TPX - Earnings call transcript Q1 2022 | Tempur Sealy International, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Tempur Sealy First Quarter 2022 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. ahead. go Please

Aubrey Moore

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

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

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

Scott Thompson

results, remarks, end top first us. XX% adjusted quarter issues to this they quarter EPS quarter financial we This our was sales $X.X first grew first more To of record Thank first in brief year-over-year on energy with earnings and global begin net our a you record discuss $X.XX. prepared entering came how joining as Bhaskar moved below earnings call. some our you, shared market for us March, on But expected Aubrey. Good our grew quarter the and then our of in XXXX commodity against everyone, conclude performance year prices we morning, impact thank detail. In certain year-over-year will and comments operations. at mind sales address sales X% quarter what the in to and of the financial initially XXXX, performance. billion and had primarily I’ll update

accomplishments quarter. of adjustments – on Sealy. for Tempur both be Crawfordsville operational system year. I However, XXth the EPS premium the our plan should ERP another XXth, team in plant in should we’re and as next achieved we The that normalized to product account global to no in mention pleased of building environment, last rollout well that the turbulence out are new this several launch Sealy new well. performance taking our our began noteworthy U.S., quarter the also continued Foster Stearns to there successful and of operating the delivery the as into the as of new new double-digit U.S. the sales returned & to new of order quarter report times Tempur platform launched e-commerce our note is operating growth. our were We also non-financial plant in fully during to the growth, I

the our the this impact effort In business like turned we Like in discuss has in up give and which to or in are negatively watching products XX% I’d environment. business, Europe, mitigated our you elements donated trends the effect order European the on way. risk Ukraine in the Russia, on Ukraine the invasion. we’re consumer impact, refugee X,XXX its war horror. to events the the that having also since international any Europe the weeks families. you, rapidly of macroeconomic in to over moment our support impacted in International competence has more war, how Now, point absolute in an we take issues is ripple operating in eight to pre-invasion eight unfolding few in a are changing the address a tragic this Sealy introduced trends largely the In idea do managing were Tempur bedding has to and those terms by region. our operations and in Ukrainian when near-term financial To at foundation our contributed running the weeks been an a not aid approximately support operations the supply the centers children displaced have of chain, the to it have with which negative And to

uncertainty Given evolution the expect conflict, these European the continue on this the to market pressures we the around in near-term. of

launch million to announced, XXXX the product Tempur to that International for in the XXXX. We quarter first circumstances, of previously given $XX international this to of As XXXX. the elected line to planned be to associated normalize. costs allow we’ve into will retail now expect postpone of new the our launch for moving market time begin was Consequently,

growth line out Additionally, few we’ll the have new to a quarters. product move from expected sales

we supply prior to as Yet, a we to and shock GDP U.S., COVID growth consumer work and in the a such of anticipate the in in likely in point XXXX. the market, U.S. geopolitical we developments low that record to also X% in and shaken We back in should lap modest through Turning by resilience uncertainty challenges. unemployment, the retail wage from most despite and that immediate chain the the see rampant impact recent of once recent U.S. the macro been half market see has confidence gains, consumer we the in improvement XXXX, protected the the inflation pressures U.S. a year, months. significant signs domestic stimulus

inflation. The third commodity external factor is

the war we’ve dollar these have neutralize been for through price to we wave on impact years. another industry market. passed commodity the caused entire we’ve rising hit As the reported, discussed, and been time last inflation, fully fuel the had generally over reporting two input to of increases cost issues inflation subsequent able Last Ukrainian previously supply bedding of by oil driven multiple by pricing response, In the actions. we

Our latest cost XXXX has increased. commodity outlook for

So international announced take another pricing markets that for round we and of actions of domestic in the our will both our effect have half XXXX. second

rolled pricing We expected expect worldwide. will incremental offset these profitability normal headwinds across markets the in additional basis, actions on the once out dollar resulting a inflation fully

continues to operations. Turning to COVID COVID. impact

operations benefiting have in many and Asia. operate wholly-owned the Although, decreasing have negatively cases been recent variances China that venture we in our serve operations of our of markets flare impacted ups in globally joint

$XX number, a in the we second recent ballpark million of EBITDA expect most result outbreak. headwind as quarter a COVID a As this

The I continues some the this continue global chain Lastly, to better although, to want shape supply overall have – chain time supply ongoing on than update disruptions. is in some have year, it challenges. certainly was year to you last this

in East stocked – Asian challenges bases impact example, we’ve the supply of source Asia. our from largely that as the China we Eastern For on we had well North our Though, risk chain the has have American that Europe, materially near-term recent European in come from for are – supplier East do minimal we suppliers, they are impacted as it have, supply Asian XXXX. the and adjustable but for in chains, supplies the mitigated most U.S.

diversifying has some supply chain supplier inefficiencies. quarters to still the base, our chain our As we will a finished may our highest few growth. improved, It Tempur taken including team plant goods plant’s normalize. on include The we positions supply although for which actions These future is future EPS to long-term strengthening take serve. disruptions, I bedding customer we communications the growth against and operations secure We’ve initiatives, vendor experiencing both and are first, through more improving our and mentioned, delivering of many adjustable develop on inventory facilitate that markets the driving all products the focused of in bases. quality company key believe global

Second, promote brands worldwide marketing. compelling with

drive Third, capital. our of omni-channel deploy distribution And prudent EPS optimize and fourth, increased growing platform.

industry. to brands, more our the in our however wherever markets our partnerships; led to to Stearns blocks are include, the With Europe of meet executing seeding needs; betting billion securing last existing next investing blocks our our stage building driving that, the new meet growth; years, of in and international innovation our to needs e-commerce building and total has addressable Foster position Over to addressable operations Bhaskar. same direct-to-consumer significantly few on next global market to our they our growing diversify broadened capital Each market brand; initiatives channels, growth. of allocation consumers, turn for our consumer diversification our worldwide, This initiatives worldwide $X in and the long-term company strategy. products, products global shop. increase technologies & The investing business significant to business presence; growing position through us business call want and wholesale third-party through Tempur the our and our and Asia; in over owned-store expanding I’ll launching all business our be through our to

Bhaskar Rao

share items Scott. earnings billion. increased would $X.XX. highlight compared to you, I $X.X a Thank prior per XX% Sales X% to year. adjusted like to And as of couple the increased to

margins the dollar no for gross points profit the quarter. for first the This in the This accounts impact change through as with consolidated quarter. gross neutralize we expected, change sales in year-over-year commodities basis our gross As in increased pricing of actions of affected margin dollars. our XXX

to This the in increased driven the benefit and a channel partially year highlighting margin disruptions. factors gross favorable in by its direct gross North a prior increased to supply chain was a X% Net and wholesale inefficiencies in by X%. increased to two-year particularly sales profit related a mix. on points profit increased change XXX challenging without basis, These The Turning were first the XX.X%. sales comp. to pricing On American offset channel American operational basis XX% declined results. strength North stack decline X% reported quarter. basis, direct channel

offset inflation headwinds million incremental As approximately and the second implemented has recently increases we commodity highly price to mentioned, domestic international expect inflationary Global surged our markets. announced across environment, additional and in quarter. Scott recently the actions and pricing multiple $XX of we

However, expect the the the for in recent prior as to driven the expense take This of American back first a quarter leverage. on actions impact in that year. operating a effect was basis operating second offset partially half dollar by by year, XXXX. basis quarter neutralized was decline be gross points margin margin, decline we pricing North XX.X%, full of the compared once will most XXX the

sales million experienced rates. exchange foreign to headwind basis, XX% turning this of we a as increased international basis, On Net a sales international. Now increased acquisition the primarily unfavorable $XX Dreams. from reported driven by on constant quarter XX% currency

Dreams of and our compared This sales pricing XX.X%. prior international profit. the decline gross benefit to As was to the in to acquisition change declined margin by driven a year, gross without the

As price a of Dreams This sells margins. year-over-year international lower internationally. range than major of a is margins in the points. multi-branded Their historical is retailer, change driving profile variety a product across our margin

Excluding Dreams, in underlying across performance Pac. Asia both Europe and was the with margin our line expectations

to the and was This cost Our in driven current deleverage declined a expense international normalized XX.X%. operating have by as to gross operating returned in margin year margin decline more level. the

sheet cash the cash generated Now $XX first items. balance and of moving quarter operating million. We flow to

credit At support was Our ratio less of quarter as global quarter, and build to first debt the was cash to a continue operations. our better leverage end inventory customers $X.X days our to be across under billion our throughout X.X the extended times. safety we consolidated facility able stock the

two is ago, the model. ratio nearly leverage business flexibility the it was turn years one Our from where of highlighting down

the Our highly variable conditions. changing to us cost swiftly to ability structure gives adapt

the balance in to invest optionality robust sheet growth drive fortified give throughout to to and -term the flow periods. us even cash Our attributes challenging business continue

$X.XX guidance. Now the turning adjusted and of the and in impact XXXX which of $X.XX EPS expects updated includes our has earnings of in to its XXXX, Dreams acquisition to The to share now repurchase the be guidance company range program.

inflation and contemplates sales by Dreams. actions to of the neutralize have least commodity XX% Our growth EPS driven the at pricing acquisition the we expected of year-over-year from cost the benefit expectation taken

for will which the business, We heavy be for groundwork expect that investment XXXX the year will a future lay growth.

expect First, drive investments make thoughtful awareness. to we long-term marketing to brand

in up and recommended, to Our industry rate basis recognized, continue more this $XXX as we and and million of record advertising investments invest. than in be of plan also a will brands are year highly the among we to year-over-year on the most make desired

continue for to deliver operations expect we our service to Second, in our to best customers. invest the

Our improving. supply has global chain been

quarter retain investments Although, to would to with plant expenses and We $XX while our us million we type managing are chain managing valuable strive These that second some fully inefficiencies, support high we They secure operational quarter. have anticipate market. first of chain inefficiencies still disruptions a customers to our supply through labor a employees incremental as through and otherwise market. the supply in amount in our and to quality the sales. deliver naturally flexed equip experience the product are similar

As related in rampant of Scott uncertainties to Ukraine, mentioned, still and inflation, resurgence COVID-XX variance. the are there war the

challenge these EPS our versus our second sales prior expectations. factors to We and expect quarter

will stabilizes as second be anticipate basis, actions For at bit. the a fourth over pricing third on go grow the We XXX% the retail EPS and least EPS and market we approximately EPS year-on-year XXX% declining nearly quarter second quarter, to of year-over-year. and effect XXXX. and grow sales would into expect a growth are up we for U.S. that quarter XX% Internally, sales sales with two-year will targeting

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

year total $XXX maintenance U.S. least between million CapEx D&A rate million open our million, investments expect which operator, shares, questions? a $XXX would of interest about that share and at of the including flooring be which million, of includes full our outstanding. and to XX% plant. CapEx shares and With $XXX million, on the $XX of currently we to a tax XX%, new expense in $XXX diluted of up for the XXXX, assumption manufacturing million For foam our please you capacity, XXX includes of call about count repurchase

Operator

question from James. first comes Griffin [Operator Raymond line Instructions] Bobby of Our from

open. Your line is

Bobby Griffin

my taking for questions. Thanks buddy. morning, Good

Scott Thompson

Bobby. Hey,

Bobby Griffin

bit? on Scott, I you. Bhaskar, and the hope was up a just big we year-over-year – well. basis little unpack inventory can numbers two-year It’s thank pretty Hey, a as

And increase? extra got a I it of you’re the launches little and Just coming in some a what the concern? you through are another here just of give price has drivers little probably of maybe know so. you Does then the concerned you can given inventory type any that in that channel too, increase. big inventory then unpack passing the U.S. product

Scott Thompson

clean Bhaskar little bit. let I’ll me a up

realize gone to have up. you off, prices First have

So we’ve are We short last year. you remember, year. were than Tempur to because fully going stocked for got it as each inventory is certainly more Tempur, cost we did [indiscernible] on last

retailer’s got And we’ve our and keep safety Tempur make we can delivery so line with quarter obviously, some challenges expectation And then our in and that stock to to sure our more times China. expectation. there’s in

a stock protect on a made being early China. on up safety we a by bit from basis so our good And call. to And decision adjustable real that’s good in very us increase to ended good any disruption

are I bill order. obviously think those to main items, because the Sealy is

you’re Tempur stock what the safety stock of a price increase items, on the is looking basis. in adjustable lot for and safety So in

I -- our from current I’m busy inventory think position, at going into the level at not about all which worried the season, has– I the point levels out. should

Operator

the from question from our line Keith comes of will Sandler. Piper next And Peter

Your open. is line

Peter Keith

morning, everyone. Hey, Good thanks.

some help a lot it that’s kind overall outlook, there’s So frame you baked guess, from I that to of expecting with revenue what outlook? guys pricing for point, of at moving Dreams. are us, an demand this revised organic just standpoint revenue in into the up pieces with

Bhaskar Rao

Absolutely.

us. the to Think as both items. pricing of be from tailwind let’s a us call should Dreams, just be that, go as standpoint. about particular So as tailwind those very it for for relates out a as, well that mid-single-digits through pieces That should that good from call to of a

of As underlying about drivers. bit growth anticipate we that see those business, big what of think would organic, you is would we a outside the

Scott Thompson

growth’s in to range would a North driven be in. be X% But America of guess. would going baked X%. probably the basically that’s of be to We price. expect kind a that down, It And by units

Operator

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

Your is line open.

Seth Basham

it Thanks a you handily. finished beat morning. the line guys the how your lot, You Can first guidance contextualize updated and just good on up? quarter and top pretty

remains and as can to the secondly, why there. Just you’re question, not a flex I costs bit of what want you follow-up give environment sense uncertain? little given And happened better, that understand your out depressed to a demand us lower then going a

Scott Thompson

Sure.

that bit. Let me work on a little

First after of of a first the strong on in quarter the all, clear half the got the and quarter change marketplace. Ukrainian invasion. the in were in the of half was There the weaker sales second

Look, at did related closed weren’t a So we the pre-release to books the sales. time.

So are you never I’m exactly know sales what be sure miss not going and as hell to to pre-release. a going

If looks us trends, still us robust as and but like was, we we And year. be we And GDP, has started smallest whether very holiday Good talked would off period. position. say a the quarter. And we to pivot were is the offensive at is April the on would different Clearly, launches, world not other also standpoint. new the about what’s offensive call, you – looks or in store to really on earnings So The our it it whether a performance call are growing over product market news, on part has while. look And the toughest I advertising, I that not it April way we and pretty the footing. unemployment the well known base. the particularly of whether positioned industry. certainly from it not the decelerated at, an is not then the had for footing, think be last new of the quite is retail look whether and cost it be I out that of we majority as said, system, should the trends, we’ll our some see is overall be not for comp flex was continue company to that structure. When and strong ERP key good, recessionary you’ve April it that capacity, we things from the March

fast currently believe You XX% what an we be certainly saw of But pivot we’re we a offensive pivoted profits good structure, COVID how when continuing amount on taking during share can to in and We hit. that’s and sales in in be both pretty variable. to cost a footing.

Operator

question comes Next of line UBS. to of Atul Maheswari

Your line open. is

Atul Maheswari

then in a the taking single you revenue your morning. some lot my question. color for half assuming macro you guidance mid America North and Good back growth And to maybe provide the how it improves Scott are if achieve back of of Thanks this international more that this the breaks Can macro high implies is. to materially in half out you where Dreams? for and guidance, outside remains year. achieve you really outlook for this Bhaskar, can the for on or digit the

Scott Thompson

to I’ll the want detail? You the And macro? do do

Bhaskar Rao

Sure.

about do we from to primarily international year. would the is continue standpoint expectation contemplated is as really into is that America as we et be driven that from an grow So North the price standpoint what from And Dreams, you cetera. back growth will a think – Ukraine growing think would it as the continue about for – our we is of by specifically, year the the half situation that we with international what’s the of get and balance

Scott Thompson

be not like market was in probably North That’s XXXX, like unit what X% compare And X% betting would want good worst to was betting it very Yes. we that more on to said decline. it, if to you a unit just XX% take look X% country that history at the market. thinking you you I decline. to America. we’re depends but mean, how What and

surprise, prices So invasion market tell was our you fallen. I shocked retail by Ukrainian consumer and the confidence increase that is guess, certainly oil resulting what and in read is the has stunned, I’d

like think today. I we’re, XXX

beginning it sentiment the we’re of a XXX come year. into think doesn’t the down like recession. more certainly has but also And like – the look I at

used to as we long We specifically we the of this would some challenged the obviously think go oil kind is of system. to shock of So the or people which more increases. of price one think of Ukrainian and you have areas. shock stabilizes, is this to don’t another expansion it Europe, a another which get the And the system, war as to be round if

a said orders flat environment XX% orders today, of bad rebound, the out kind situation. world. As in were different we once And those we’ve the as are sit while. semi invasion, X%. much the things remarks, for then their pretty or seen After it’s back and prepared to in up Not what to things running to begin kind turned pointing I here than pretty I different up COVID of deal people we normalize hits, in pre-invasion. X% COVID normalize. the And am orders a in little negative. with

say had. we’re would anything lot I no our sitting type we’re not expect And to of better the get So than hit we’ve a also that expecting guidance, surprises we’re where today. more to whole

Operator

Truist. line Our next Keith from comes of question is from the Hughes

Keith Hughes

Thank you.

on Just was give to and a more. in some Can bit the little quarter us that drain up worldwide dig year-over-year? you much how detail what quarter overall more into pricing the

Bhaskar Rao

Absolutely.

on think was I So – out, we our $XXX about what about rate think annual an that is indicated ahead performed initially, when we about of that the and way it million expectations. would And you has we Dreams, that basis. when came run it

that XXX, you price imply it gross was global standpoint or of reverse did would So call it, about that math you $XX about drag engineer a million that $XXX let’s call When we When a a out XXX bit about, million. that ahead margin. points improvement pricing globally. the think from is on basis

Scott Thompson

operations. there of I’d quarter. operating capital in we’re has And add allocating allocating our we cash EPS generally look, what is this is, core as think think business And I certainly flow, of program because our kind of allocation part enhanced capital. that And core that’s

Operator

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

open. is line Your

Brad Thomas

of we you how I more And I it question promotional of Bhaskar, and I Hi, if I’m bit if aggressive? talk do more in as get you’re and could guidance, the the year. a the the the about about earnings landscape to if terms get ask second Do doing you’re on thinking seeing more need little backdrop? was wondering you advertising just math, Scott, right, through thanks. go And what the promotions level. think aggressive, $X.XX implies around quarter then because you the

Just on out play I’ve that how Thanks. sure any margins done in may XQ. And math the help making right.

Scott Thompson

question. and Yes, through I’ll talk let about Bhaskar second the promotions the go of part

you promotions, pull previous First though was back we all, calls, from on even didn’t remember of demand robust.

from last so and year, the we’re calendar standpoint, be manufacturing change same And a year. promotional that advertise cost to had expect year, we This plan there. we last We don’t on any going to advertise.

a advertising promotions, promotions. Now holiday far year growth, period some negative this But the maybe And those want earn will got quarter They promotion co-op, year-over-year. taught environment back valleys, fact, some advertising last we’ve them so their I’ll they’re in which full bit didn’t is call promotional. up standpoint a do level back advertising. be things if year. back in period seen that’s retailers. think back retail the what working retailers retailers there’s promotional other less dollars. holiday the call the they the critical and has think growth That’s slower their be are periods, you not far. retailer pulled of when standpoint, first get And at on same-store in pulled one the good And And year game so on got understanding little on full in to holiday same-store more on during doing. the what the the game. and we’re than from to got years. seeing They’ve the the I a from an of you’re during what was They’ve the And advertising year retailers And to to last to the coming getting because previous spend I

Bhaskar Rao

out good the call quarter. on Brad,

way it math So the closer that to from standpoint, thinking $X.XX. was we that about were a

standpoint. in do quarter around there you call a Let’s the announce to And that expect we specifically that we on is year big full about you the think another think challenging, And and increase. about $X.XX. be price when to when that most drivers EPS the bit is a it,

go back half year. into However, the that does the not until effect of

million. we by on commodities be So will about exposed $XX

variant. happening In the in got COVID challenges addition, the with we’ve specifically China over

So from and to there’s this going mentioned, headwind resulting invest come a than to out And of as continue then as we’re stronger our that competition. Scott well.

but the we that have throughout the advertising will quarter year, well. investments second in happen So the as

Operator

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

begin may You

Curtis Nagle

Good morning.

one Stearns talk follow-up a on could say to it I quick and down you two Just What just a least on the Foster you XQ. was performance months the at could Scott, relative how quarter? Bhaskar, quick to guess website really much March on & directionally or other the launch, interesting.

Just that’s curious expect and far transactional year? this should well trending as Sealy we a so later launch how website

Scott Thompson

soft just the got Stearns progress launch direct Foster tone it. I tone recovery the & I’m think quarter I and hearing first support And Foster we good it did we are real any showing report. in our was we’ve early is Foster certainly website I program Sure. really to retailers. any highlight, investments have out invasion recently. going Europe too the early way Stearns feel is And of in some & recall the retailers I is lean brands a here & from Foster’s soft growth of in. good the quarter Stearns and is tell in to would from you solid business January having and first and February. was to the in is & continue But with highest April post early And very about – business Stearns was we’re rate what as

the Stearns to on year more Foster. So throughout that & report could be

Operator

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

open. is line Your

Laura Champine

outlook from this do year. for Thanks How It’s you taking growth coming XX% my question. mix? price least of contemplate the for at much on that

Scott Thompson

probably double A lot, look almost that’s lot. you digits the A if price increase at itself.

Bhaskar Rao

for look basis. you a like like at When

Scott Thompson

the certainly getting for for some because then a you’re getting lower got Then than going dreams, also in like more like. you’ve benefit. you’re there. That’s bit And some little end end, rather higher

and we’re not ashamed through of increase of don’t you good if flow free in – move the it I we pretty business, your – the out acquisitions it. got capital program to diversity continue more really business. business allows to the the plow plan that. cash That’s the allocation the you capital really periods. you broad were So and – don’t you’d I because But part the headwind and and we’ve on strength see, business a out strip that’s, to were We strip price right of issues, think is softer allocation these and don’t to stay of

Bhaskar Rao

Right. And way dreams think to about DTC about mid-single investing pricing together, price, that all being Scott have when digits. Laura a the being is standpoint, think OEM, you a think the you still growth digits, from put it in business drivers mid-single et think globally to give as about – said, about We that and cetera. from standpoint,

Scott Thompson

the the numbers look I see first other don’t the And when and and quarter. we good And more are even have we although, looking analyze, keep I see first and yet, all a quarter, of in quarter suspect share we share. fourth we all numbers certainly suspect people’s indications took bit in

stronger – like get really competitive we’re that we from and we standpoint, standpoint. where we to from a positioned can a So competitiveness think and strategic continue

Operator

Robert Drbul Our next question line the comes of Guggenheim. Instructions] [Operator from from

Your open. line is

Robert Drbul

good Hi, morning.

Just a couple questions. quick of

sort that rest you I Bhaskar, $XXX about of more some on on think that QX, marketing side, the magnitude – and discretionary you’re million this just you any year? as had the First, international or QX then the I looking of QX? Or sort around levels, And color sequential of the said the us think into the the the a inventory least can changes and is $XX think for really retail previously into push you in that marketing, bit morning, give saw you side? you Scott, industry is at said little is of at XXXX cut $XXX little that a million more of giving improvement the

Bhaskar Rao

the deal it’s advertising. with okay, if Scott, I’ll

Scott Thompson

Yes.

Bhaskar Rao

and strength it. So the the model one of of business attributes our is flex natural business of of the the

advertise to to we behalf. a $X advertising, about think you our couple retailers is advertising on as where components. the So One there’s cooperative provide of our

So advertising the is, flexes, as as flexes the is you’re what that cooperative to revenue well. going see

direct that a have is growth to long-term. standpoint a the advertising, addition over good that We national from that’s believe advertising. driver we In the

you’re thinking given it. latest is bit the we previously good flexing what what through what And you’re a our what is the advertising, seeing how call So $XXX now out is our advertising. are, co-op – and from direct were expectations is about primarily advertising seeing million is

Scott Thompson

part this And what the first was Bhaskar? question, of

Bhaskar Rao

Macro?

Aubrey Moore

Industry?

Robert Drbul

at inventory the retail. Just levels

Scott Thompson

calls. I of say some inventory. that that Got we it And activity the it. we’ll January. by on year in it Look, call had normalized we would some last unusual end got think call out we

can So don’t I you, a little been forward to going about it’s think Other have lot look, we I really than tell what inventory. on talk slower. a

kind but do to it’s had it’s bit So little significant inventory, year. the last don’t not the more And a of have the retailers we numbers. same activity think I

a getting slowed lot as some challenged to needs We are pressure the water have on And furniture they stores space product sales is that was have is because down place that warehouse a the North of significantly. the it America. headed furniture the feeling called was from the furniture

inventory. but so the retailers at which significant a And space, kind here, that’s level to things. some bedding lower of not the when their thinking pressure bit almost guidance and It’s or causing of about hiccup warehouse of business. would consider I normal of those earnings thinking those you’re little decline their you’re some But squeezing again, is a

Operator

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

is open. Your line

William Reuter

my you on be targets the Does pretty that inflation. with cautious there question’s more or given leave may having Hi, contending on may be potential smaller uncertain. more challenges environment’s that M&A transactions this

result be better could a as transactions. more and So be there there may valuations

Scott Thompson

for better are it more from just and for playing online that certainly game Google and companies has compare that want both the tied the a Apple, if valuations it’s pure Certainly, pricing of the the moved they’re companies internet, market acquisitions environment a down or that’s cost kind customer there’s acquisition little changes challenging free you Well, to become to made especially by for public rates. been bit risk that to of changer. were

bit. their rates, to change a So quite cost their have growth structures

up perspective, to mean don’t continue deals. the From changed. and like I price deals So think really I always down. occasionally at we market look anything’s our changes

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We’re transact. to not – any means I don’t think we’re hesitant by

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when PE you acquisitions. tough looking and alternative you when consider is an acquisition, to so a you’re do pretty of stop at comp your do an have And capital at use buyback

Operator

Our of line Jefferies. next Matuszewski the from question comes Jonathan from

open. is line Your

Jonathan Matuszewski

question. think delayed Is the launch there product XX%? Great. to Tempur to XX% a Thanks. down on from the to the impact Thanks my International about for taking XX% way guide you of moving

Scott Thompson

bit perspective, From bit It of be Tempur us to a International a my quite it little it EBITDA. the kind on launch was to going this was a going money. was cost Sure. drag year’s of of

Bhaskar Rao

Yes.

Scott Thompson

a a or costs, benefit which benefit on have till those in war guide this back And we we’ll that comes earnings launch negative, year’s that’s off all guidance. the positive big been we’ll moved and of going time, it So so the normally of a Ukrainian little the be, what got in benefit. kicked away and a we have that and almost a you takes At that, next EBITDA lot same have should XXXX. the to also for sales would increased the normally from the some year would where of – have as

Bhaskar Rao

in fair exactly that. That’s

Scott Thompson

Pretty dollar for much almost dollar-ish. close,

Bhaskar Rao

right. exactly That’s

Operator

Raymond Our of question line James. Griffin will come Bobby from next from

Your open. line is

Bobby Griffin

here. half. about second talk Scott letting the to more and Bhaskar, for thanks in just one wanted I guys, me Hey give

You guys called out for earnings to be up year-over-year.

I worse the I that. confidence on last year. count, you year, like, probably is half this last What’s be macro of so but or assuming probably last of that think basis the that put of $X retail some an in arguably for versus kind maybe XH. other kind apples of of guys that $X kind versus half this XH some a would $X.XX you when I dreams, to versus share of apples year, would month give worse worth you drivers environment’s be environment still unpack inflationary guess, the of underlying mean what are

Scott Thompson

coming I take is pricing and that’s that it. mean commodity I period to last some of. of stores mean time got in, had the with. off picking easier comps. going increase you’re trying additional We coming right, new the one extraordinary share we trying March, going start Well, have numbers out negative year, the that’s to And we Sealy Look, got to have in. We expense. the of to retail year product with, out, were got continue that’s marketplace. last up last year, you’re comp we’ve really are prices in product because compare in comps to hadn’t that Part we those first were have half of part you it, April to look we’re

Bhaskar Rao

Right.

there’s about we I China, quarter, that from in Shanghai the that’s drag but And shutdown. EBITDA that an think that’s a be and second way Bobby, exclusively with it I of going not China whether specifically, So standpoint, to what’s happening Asia. about being call a that the confluence broader be that’s is in basically million events, $XX that think

about, think go that going we situation not China we half happen. as contemplating the is Shanghai think or situation is into back that that we’re to So I as don’t

that half. us into be back the should So we for a help get as

our in products, the and to cetera, strength put addition In we we another price. et again, also brands have of the –

first in second the about half exposure associated or specifically in However, of comp with we $XX got the commodities. quarter, million in

of help And that improvement well. a So for then mentioned do as when is should significant a be as that back in think that, tailwind us anticipating the Scott we’re of consumer be you back should price in and of force well. half as think the you about that year, that about though half lapping the the a stabilization, not bit a getting

Scott Thompson

that Yes. of we Bhaskar said third And I China’s quarter. the would for assuming that to the open business, is come going highlight be one are sentences

Bhaskar Rao

Yes.

Scott Thompson

certainly call that got China helpful we’ve the So we’ll that’s one in it back in lockdown, also. of quarter – half

Operator

Scott call Thompson any showing And I’m I’ll the turn in for closing Thank not questions any further you. queue. the over remarks. to back

Scott Thompson

operator. you, Thank

day what every For the do you over XX,XXX employees you the to around make company for successful. thank world,

you of shareholders of operator. Our thank our for and today Tempur ends To lenders, retail representation partners, call Directors. for you. in you Board your the This our team outstanding thank confidence brands. leadership Thank your its and Sealy’s

Operator

This today’s conference you concludes call. participating. Thank for

have a day. now may You Everyone, disconnect. great

Tempur Sealy International (TPX) 28 Apr 222022 Q1 Earnings call transcript