Earnings call transcript Q4 2022

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Operator

Good morning ladies and gentlemen. Thank you for standing by and welcome to the Tempur Sealy’s Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference may be recorded.

I would now like to hand the conference over to your speaker host for today, Lauren Avritt, Investor Relations Manager. ahead. go Please

Lauren Avritt

Good in operator. the and you thank Relations Thank call. morning My participating today's Avritt, name for Manager. you, everyone, is Investor Lauren

wishes extend Before leave. maternity congratulations want started, who to getting and currently we best to on Aubrey, is our

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

Private safe includes Litigation XX-K forward-looking are harbor differ may statements of a provisions that These the Risk Factors. the Reform Securities the affect of to Regarding the variety filings, annual adversely XXXX. and uncertainties the call Act and This company's heading and involve subject of could Forward-Looking materially, on that statements Statements due factors SEC Form to its results quarterly XX-Q forward-looking actual Form Special business. discussed reports These Note under factors are including in on company's reports

as also posted the non-GAAP on the statements. can financial update Any in company's SEC. information forward-looking no and morning's company of press found to Reconciliations at which accompanying of date release, information. is website the non-GAAP statement be will which the commentary made. any been This obligation investor.tempursealy.com forward-looking financial undertakes The include only has this speaks investor it on filed with

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

Scott. over that with to call now, introduction, And the pleasure it my turn is to

Scott Thompson

our guidance. financial and review Then earnings will initiatives. our will more highlights I'll to our Good some then fourth Lauren. and begin and discuss in Thank you, quarter, detail delivered Bhaskar fourth how full XXXX our we turn us you morning, our everyone, call. I fourth quarter on discuss from XXXX joining performance long-term thank quarter and for on with

with we Q&A. environment, Finally, call view a current open how we will on for few then the close comments the I'll market up

was EPS and as Compared to a growth were compared net XX% $X.XX. in approximately the XX% X.X a weak fourth XXXX, sales of decline a a EPS adjusted the XX% adjusted we sales quarter same robust as in inflation. market quarter navigated of a experienced year, adjusted XXXX, EPS and the and This fourth decline this to a overall In billion pre-COVID represents in period in growth XX% sales period. represents and last

a of However, premium we resilience and enhanced a customers by more continue focused subdued. customers with competitive slight value bit in industry previous outperform position. a our good to quarter, our we of with broader the our observed Consistent bit increase sales

highlighting I'd wins of like begin key to by some the for quarter. the

we discussed as Stearns the further distinguish last launch brands numerous Innerspring the First, which of & our Innerspring kicked-off successfully products, collection brand of is America designed Foster quarter, marketplace. mid-market our in traditional new from to North high-end we

demonstrated partners trends. for portfolio order in our retail for through enthusiasm to supporting excitement the new commitment reflected & This their compelling third-party new and robust line-up brand Our marketing. both Stearns national is year-over-year have Foster product the product the

extended the have In window a component we product slight launch quality delay. ensure order new response our the stringent in meets to requirements, to

complete to XX%. holiday we Day expand slot by retail to rollout the expect We on more remain by selling track period. Overall, Stearns Memorial than

channel Turning our second quarter performance growth. approximately to delivering e-commerce highlight, double-digit our well the U.S. performed in

greater the in brands. both e-commerce high ASP assortments premium Sealy and Foster & unexpectedly Stearns sites mix SKU exceeded more into new resulting the have Our our expectation, across

difficult especially also business the compare. e-commerce prior considering which Tempur year quarter, a in notable growth Our solid delivered is

our Sealy the at of our With launch recent U.S. we have of leading to operation now website, to websites the new direct-to-consumer brands. each

be tool build powerful voice] customer, on our strategy. us [ph] enables a closer that the to omnichannel is and of presence to drive e-commerce expanded Our [share

valuable gaining a developed we've of and This customers, furthering our efficiencies. insights helps marketing consumer build For the years, relationships long-term marketing five drives our last relationship customer and direct capability. direct millions with

protect communities further our commitment ESG, we our to to and and the Moving improve environment.

website. We recently which published our XXXX IR on our is value social corporate report, available

proud ESG XXX% We goals. in U.S. of made fourth operations. quarter, goal our European from we progress diversion achieved the our landfill the and manufacturing In we've of our are

goal also neutrality progress of unit. decrease operations We per made towards for global emissions our our carbon a in reporting

XXXX. long-term over progress moment a Before to success. and we've focused to long-term the made remained initiatives turning take year the want fluid on standpoint, we was from review on step the business a back during call for Bhaskar, Though to the our macroeconomic I positioning

is When it which suite X key products continued we evolving development, this product markets and initiative, to our product quality in highest Starting through anticipate various objective all preferences. our to the with consumers is XXXX, comes made early launches. to develop In react the against objective serve. progress first to we Number

featuring of U.S. resonated refresh new hybrid the lineup mattresses of launched Sealy Posturepedic line This our improved targeted our technology. cooling support, superior has consumer part comfort, and As innovative Sealy portfolio, Sealy of premium truly with we a base.

market leveraged base. second launched year, well. Collection of Sealy to We half brand Sealy into our as the tap consumers conscious and continues constructive broaden ecofriendly appeals or our new environmentally This to source Natural segments our material. to new sustainable We customer collection the in

today. of grid, mattress the Sealy evolution also which grid, the We in represents FlexGrid our the features gel line, relieving market technology pressure it launched

With at scalable manufacturing able to a products we're these mid-market a price. unique approach, retail offer

our adjustable quarter for XXXX this to XXXX TEMPUR-breeze the and beyond. we'll set upgraded and we supporting launch innovation Later launches, of the pipeline U.S. an line in smart addition basis. In products

distribution to expect into we wholesale ACTIVEbreeze system year, of our the in expand doors. select TEMPUR cooling the later Then

appeal strengthen and drive ASP. Tempur’s minded attach launches and rates expect strong We the consumer improved to to premium further these wellness

of phased roll-out quarters expansion Tempur This market the International our strategically and allow more multiple customization drive been largest markets mattresses, the to lineup by the launch Turning The of to undertake for region. we'll Beginning products. this pillows, is bed than group. basis history, to company's XX reaching worldwide. quarter, new international in designed has addressable product over

point technology, leading power innovation. ensure Data and Finally, tech I at partnership investment team remains sleep industry will in would Silicon our with forefront sleep that Company, Tempur the our of our bright, full Valley out started Sealy Sleep R&D

our quality a the to innovation, leading of of received recognitions product evidence throughout As commitment number our year. brands

Number brand retail ranked products. customer the in true online X mattress for category. second a the testament Tempur-Pedic satisfaction year among Number in Report Notably, mattress ranked category. in year XXXX a fourth X brands the row, and A of our customers' for in the And the for trust row to Power J.D. in mattress

is supported our a marketing We brand marketing to promote which million second Turning products investment with initiative, and compelling to our brands approximately year. record $XXX our of with worldwide. this

these generating investments serve In driving for and addition near-term to bedding XXXX broader to strong our the the product to market relative also returns launches. outperformance seed market,

highly mattress Sealy X leaned and on industry one brands. doubling most Stearns and of Foster of XXXX, of be Tempur in untapped of among and national we TSI the the X continue into the best-selling shoppers brands recognized, our potential television. our aware desirable least to America the by brands In Number the presence in and at recommended, & brand Number XX% with

with marketing these which placements. contributing is to in lineup significant for and the reflected a combined awareness grew new Stearns, growth to addition retail our product investments increase consideration and In support, in

our sales channel clear website brand. traffic Stearns & to to third drove our growth in billion dollar Foster’s brand, Stearns product, and Our successfully making XXXX, progress investments and make goals Foster in &

Last upcoming worldwide. year, and programs for ceded in initiatives also marketing we market investments with strategic the e-commerce launch international sales store

wherever omni distribution our powerful third is with initiative wanted they in-step present omnichannel platform. to optimize be to preferences Our our shop. global to Evolved, consumer

pillar and in doors. is broad experience largest our can products our omnichannel person. in third-party footprint XX,XXX find The This that than ensures distribution easily consumers our strategy more retail

well to the U.S. both in There represented products. to this not retail in sell to currently who Tempur increase partners retailers do with we're Now, balance certain are third-party today. retail and opportunities Sealy year existing our retailers

Turning OEM to our operations.

we growing In million Sherwood delivered within in XXXX, in significant progress business we towards entered operations ago operations, OEM our XXX charge growth space we OEM to Innerspring and sales. XXXX, only target our significant years we our a While made the continued, in business. both foam-pouring as in label private our of our few

sales and unit for we advantageous volume. cost all spread OEM more cost per the will of products branded drive as our the fixed that our Note decrease enhanced supply growth agreements on

of wholesale growing OEM sales over in compound growth we to five-year running of addition [$X business and annual our robust now excess in rate business, [ph] XX%. In with direct-to-consumer a in our are annual billion] global

operations, over brick-and-mortar XXX Regarding around we currently and the retail stores operate store our opened XXXX in retail world. direct storefronts XX

XXX fleet the Dreams retail Tempur wholly-owned locations outfitter venture retail U.S., in are is in more and than led multi-branded stores UK. both comprised joint the Our of and by XXX locations over network and

Tempur an In average company-owned e-commerce for they robust stores million location facilitate, sales the $X our generate sale $X million per of total, location. U.S.-based averaging retail per a sales the including stores with

I at Finally, aggregate since over XXXX. our growth U.S. compounded web that grown note XX% a has in should rate of annual

final and drive to deployment. through and initiative fourth prudent key capital is EPS Our execution increased operational

In EPS allocation executed balanced of compound XX%. approximately shareholders. billion We annual our capital. rate $X.XX. on adjusted XXXX, We growth represents of we strategy allocated return capital generated to full-year $X This to value five-year in a

our cost expected demand lead plant over reduced market. reinvested to one-time new which operation increase meet investment unit Indiana creating to This XXXX, times, in and sector, includes premium Northeast per in our to enhancing stand-up in logistics a ensuring by ability the to we the customers product service foam-pouring operations. XXX First, is our in commence million in Crawfordsville, availability shorter

Bright, with invested premium at customer technology we offering currently a different in XX we today. new company based targeted serve a product Second, than million mattress differentiated

of finally, Third, per should over today buy I price share. in we share. approximately paid XX% of bringing $X.XX shares dividend share million back in a cash our at we XX% repurchase increase $XX to it dividend. average a we And an in outstanding quarterly note to XXX $XX invested million our announced

in subsidiaries and direct-to-consumer common cyber communications across five be from on our long-term security, This all of investment to our ERP facilitate enhance of status, critical if system. our of global customer operations, one I'd which to objectives. XX our ability the systems XXXX, multi-year drive completed remiss journey more capabilities. our using than global efficiencies order a didn't into ERP consolidating play part our improve our we regarding will transition, different I operations expected transitioning in In long-term deliver mention

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

Bhaskar Rao

billion In forma fourth $X.X XXXX, share which Thank quarter had We senior consolidated pro $XX with consistent per of the were sales this of of adjustments credit of you, quarter, all approximately terms our and adjusted are million earnings the Scott. $X.XX. facility. was

X%. a XX% results. decreased the channel direct quarter. Turning fourth wholesale sales the in decreased to decreased the North Net and American basis, On channel XX% reported

we at that American are pricing to outperformed benefited offset please profit primarily note of million. Tempur-Pedic quarter our driven margin the indications looking was market. sales Early fourth of gross operational by a backlog and to year declined mix reduction, by headwinds When reduction related backlog XXXX North growth, significantly prior Tempur-Pedic XX.X%, actions. our the partially by adjusted $XXX

backlog gross margin deleverage. and decline. prior the The year XX.X%, approximately of declined margin American the operating to half operating reduction North expense for in in driven accounted by adjusted margin the decline

a Now, the decreased foreign we constant headwind X% turning on exchange rates. in to a basis. unfavorable Net international from quarter international. a sales $XX basis, decreased experienced currency On XX% only reported sales as million

headwind XXXX the EBITDA. contemplates remains for currency current trends both favorable a seen sales to since our and have volatile. adjusted we fourth Foreign expectation FX Though modest quarter,

improved by by As offset pricing XX.X%, commodity year, compared mix. actions inflation, prior margin international to the to offset gross our partially to driven

to improvement expense Asia. by operating leverage, offset Our driven the COVID international by XX.X%, joint operating in gross adjusted and on operations in improved our the margin impact partially venture of margin

highly Turning as been think raw which In for fourth labor more bedding than to across trended expectations. of costs, in-line commodities, quarter, industry with inputs, of the inclusive logistic our inflationary the largely years. global all and which global commodity two we about material have prices

prices although trend year, of though peaks, to We prices significantly pressured. have anticipate expect commodities their commodity XXXX others to ahead that levels. will continue in continue ease throughout gravitated could we off XXXX the Some remain

Now to operations. global

We tight quarter. are million while our taking through which customers, in in actions market, $XX an the support a evolving incremental managing resulted expense to chain of and global labor fourth fully supply

chain supply and stabilize, expect drives as and XXXX new system productivity, we continues the throughout As beyond. improvement ERP our global to

fourth the the volatility, believe the year. best $XX of moving cash to outperformance of our our flow balance in operating and We customers on quarter, goods. industry response the service million. In Now, actions finished to to last XXXX had quality product cash and with key stock In items. one sheet customer we global reinforce took possible safety the relative flow this was materials providing raw to supply of we broader focus our of the drivers and chain

of improved as days our stabilizing the inventory began in we throughout XXXX driving will inventory levels Our safety the stock. normalize cycle to We XXXX supply cash normalize back continue improvements. further chain half anticipate as to

Our new phased plant in in track Crawfordsville, on opening foam-pouring to is quarter. second its begin Indiana the

optimize plant location incremental we to service complements manufacturing online phase Coast order into new our enhances in level footprint the facility, while capacity. production this to the grow of East quality plant's In This our to customers. will existing the and we ensure ability bringing the highest

and more We return to level in spend a thereafter. of expect our significantly CapEx normalized to XXXX decrease

cash X.Xx, ratio leverage million, under $XXX to We our our $XX was $XXX and the of of debt range end less approximately in by as We XXXX. the spend fourth approximately At returning leverage slightly million, facility million. of spend driven anticipate Xx. our think billion $X.X annualized of target range Xx quarter, and approximately ahead consolidated growth target maintenance credit of our was of CapEx to

XXXX Now, to turning guidance.

adjusted [selling] wraparound primarily $X.XX our by of in [ph] impact to initiatives four of $X.XX. sales the benefited considers discounted growth by of also execution This of and EPS range the the the to of models mid-single-digits, key We pricing. and expect be driven

brands to new Sales products, the of $XXX midpoint and investments our million leading in record $XX of at continue advertising we and $XXX product support million EBITDA of approximately and support to of resulting spend as marketing range. the million over launches

XXXX As loaded phasing, year-over-year about the will in be front think quarter quarter. comp. first last product and advertising I the in will with pre-war a first cost That our launch compare result combined difficult

consolidated EPS XXXX consistent outperform We expect adjusted prior first year expectations. that are to XX% market. represents The the sales quarter and of EPS to

$XXX $X.XX, representing Our in a primarily our X% facility, quarterly million, CapEx the CapEx, XX in at XXXX. least capital of flow, guidance of approximately which of of also includes generated of the completion back [XXXX] free allocations of growth outstanding Crawfordsville to the fund considers the million following dividend which shares to funded an repurchase cash increase of year. relative of and through [ph], is of XX%, the our half

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

to expense on $XXX count XX% D&A $XXX million of about of a diluted and of million tax For XXXX, the expect full-year we to about XX%, rate to of million, a interest million $XXX $XXX share XXX million.

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

Scott Thompson

Bhaskar. you, Thank job. Nice

call the a mild and economists a mild the the this that in up encounter Ukraine I a phase and China. recessionary at we recession. Q&A, expectations of environment by a backdrop operating And of Asia elevated the opening consumers war thoughts we’ve XXXX. the take Before ongoing We banks. exhibiting backdrop in growth GDP resilience aligned XXXX. outlook inflation, In opportunities the less assuming volatile consensus expect in see U.S., for In although forecast in we'll macroeconomic some for we with our see year, Europe, we're share in moment major led our about in

compared U.S. units to Turning but the an specifically to XX% produced complete experienced expect decline history. unprecedented bedding industry We we bedding to Last do XX%, [indiscernible] U.S. expectations. our industry were U.S. yet, in not its information have down would year, XXXX.

units the a consistent is with half. back Our bedding XXXX stronger grounded to guidance year half stable the environment in U.S. first prior with the than

growth currently in bedding We units thinking the return industry to U.S. are will XXXX.

and industry omnichannel outlook targets the top strong our initiatives. outperformance bottom XXXX continued bedding new and on by products, both driven worldwide, contemplates the brands, our across Overall, growth This our line.

competitive growth to strong significant position provide opportunities. with us long-term Our continues

open And for with that, Operator? call I'll the questions. up

Operator

first Susan [Operator you. of question Goldman Maklari Instructions] Thank from Sachs. from And our coming the line

Your line is open.

Susan Maklari

Thank you. Good everyone. morning,

Scott Thompson

Good morning.

Susan Maklari

brands lines thinking know you of good on the various you're gave around, performing. lot the thinking is and the question a product of consumer, about the My they're about details state how how and you

out] to on year the this the income thinking you consumer ways about As are macro? the segments respond the the that you [look pushes and how in polls may [ph], the different

Scott Thompson

your call. segment the obviously for go Thanks focus the and to world U.S. take That's the to around I'm Sure. biggest question. entire our going would on

So, to been in couple U.S. we're a observations. on lot of seeing consumer consumer there. focusing the consumer, where been. high-end One, continuing of Low-end deterioration has has hang the

[trough] been. XXXX-ish. be X% I think XX%, when we actually down [ph]. And close right] the that to down XX% production [ph] where is We're look at trough unit probably it, X% historically call very or the and have this that in units we would [That's North off America. year, well from is

think so, traffic downturn, little taken but I bit – a to a we've store be [Bhaskar] continues [ph], mean, I clearly, soft.

what would you, up I retailers but think the people tell [ph]. it’s [buy] show

it. guess, people financing seeing, little a We're fewer bit I

I think consumer standpoint. would it's, a say I from

So, to you is again unit XXXX almost heard basically to in the We're the growth industry. that back come by XXXX outlook. unit the which will And our a for assume production U.S. looking trough be stable,

Operator

question. our the with One our you. Basham line Thank moment And question coming Seth for next from of Wedbush. next

is Your open. line

Seth Basham

Thanks and to a on morning. guide Please bridge a XXXX. color give your the bit good lot us more margin for little

launch to pressure few to advertising, the drivers a what but about biggest commodities, tell can that as benefit costs, you talked are? expect think again, of of then, much And you us etcetera, how it there? relates do You those components, you

Scott Thompson

Absolutely.

about I it blocks, would together in about some improvement put margins I XXXX, We've think think a into building think I particular go anticipating XXXX. no some of To I as basis. operations. are and when investments on So, those EBITDA is year-over-year order, we in way made the

turn continues year the for chain supply plays us tailwind in to stabilize, into that as that that as a out. is will expectation XXXX Our is

last XXXX. of actions, June in action as place put in that, we is to addition have we In the pricing

the We benefit will in that XXXX. get wraparound of

As we excited have have you we on. very going [X do miles] what mentioned, [ph], about

second We quarter. in wrapping the Breeze first have quarter. Stearns the up in the coming We're out

have [Cube] that's that's international happening all [ph] launch We happening XXXX. throughout sorry, – the

However, quarter all principally $XXX be as Breeze the as discount, the mentioned with floor be that will we call gets there. model let's the the call in million. advertising investing we And cost will second that in on year, throughout over the finally, out associated then

initiatives those all add we the fundamentally You is that have going and to top are [indiscernible] grow then line. that

initiatives half of those pricing bit a that mid-single-digit our and models, the four come from the well of balance from is as as growth So, will coming actions. with

Operator

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

Your line is open.

Curtis Nagle

Good of morning. Kind question of just my Thanks last terms out very in the sales much. breaking guidance.

talk U.S. which a now X Through we're in sort think of dig has expected, of right, little a are little the started how we've months feeling know, that? better just Maybe the in you're over right we continued? a good. than the bit that I we past, about into U.S. Scott months, is X trending XQ. little and terms don't Could just at the how about where more moment been talking U.S., in stabilization, so that's or the I

Scott Thompson

X:XX the It's used shopping I during a moved people trend they on feels back week. Well, we'll can to I more weekend the the as than with than week you I and getting stable. shopping traditional A.M., more trend tell mean, we're it's of shopping from weekend. of less COVID to like more doing. it call during the on how the standpoint very mean, off, we're Look,

during we the was that that quite holiday periods COVID through calendar. trends saw the the other the and as steadier robust were was of not business One

more periods anything, haven't I are take is makes peaks since of And think that stable. look, a least in seen the the our of anything I would year-end that volumes going reasonable But peaks, that trough – is all seen to trough we're I add critical become the call would And me us share think I the anything to is real won't the that i.e. think we for holiday make getting real stable. the XXXX. I'll now haven't at amount be, industry continue And where that we think a industry. what what back pattern normal, would historical back and but

Operator

Thank Bobby James. line you. the And from from coming our Raymond next question of Griffin

line Your is open.

Bobby Griffin

prepared Good some going morning, talked Sam's my an you some that little have you bit products questions. a with a in retailers to in that do or I Scott, test store. as guys guys. with for Thank don't opportunity some have to your think much potential you maybe launch sell maybe on remarks, taking share, about

rollout So, of is anything there? picking can new for swap you some maybe placements the going guidance is around assumed up timing update us some on in how initial and the And that? that

Scott Thompson

Yes, in Sam's we are online.

we online. fill relationship to we individual would can would Do we You a working very their specific we good an until update firm generally step specific team sales is kind anything and say have don't that lots with say we're Sam’s you would putting expanding. lot in for in about talk goals, certainly customers, our I And a don't and of see guidance? we have Sam's our have have really start customers I forecast us and closely needs. deal. with have don’t opportunities No. but other but a of I and that,

Operator

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

is Your line open.

Atul Maheswari

color Bhaskar, question a thanks question the for on lot Good Starting, for and on great a taking all call. morning. sales the guidance. Thanks my the

up or to low were guidance maybe rather wherein EPS flattish [ph]? X% [XXX enough pair P&L which to fall sales cushion a on the still if scenario have or digits, XXX] achieve were up to in single the mid-single-digits, sales short, say, were expenses So, back there you of do

Scott Thompson

Well, know have, there's that bit variable When cost question. there's – in our quite and which a you structure, really variable cost the Bhaskar structure… we embedded

Bhaskar Rao

[ph]. [XX/XX]

Scott Thompson

[ph]. [XX/XX]

it the call to if ability organization relatively there's the downturn. right-size quickly a have we So,

real towards you you activity. though levers thought if pull several headed all pull would of were the you think quarters is, you levers, those would issue I certainly recessionary

take is downturn levers as not the pull levers. to You may organization pull within might those not very around may if short-term you or got an in you business and the though, a complicated think opportunity you've because

what do. guarantee So, we I can't would

example We part XXXX, a our think might you North the and to in lever? It the know why on an in that of the might wonder had for And somebody our latter advertising down up a back at expenses, the pull look be is expenses maybe pulled our it long-term. brands. the know, percentage I we you XXXX. a could basis sales because is we as the EPS as opportunity and didn't interesting lever but on advertising dollar advertising if obviously in support America have that we've are up. number And higher our I and happy street. taken don't run business pulled make to continue to on

So, we're we overall little great talking now, short-term a we're deal But strong support competitive flexibility about my position. those it's have with bit [indiscernible] so to of a brands. situations. share, And right pretty to take guess we'll be the macro I suspect business the our and in market. aggressive, in model, is, continue

Operator

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

Your line open. is

Unidentified Analyst

for Peter. my for This question. is on [Matt Edgar] [ph] Thank taking

in if input Sorry, what's maybe the can embedded I on, year? [numbers] you're go know it's XXXX to missed be you you the Thanks. and kind your of just but how can through I individual down, of walk guidance? expected and costs us this basis, but you just takes through said [ph] puts expecting it,

Bhaskar Rao

absolutely. Yes,

raw to I material I call, cargo the labor. when about ocean think mentioned commodities, about I on everything to So, as think from

in we've increases years. speaking, unprecedented last broadly few commodities the seen over So,

tailwind call the I they expecting, quarter think in that no come is modest off pre-pandemic let's by we in means and XXXX But have they however, say being way we a what year. saw at and XXXX, fourth XXXX what are would a that the I peaks the peaks it, is earlier their about the level. the are So, into bit,

Operator

question. Thank moment for from question the coming Jonathan Matuszewski you. our of Jefferies. One from And line our next next

is open. line Your

Jonathan Matuszewski

Great. taking question had on Thanks competitive much my a the so for I landscape. question.

Your a filed couple largest bankruptcy ago. competitor recently of for weeks

partners with brand? us have are regarding conversations much. Thanks your the Just sense since news this curious gains looked could of you how if broke so potential retail for how a TSI slot conversations give and progressing

Scott Thompson

particular it to Yes. don't think was Thanks well was I and Look, for question. news telegraphed industry, think shocking the expected. I that the

So, the with products, retailers is I it's and fundamentally don't the kind advertising with think discussions retailers. items. support What about of our care changed quality those

aggressively hard, I chief a has But strong our brands retailers. work continue competitor think with tough competitor. we to our and is

changed So, they don't very in marketplace. provide most service as retailers mines, think long actual products the I much filing quality the as and in

Operator

[Operator you. line question of from with Keybanc. Thank our And coming Instructions] next the Brad Thomas

Your line is open.

Brad Thomas

a little what this much perhaps how about expands and how for impact market on detail bit was Tempur really potential will I are for international company. that more think Scott, the could the product Thanks. be Obviously, this ask about financial to the thanks. addressable Hi, underway. changes share you the be once was is substantial really, could hoping the you I out? hoping rolled

Scott Thompson

Yes. me Bhaskar probably clean up. I'll let I'll and start,

launch in as and serve lower middle a make said, better. points it. the of that we procedures launch as customers manufacturing than you on, is can repositioning Tempur to internationally, Early hit we a the As brand this the price look and normal significant changing we're we're bigger some how some temper our so of we're

think, And what's say, standpoint, Early indications market I'd do XX% from an the are market addressable to perform. we is XX%, XX% of good. course, expansion addressable you have XX%, absolutely it

growth say, okay, international a the for increase that going do and think but Tempur can't we're potential it operations. on hard that unlocks working the I but just area, that's very much, put to You sales

EBITDA it. in benefits starting of of our two full benefit of important or we seeing a Because probably three in standpoint. From of and second I very think that start next you'll this XXXX should see quarter standpoint, be will year. the over sales the the long-term the and years the from stuff, launch growth cost But

Operator

from line coming Thank Laura our you. of Capital. with Loop the next And question Champine

open. is line Your

Laura Champine

your our this positive to the actually guide for view the taking industry for half Does recover estimate? kind in Thanks of year. back in for need morning. It's back inputs this in the, the on that growth half to hit question and to be you the mid-single-digit

Scott Thompson

mean, I talking stuff. so. ball probably about crystal Yes, you're

this. heads in the me think give we said all let's – little words code. but final look, bit I data in XX%. the have So, yet, were But down probably the on quarter, as we We units fourth XX%, a that's ZIP suspect of certainly say, don't

think first a down tough the pre-war quarter, the is going I quarter. for in units into suspect last be It the first will compare. compare is I the industry. that That So, very

be the I in feel projected the other it way. units we'll in you've pretty So, call some first to have down, and be confident the quarter. go to By units down got first the would definition, quarter, that

call end in, you'd with and fourth third so, And it, quarter. the XXXX growth

Operator

Thank question. coming our And JPMorgan. question One next with Casella line for of moment you. our next Carla the from

is Your open. line

Carla Casella

thank thoughts navigating I the as as that expand kind need turbulence you M&A, want up that continue the in just or for is given organic to the of are and grow business guys more M&A set you. opening to opportunities market, very Is well seem be you Hi, OEM to your ask, there there – well. it to you growth?

Scott Thompson

It's Yes. interesting.

two look at industry, something it's opportunities a year. opportunity in and few world we've to year. there's said, want Historically, at transactions look in do an always is the And or a we one we've when it. done we As every the we quite bedding

I've strategy is win-win. I purchases where since can and think really we been whole find purely opportunistic the But based we've on done nine a like here.

that what said look is, stuff, price having we sometimes stuff. all means that, look, at so, we And

works Sometimes price something happens. and the

the a effectively negotiated price we to I using now think miles happens. apart until is it – a Dreams we've both And for we years the is then that a with we five of number we win-win a actually Sometimes, close years probably and as for think both them companies pretty the which had price nothing had close, felt transaction, company the sometimes I like particular classic is, for example stay them and was year. transaction of win-win one, for we're that

is and the that very one Some quickly, transactions happen mind to comes Sherwood.

start look finish, team aligned like been we quickly were from XX what the that future if think more to might have like. very I to days, with that

a was very that So transaction. quick

had whether year, unexpected – unit look know over the in at COVID the it talk you war the decline, a Europe, it in some FX, market, the So, rapid you was when with you inflation, about it, Asia. back difficult

a certainly yes, it's So, year. colorful

there aligned or good we don't we good both are industry, Whether really continue for opportunities? anything, are and for to people. But the ever are to good continue I parties, talk on there more opportunities. mean we'll get and I our probably customers, transactions talk to for that more for There know. not look people So, are. to

Operator

of line we in coming with last Atul UBS. And from the you. Thank have Maheswari question one queue

Your is line open.

Atul Maheswari

gets Could Bhaskar, some thanks me that blocks decline. again. first just and color to building revenues, on the EPS sliding provide guiding margin, seems to XX% quick a you're It Hi, I for you the a had terms gross in you XX% guidance. question, there cost? on in, quarter like incremental of

Scott Thompson

Yes.

much, normally Before and kind he quarter, you like the not make we needed a for give industry realizes does the quarter. me felt if of bedding it be that, wouldn't that the last little to comp tough color we on last give – sure We that's to everybody really on we color but let want first pre-war. a surprised more

Bhaskar Rao

good Atul, a question. that's

Let to this cetera. at QX it lot when is are me et macro, way. look be Year-over-year, FX, the the answer war, of happening, a QX, that you the inflation, whether things it it whether there be

it me let So, way. do this

go from to me Let QX. QX

way I straightforward think think much it's a about more to it.

unique growth, that incremental implied seasonal we from our that. associated we've Then about versus then is have launch Foster. are the what So, flow-through would is quarter you revenue it for the that some QX. sense. the – And our off would from that with when have that think that you ramp-up expect to slight we standpoint, And what revenue, of of & of obviously, what international well that is items we'd QX QX Stearns as some a two we products, as expect make

So, and the launches. support brand think I advertising way is about that – those to

that to I QX is and those the for let's would as expect to in associated OpEx. investments relative QX, well investments again, as the products, the revenue brand a of what So call launch advertising, bit with

Operator

Thompson I turn to remarks. the back call over Mr. any you. for now closing Thank will Scott

Scott Thompson

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

Operator

Ladies and gentlemen, for that Thank does conference today. the conclude you your for participation.

You may disconnect. now

Tempur Sealy International (TPX) 9 Feb 232022 Q4 Earnings call transcript