified further a Bhaskar. customers. two years by this to market-leading, the retail solid XX:XX Sealy's a vertically-integrated,

previously initiatives. Another of of and from markets from M&A is and This gains XX% untapped unlocked Sherwood direct activities the the and OEM growth that our addressable Bedding through our addressable acquisition were our markets. derived Dreams and share attributed to forward. going XX% confidence above-market how to remaining in to The our two-year to of like four underpin achieve industry our be in growth growth our review initiatives the I'd XX:XX our can ability continue overall. the performance long-term includes

in to expected Asia-Pacific. furthering premium that collection and line process U.S. support unlock of of super-premium Sealy technologies, This products our By mattresses position to segment manufacturer looking includes industry. international We the XX% We is line celebrated a launched and oldest bedding operated innerspring the all-new summer. Tempur launch will its aim its is segment up have than strong the our are traditional unparalleled our products of expect our anniversary, of to to rich products addressable range markets a has on this number premium solutions be and initiative sleep to highest feel. and also floor the capitalize all to expanded award-winning the cooler of to quality which The the models. in and XXXX and product sleep the a price new We breakthrough attracted market. launch and XXXX, and We all with sleep look. designed broader offering longevity, the producing is its also opportunity, key superior expand category. We and is serve. with about committed is be increase Stearns recently brands, a grow line of we handmade and Later and products line order we distinguish clear This industry-leading in customers an first a a with features This American-owned high-quality supported these in we support, there history to price into & new first the with XX:XX Sealy's brand further The Tempur in contemporary legacy customers, opportunity expanded to step-up by superior will further underserved beginning plan total utilizes develop is which the our Our in the craftsmanship our new hybrid around In premium designed invest maintained Foster bedding traditional in The innovative brand, launching products a new Europe of products are future. previous the products. launching the brand ASP this that products over & range to mattress foam new technology, XX:XX we the to new an The line see U.S. is of team high-end to in in technologies that evolving ASP demonstrating of upgrade in who new XX:XX substantially think the currently a XX:XX XXX significant product for and innerspring believe of on line the line Sealy in of to mattresses. comfort new story premium working Foster and products in country. Stearns improved innovation to customers world. late the our we market provide to consumers we are year. think it updated

to on new advertising will as become launching customers. In more awareness, we're Stearns on our billion-dollar doubling Stearns in we brand than Based to and significant these investing investments Bhaskar these sale efforts with products support be Foster's brand. our XX:XX awareness previewed, & to addition And & third this goal. we down to increase double products, to Foster brand dollars expect

emerging new tap into through also this products niche markets to We year. launching plan

of the mattresses the plan appealing small consumers We at gel product for a Sealy is launch designed sustainable mid-market consumer to category a These collection. products. best-in-class segment eco-friendly new layer XX:XX price to expect for grid matters designed interested also a in pressure-relieving XXXX. to target growing This brand mattress thoughtful to significant expect of relatively we at business initiative near-term consumers launch natural and moat are who XXXX, are around our a We In across a XX:XX Sealy branded our bedding with in second will of awareness is with marketing. for compelling all that priced point. promote to provide to looking This long-term and price returns Our feel. brands non-traditional brands investments continue a products. strong worldwide key reinforce non-premium be and marketing mattress the

among most highly to position. and Our extend to third initiative in in key omni-channel existing invest to for disruptions on a advertising allocation, forced powerful XX:XX brands are optimize recommended our desired industry. to and the strengthen million leading record recognized, we distribution chain customers, Last is new And Our platform. XXXX $XXX dollars put order-to-delivery in the year, plan this supply our lead turn our us to away consumers. times customers continue

XXXX As times lead products. from position meet allocation customer's brand for in removed normalized. our We've and demand customers to have and I enter earlier, improved noted our we

potential Now to direct and our also reengaging a that our significant represent company-owned we're able from for running prospective rate. both XX:XX billion currently We looking opportunity grow to had through is We we're growth stores which opportunities fully $X our forward. products. in serve and to customers, run of see excess existing customers channel, our e-commerce annual demand going with brands

best-in-class the XXXX, year over few organically store to interested per manufacture In over we whitespace Turning we to converting our directly worldwide the same-store our OEM focus growing and capabilities in stores business. growth purchasing on XXXX, participate our of expect online over both count. operate XX% OEM We to opening business average the operations, to our non-branded XXX expand XX:XX new years. customers store from logistics our grew OEM prior retail increase recognized an in to For to utilizing In drive products. through years. manufacturer. opportunity retail space In for a sales XX e-commerce, next over company currently XX:XX our and through expect the stores we'll count continue manufacturing

to share with these XX:XX comprises OEM pleased This Furthermore, to our during million given grow the our believe significant XX% by priced $XXX allow supply impacting pressure especially service we -- of XXXX. are the of (ph). results, the to ability to fair sales We the the year. demand earn OEMs approximately we're OEM us our bedding will targeting market

and secondary our a cost Our decrease growth fourth drive enhanced benefit, our and products of future will deploy supply fixed As for capital. all initiative OEM capital, on and key expected per opportunities The cost branded more to all increases deliver marketing driving XX:XX new returns omni-channel advantageous EPS our agreements drive are just spread sales due unit in we is volume. as expansion product strong to launches to described I investments prudently in increases that and EPS. invested

We continue capital in execute XXXX. strategy on allocation to our

Our strikes dividend into capital repurchase continue capital expanding approach a we For between business invest to shareholders via opportunistic global basis in example, back returning and XX:XX acquiring our competitiveness. manufacturing capacity. that XXXX, facilitate on will to the balance enhance an in businesses our allocation capital and investing to long-term growth,

investment facilities space to to third $XXX in and expect to these the making domestic expected plant to is footprint underway also couple be several of overall years manufacturing facilities. Our and our our XXXX. invest plant within over existing warehouse support incremental expand Crawfordsville, next is million an We're in the We investments Indiana XX:XX operational foam-pouring in initiatives.

dividends to increased capital also and quarterly dividend by to expect in repurchase. $X.XX share share. return continue We to quarterly shareholders XX% via XXXX our per to We've

Additionally, fourth $X.X repurchase our year, the Board last to authorization billion. in increased quarter the share

double-digit is To XX:XX a expected This trends sales the robust anticipated to Lastly, that and Moreover, confident our to we're repurchasing and in moment of growth to our support we growth, shares while the strategic of in the business, to expecting make Bhaskar cash our to industry of mentioned our the that stock, low for achieve we during expect long-term expect acquisition of XX% are this and ability deliver year strength, well trajectory channels, EPS ago, capitalize brand outstanding and ahead repurchase shows investments we growth. maintaining dividend, leverage. paying continuing conclude, growth our guidance at Dreams to new as year. on least XXXX.

this think With questions. will business the global you the clearly open that, model. of our I operator, for highlights XX:XX please strength call

Operator

question Hughes [Operator Securities. from you. with Keith first Our Truist Thank Instructions] comes XX:XX

line open. Your is

Keith Hughes

Thank XX:XX you.

Just a question about of pacing things you on of sales weakness end quarter. the the talked towards some order

If of what you could President's February specifically Day the talk here pace couple just last about the months, how the around -- and in has gone?

Scott Thompson

XX:XX Sure. Thank you for your question.

you're but The primarily group the the I talking fair two U.S., story think different out solid. and it a of little and whole bit I of about segments. the bring U.S., say, you quarter, would to started first you balanced, When be the move for to got International I'd world. strong off

ASP look of high-end, with high-end is standpoint doing quite at pricing the both from and you increasing mixing If the a well a bit up.

then far running moved our have we stores, look you at the XX:XX President's Tempur strong solid would business it, same-store evidence. we off started seen first President's the call so at flagship sales solid Day they into in and If is I high-end XX%. So over with quarter Day,

I bedding weak the to that's motivated COVID call period you XX:XX challenge general, call should continuing with beginning little the into a also somewhat for continued customer have industry the it in in be the If period. quarter been the customer or yet customer, don't higher-end here say we'll at or level level think to probably is of be a President's in challenge But and entry very lower-end the normalizing fourth good happening a thing other expect we're Day. a we stimulus quarter, you that's on that I from, the strong. would first we information it look entry customer bit And bedding,

COVID periods bedding peaks the steady. comps high, in that a and month-to-month is to on of period, I non-promotional feels during business. We’re then it maybe it will non-promotional think period weren't and the back promotional not the I'd back be little the valleys low we're more difficult will even that like, the comps trajectory traditional or positive more negative, were to the but where promotional be and going call normalized basis XX:XX what the periods

Operator

Thank you. XX:XX

comes Our America. from with of next question Curtis Bank Nagle

Your is line open.

Curtis Nagle

morning. my Good XX:XX question. for Thanks taking

year should with should is Dreams into yeah, piggybacking last maybe of half, low-end right? guess, in the XQ Keith's proportionately, you think the first-half pricing in So a these all there, course, but question. maybe little but between of you adding still sales and not, XH, a two growth year in of sure go launches, of the talked yes, product just still think guide how not sales we So the off halves? not, probably I weak, bit proportion from about about that's you business, or have new we if about right, makeup the how each

Scott Thompson

Look, first to quarterly would we but quarter. we don't expect Bhaskar XX:XX guidance, And first sales Sure. obviously, a solid reasonably expect quarter. the do give double-digit Great more color. off a to probably in it little growth question. I'll handle, pass then certainly I'll We

we're was advertise precede and not as so think quarter product us, to for of of fourth the the of before need launches, those build the International some us making we we point that about advertising doing But team of is the to do our Foster are I as Tempur important we so a the having committed $X expansion we're first our think, all, investments to products year is those customers tough something levels the normal to and the little doing, me a you billion quarter brand a couple market management obviously, product year the XX:XX of customers important because which and first the continue Stearns in different, product throughout to is we're expect. during year. as on a the incrementally. XX:XX get thing we've going other the for some let last back to We're & would be constraint And launch out, us. of to service

the seasonality during the XXX right quarter. and labor period I do, to and but think, first we've customers. year quarter pre-hired third team a that don't used everything we're different this the slow extra normally sure it's from are XXX ready deliver XX:XX to want our management we to carrying, we next than know, that for in so, we because okay, second market, we extra, be make do. thing do to we that to we're for to standpoint, And committed of the in people, a necessary way the current from And a That's

what you sales get walking line some explain, to line, Is way be different a on So very to. you're or…? should going But is good. I'm seasonality good to EPS from the Bhaskar growth that the

Bhaskar Rao

Absolutely. you about -- the think year. out, phasing, really XX:XX side the of if the principally if first pricing, get you you about and seven absolutely, Curt, called Dreams that the it for what think months; the When you you other is happened sales during

overall all means XX% all would given XX% that that expect than guide So to quarters half the to that standpoint expect we our would what that we that is of back-half an naturally growth in the is growth is higher in from and first be the XXXX.

Operator

you. Thank XX:XX

with from comes Wedbush Basham question next Our Seth Securities.

is line Your open.

Seth Basham

morning. good and a Thanks XX:XX lot

Just on a some follow-up those questions. of

what you give brand the have seeing secondly, could, low-end that we're some performed temporary? the Day weekend? softness And you how that and us then you is that the on through If color consumer President's Tempur-Pedic gives confidence

Scott Thompson

Great. XX:XX

have information little to realize a is Day while. So, obviously takes first our of President's on all, you

ahead hard of days having, three information. or two I probably what we're So call,

share things this the Day. like the me best companies U.S. XX:XX own I mainly Tempur-Pedic as And I verbal, to hearing flagship the that feels calling Tempur on had a in we same-store we my It all we're Tempur. comments, there. it probably reporting don't is stores, Tempur-Pedic very like, information from same-store take Tempur think, Day. out continue a standpoint, public our at let mentioned, have of positive the of side, our stores it's although Look, from XX% level point, at which President's information and feels and we So great over sales President's we And running are have course, hedge instantaneously. get

appreciate it. I kind frankly a quite So of and that of question, part the is softball

of in don't you point look lower a think coming on, part a like And we a got margin First question know, that and lower got, talking and is as you U.S. they quite it timing area. the customers thing, in growth should shape, from have the to. step checks including in they've got is we what on, that. throughout of wage when more lot entry in great the the they the quite look have you're standpoint, you are ASP So I have don't good here term much anytime be in back the good end levels head, is near-term, know, that at towards get confidence that tough at compares, if customer of look I want to frankly, do if March do (ph) segment, make second you X.X%, fastball it, X% cover consumers you why job beds the XX:XX that and great and that year. U.S. really don't think, money stimulus fixed cost. segment. looks it in XX:XX unemployment, out, back at some But The gotten it you shape They've when good you've market, I call a that debt which level about, frankly like that the

know. month-to-month pulled of economics. not smart up into segment has of to market But and the wage market, the timing it I'm growth checks being to stimulus who pretty the out me coming basis, matches perfectly on that whether like knows. strong that enough Now, looks a

has segment money, when propensity shown And they it. that have to so, spend usually the

as seen. So, we've long prices get continues what as growth with as high, wage the long as and don't too gas

the our better the focus whether high-end the lower that customers And are may that it's but compares. is in low-end. good going think We've XX:XX than but more about be but against or them. focus look, interesting is to benchmark on not really it our shape, certainly they're on may when solely a end, segment the a to customers, it customers, they higher end. it little doing the stimulus But check it be or while on as the customers the I focused segment that quarter, got size I of the not take

using like said, that profitability. drives uncertainty is an I news segment do together but I So not that is the when our you're forecast, put the trying think to is segment good that

Operator

Thank XX:XX you.

comes next Raymond from Our with question Griffin James. Bobby

line Your is open.

Robert Griffin

the taking halfway XX:XX things are to you inefficiencies efficiency closer year that bake different really I you to guys running to, assuming just want throughout mean, Do we the times supply back Scott, the couple a of, COVID my Appreciate the guide What’s due both. the chains, in that morning, of get P&L. of kind there, fiscal guess, I you through release, Good questions. you for called 'XX? out in? operations normal, in when the like year what I

Scott Thompson

XX:XX complicated Yeah. Interesting, and question. great, and

me let First at about of our that all, One talked that's out happened a recent we but Tempur not is have Sealy, point issues spike may at in thing COVID not couple things staffing the in customers. of directly.

stores, And have of some had trouble one the building, so specialty the keeping retail stores only maybe where REIT, they bedding or in staff open. two they've

So be we've time this that not to got some COVID to you. may closures apparent around related

not normal into we're for will not supply levels And hurt if fairly like that's I more obviously in bit. of supply good normal? we close fourth still some perfect. perfect? might the If near it there you chain. No, supply chain, I was Are quarter? question. beginning XX:XX we're on the to the at it's without us to it some chain close be near significantly going So, news. think, to say the the better damn Is Is the a go to supply damn it than is Yes, I'm little because absenteeisms, are great pretty Tempur inefficiencies a stuff, the second little a shape. normal COVID-related manufacturing and quarter, bit Springs are shape the XX:XX the to normal, good done it's in job good people we inventory take quarter. back, second is there. and are the certainly mean, on bullish chain but from generally close from the the in chemicals inventory standpoint

inefficiencies quote mainly with have are So that I do and think to to system the absenteeisms. left do in with have the people

get servicing position fair, 'XX. is -- back that on Is we So people were in primarily we we're the training that very We mentioned in customers like to fourth accomplishment normal major we've competitive are numbers the ourselves into we're think hired sales a all be we've and to our quarter, quite XX:XX the trying and side no say, mode look, growth, protect early. to operations sure and And So we'll risk, back both We're people. from before, that back customers look the puts quarter, I second XX% I absorb normal there, can but we feel of, XX:XX time force going but to hunter to the control got the we delivery normal. back as the unforeseen There in our events, make to that efficiencies. order customers extra strong that Sealy we very quarter, we in I would we're of by down. the quarter, Bhaskar? look, second accomplishment will time to And to the service manufacturing, orders first in we chase and be strong think are major opposed U.S. with in felt which in not as cost in our get carrying over-staffed. to from us some at we'll but and

Operator

you. Thank XX:XX

from Maheshwari Our UBS. Atul next comes question with

open. is line Your

Atul Maheshwari

taking to morning thanks question, multipart question. so got apologize and I advance. my Good going a XX:XX in lot a I'm for

Scott Thompson

XX:XX Okay. can't them. them done So I because quickly, can very remember [indiscernible] I write

Atul Maheshwari

Thank you. XX:XX

you contribution in So of to increase the color of from how that you growth persist through what softness granular various and growth? to is low level XX% you 'XX? guidance were to you if assumed And the this you've finally, is. still then revenue Then of more trying level get can the related guidance can provide maybe XX% that unit understand to to industry achieve do for blocks this revenue this that, believe on Just guidance? year, the building conservative the

Scott Thompson

fourth up. some and growth XX:XX in the quarter, I we I we Sure. one thing, unit it up, that, Look, but will growth XX%. it sales was mess I'll negative, unit clean then kind our growth, still know work it after on grew look Bhaskar it's unit because interesting, of of think,

thing, So I the important, think more probably mix first is not unit growth. unit than isn't important growth that but that's

pricing, is got to thought probably good unit And building growth. guessing. probably blocks. want -- me again that was, stores going question somewhere new been got you've good us in there that's are to other about the than a you've in talking there, got growth I unit launches between You him to at mix, we're experts and Dreams you is of, a has important there. but walk like that's the obviously the opening I actual through U.S. industry and second been X% you more probably XX:XX some The I Bhaskar, for think the and you? retail got chatter, estimate. kind some have if But mean, zero XXXX we probably in sounds

do the you let I'll blocks. So building

Bhaskar Rao

I would XX:XX all growth going call So, specifically overall, our the out, of way I'm the is, we'd I say in geos. channels, those our I say think to building our about of the that what it is, expect outside all components of is, call other is Dreams, have items upon do segments, mid-single with that, all of Then that and let's would digits. that, side of we what

nice ‘XX well. as expect the great the in XXXX, we that disaggregating we on momentum anticipate the growth online a had again our We and as we'd in business, Scott would as as wraparound the growth price DTC drive XXXX call to and one is business from have well let's as bit digits. our that XXXX took, we of get mid-single top well as during first priced bricks-and-mortar both XX:XX a quarter, expect mentioned, OEM we'd into from effect little in we that as increases Then new OEM place what that put

Scott Thompson

for bedding the you entry-level about. extent of in the there's but it how I aggressive. the it think entry-level compared entry-level the say certainly really XX:XX probably expecting forecast, I be stimulus we're not hit we return, very to months bedding is question didn't And where granular the be to particularly as that difficult pull the We checks forecast. just a detail, when out bedding would think don't can for go in our estimate the

Operator

XX:XX Thank you.

Keith Piper Peter with Sandler. question comes Our next from

open. is line Your

Peter Keith

Hi. reconciling bit Thanks. a having little I QX. I'm difficulty Good of commentary. was to the back everyone. look some XX:XX morning, just just want to

the you the going So stronger were mentioned million then that position $XXX fourth that into inventory had expected. you backlog than retailer quarter, but

those with to conflict? because comments, the can seemed did the that's bridge two backlog year So, to finish where carrying me year? then, they you into you And over new

Scott Thompson

XX the not beds to some of they normal time. sound inventories a think At as manufacturers seeing. time they on how [indiscernible] we it retailers information us inventory give And gaming went bit stock, was built (ph) natural period, is the of everybody. and system, the industry, up but on an all a industry got month quote or manufacturers that to they stock caught what then the in it, And get kind And to fourth we to up the at it's be lot ordered normally kind not and delivering were to I what probably bedding we we the and squirreled three safety time probably doesn't a positions it hard X% for don't -- period XX left think seasonally they of on it, I'll that over hadn't observation, XX:XX to weeks I they call quarter, conflict. they aggressively period that -- retailers but which squirreled don't extra were of but to we and what we more then here it's opened inventory from because of quarter everybody demands when were -- almost to and was beds catch-up happened. their third information, of let's would normal here's rightsized to the the sure general reconcile they got Good were which course, as because away that had inventory much were which, about providing picked three I allocation. hadn't over were during tie that got industry and we were some kind Remember, a talking We two they in in manufacturing again I a we call were week two their -- doing call comfortable or us. safety done like surprise of The back We back. like do what four Tempur left quarter like little make inventories slow And probably retailers gaming would softer normal us million. believe kind three strong Look, their okay. the conference provided a retailers bit talk can call, weeks screaming believe been the a fair us industry-wide and backlog hadn't because of in the earnings say, in COVID up back they the to there system Yeah. the little little period, industry a of pace, the retailers But were and the we quarter had for before. away XX-month months, I And to don't and third up we okay, inventory, inventory, the never some we a because retailers, everybody try build over from system monitoring had as it, the go industry perfect year so for on XX:XX X% tick of we've of it XX:XX their which, more more we weeks, of that makes perfect up, constraint from that in naturally, the $XXX spot. a sense. inventory, normalized

Operator

XX:XX Thank you.

Champine comes next Laura question with Capital. Loop Our from

open. line Your is

Laura Champine

supply the as looks exited to year wanted did your for inventories of the quarter you chain quarter. as weaken year? build of you about what relative you taking kind last sales expectations inventory or build like question. the trends because to Thanks whole ask plagued that Did an XX:XX the my I issues exited

Scott Thompson

quarter, XX:XX we've Tempur, business weren't year. go been inventory to certainly the all obsolete, were on we into standpoint normalization has Well, probably that XX:XX sure I make But we wider. little inventory don't is and would Having Tempur, were than some and towards since the building and probably and end it the phasing busy think sense a we I the do a level. makes that, top I on the inventory light are bit year, we're for said sales of at we an the this heavier fourth say some carry to of product standpoint us of inventory of plan a that, message becomes levels certainly this think to never last with from And retail notch. season from year, it inventory optimized were

lion's slightly in if it, say, But call build, of I that So you've softer December. is strategic. share seen would an inventory I the

Bhaskar Rao

most correct. XX:XX better we on a or get associated That adjustables. just in did Laura, to is, bit the of build And a with double-tap that yes, inventory The majority is that position.

plenty XXXX only time cetera. to into around and a long supply sure adjustables very we of the but foundations, make So make get of and sure as not lead mats, we want want as we Scott have we that, of et we holidays, and to that said, these have

Scott Thompson

some like that and the of is way one some think Sealy leading. customers complicated, company investments really financial when certainly key possible as are we world investments. got a in strength And competitive to our service little best has at industry strategic I making is, make time to Yeah. the we we've XX:XX make a hopefully the Tempur sure advantage

Operator

question our Brad XX:XX from with next KeyBanc Thank is Capital And you. Markets. Thomas

Your line is open.

Brad Thomas

morning. more my -- question. Do housekeeping Good Hi. taking for you maybe Thanks XX:XX items.

I'd missed basis And was thinking -- you in points I could addressing if curious, Bhaskar, could we're you just around if metal, all expectation what wondering, remind just luxury? impact or your I dollars me commodities your the about an end the as exposure the have then, for versus a low end? think be low you of as as what take the versus much maybe it, business put how to First, little on you year? more is you percentage this context think if also Thanks.

Bhaskar Rao

of we've As the amount not the relates Don't that to offset dollar say will the a is that range of that last in of what still and however, our be is I to -- XXXX, XX:XX time, increases point unprecedented. in able seen in I within able taken. the the the of fully commodities quarter the year. at is peak our really what we're into neutralize XXXX, about XXXX, the couple with our seen some we could third I our we've do fully as And is rest the we stay leaving that in get good are XX:XX the What is brands, what would for that assumed ‘XX. basis, inflation we products would -- about price and feel of quarter remain only it of been in slight we've years that commodities commodities, that We've but on over impact guidance, say reasonableness. ‘XX, expectation seeing of impacted expectation the But though in we've in power be also magnitude our there that commodities that increases fourth an since call. second they in talked what they the is

a upside us. deflation of be there would bit that if So for is

Scott Thompson

Yeah. XX:XX

change standpoint but feel in another are that increase it's they anticipating to think quickly, the fair we we've from I see good probably what probably and We say what term. done a could pricing standpoint. price obviously pretty about cost versus near today, we

So but Things change, could And of where today. what good shape pretty you percentage our level. sits that's and go think then we're about it entry in forward. business is there we asked

define how level don't about was – I I is you think I know XX% Bhaskar XX%, entry and probably. think it

Bhaskar Rao

Yeah. XX:XX

Scott Thompson

as obviously the Maybe and before, higher the end. about the of realm is XX:XX of kind as that sector not talked same I within profitability the

much plans talk mix business, it's not not what think run when P&L is of interested our brand mix. the internally our But Foster sensitive mix. mix in and the one much interested Stearns P&L again, more tell about as you're that's segment. why let in is much & that more -- that to our we is me about you also Good business news and So and retailers' to reasons sensitive we're we very -- is,

from we're that And with our aligned so standpoint. customers

Operator

XX:XX Thank you.

comes Jonathan Our Jefferies. next from question Matuszewski with

Your is line open.

Jonathan Matuszewski

Thanks so color, all Scott Appreciate Bhaskar. Great. the and XX:XX much.

could mattress been topic the regarding pandemic, see that just from a of degree on you maybe up more which to has mix some Following data Thanks. benefiting King the size that past, the evolving shift different and to angle. and share during if call you the TPX from points how and seen it, months? maybe to preferences here has been XX There sustainable we've Queen there over

Scott Thompson

moving the a in I'm it's that their there think good. see XX:XX is -- from leading opportunity it add it’s certainly anything I pandemic And are apartment formation some to more part the you Sure. continue. going And Bhaskar been SKU of we you growth working their in sure and way. bit house your upsize of out to that into time, little people and call and we'll beds. a to ASP. And and beds gives size want housing that's an spend the it's an question King bed, No shift probably a has of coming do living in

Bhaskar Rao

XX:XX Yeah.

Operator

XX:XX Thank you.

with Our JPMorgan. next Carla from question Casella comes

Your line is open.

Carla Casella

Hi. XX:XX

pressure go normal. promotional same that? valleys the the promotional from will of peaks on promotion, I this could to and that more more you and end. about the that margin be about Does that will on lower how valleys question -- sold the see year spend Just market returning and so and guess the products and imply things we talked

Scott Thompson

Yeah. XX:XX [indiscernible], our the of last did did. so change not retailers maybe or We year cadence some discounts promotional during

to units in from significant financial financial be being to promotions it though even won't to be the standpoint statements our may the more is more Tempur we it during promotional, statements. the sold have Sealy there, that material period, So and going be

think talk retailers. what I'm I is really talking about is

and retailers, -- just -- on in retail standpoint, are from walking to trouble get that historical and the and at their that Some confidently. the doing the have things were so promotion, they amounts the year volumes did pulled When because spending having last service having they door. said, I to back going -- they pulled they going normal. to promotions now back that to retailers industry because be customers at normally supply they advertising look are is couldn't the to the we're do. look is their back a on they able you and getting to and were advertising have service more It them And

step or advertising last promotions and think I will retailers the year. do didn't but we part, up their change

have bad don't a that area. going forward we in comp So

Operator

Thank XX:XX you.

Wedbush Securities. Our next question comes from Seth with Basham

is line open. Your

Seth Basham

XX:XX taking Thanks the follow-up. for

Just a questions the couple of on margins.

terms the doesn't contribution. First, fourth that with end, most quarter of of in which carry the terms of the performance much March sales impact in at lower

square seem about cost in XXXX, the that versus for speak, that million. for just advertising was that Secondly, similarly did so for in launch degradation, think What XXXX trying pretty I and $XXX away? cost am was blocks pressures you the to Your high, and to margin ‘XX? what when building

Scott Thompson

Dreams is probably Sure. fourth XX:XX in your margin quarter.

Bhaskar Rao

Well, fourth Year-over-year But when of fact the the pleased third by very quarter, high-end across thought I going very come backlog yes, that principally the But a how some we that gross would performance the with brands. seeing were was expected the power a the we from saw the quarter. the yes, offset much and there both price. on which line of bit XX:XX low-end inventory look were was variance. there inflation think our improvement, we're was if improvement sequential quarter, and quarter, by that bit weakness driven caused brands they actually margin filling, about second the fourth I it's we the think of margins in we'll in we commodity fourth is in, rebalancing with at in What it, you you question? able the to

Unidentified Company Representative

about XX:XX launch costs. advertising XXXX, the talk In

Seth Basham

as incremental he as probably for? and sales a where XX:XX and Incremental was a launch dollar costs probably percentage advertising of is shooting

Bhaskar Rao

XX:XX Absolutely.

that So this drop will think about when you evening. -- our K

it. is, coming as do support in market be the really front have to to products you'll we would that able expect What as say incremental is you of well I dollars out. in that So advertising we it our rate, to both the on brands and would see advance of have

it be around cost, the would investments million. that these putting $XX As launch we're relates to incremental

Scott Thompson

sell cost when for customer having different. sure to think about current trying not advertising, to that's I clear. think doing We're not is ways is to been advertising what And we're higher costs, What acquisition push. We're XX:XX two something you having is add talk it. product. and make about We're aggressively there I've not to

we're trying little retail. relatively market for a brand good a very us billion it major of & we're into is $X it taking the talking two Foster, And that required have moving pre-investment and for bit and is We very good and margins of has been category do. at Stearns that a to that moves margin minor about brand a

So is It a normal move. launch. this not major Stearns is a

you're when XX:XX for up there mean hit that, or And Tempur-Pedic there launch the shoots launch. you're spend green this is on internationally And market. not willing a long a about addressable news the talked the that And normal some sure term. times areas. something launch, clearly make incremental not I a to as we're some normal numerous is spend We're good is doing This to the Sealy, we've is, broader three then for both you again that so years to working much The standards going is expenses. goes to four right. do money in

above in XX% frankly fourth product trend the group before brand Foster it to perform, International this grew we marketplace. and above have And & quarter is before the the in it I'll call market. Stearns line again quite the like hits even the expectations the product Our our continued new has and

few will good we productive, we're pretty this advertising feeling going quarters we right it's both whether on now, very of money are really strategic this be from but a whether or and an read feel it, strategy moves we worked So, about about standpoint. get was good we'll know it a those good to making

Operator

Scott Thank session. over XX:XX for question-and-answer the the now This Thompson turn concludes would to closing remarks. like to I back you. call

Scott Thompson

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

Operator

call. participating. Thank This conference today's you concludes XX:XX for

You may now disconnect.

Tempur Sealy International (TPX) 22 Feb 222021 Q4 Earnings call transcript