TPX - Earnings call 4 2023 | Tempur Sealy International, Inc.

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Operator

Welcome to the Tempur Sealy Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Aubrey Moore, Investor Relations. Please go ahead.

Aubrey Moore

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

affect This a Chairman, are and the in President differ headings adversely CEO; Officer. provisions statements of on on date today business. only These filings, of its Reform safe me and uncertainties, Securities discussed could of is factors under to it President variety are and on includes Special which due subject that materially reports company's Scott factors Financial the are Vice Joining forward-looking speaks involve statements harbor as and Executive risk the including XXXX. of the that regarding may Thompson, and Form made. XX-Q These quarterly actual the statements SEC forward-looking results Rao, and factors. the company's Chief to Note Litigation statement Form Private Any annual call report Act XX-K forward-looking Bhaskar forward-looking

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

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

Scott Thompson

sales of an In Firm of up Mattress call adjusted before proposed Quarter net guidance. Bhaskar Fourth everyone, Quarter Good in were to to full performance Aubrey. Q&A. After more from I'll XXXX morning, acquisition turn and and thank the our approximately discuss highlights and Year and $X.X with detail financial and our that, Full call our year, $X.XX. you us Earnings EPS XXXX quarter you, Fourth billion, XXXX, for was I'll the the Thank some of joining opening provide the review and begin for on over then update our Call.

line with EPS in quarter, were sales results and for consistent the with our Our years. expectation approximately prior adjusted with

highlights XXXX. few a to Turning for

like robust cash flow resilience to our First, sheet. business highlight of I'd our and balance industry-leading model, our

a given Our capitalize the delivering bedding the America flow, the flexibility generated billion in and us investing business retailers over position over enabled after our We market $X.X million solid brands, the industry's the financial capacity in and and $X.X $XXX our in in outperforming and and in opportunities. environment. cash billion investments cash strategic operating us investing in last broader dynamic flow has believe on in CapEx. In strong capabilities internationally. succeed years, X North We're we've to to advertising

the from net X.X adjusted EBITDA to declined leverage year, debt prior X.XX. to Versus

challenged believe transaction. down coming for units the category expect our proposed in mattress continue the versus is units produced below trough U.S. for to Based to XXXX. on we prior market, were the largest of as reduce the and double The preliminary U.S. year, figures, XX-year industry. were the the we digits in quarters our Mattress which closing the the for We industry, bedding was prepare leverage

in However, seen demonstrated recently we we markets international trends similar the The of a basis. operate have have stabilization consolidated demand. category on generally

strong We the positioned of investments market. of consistent consistently bedding operating we've in and X trends ASP model With historical financial to the benefits Tempur the the is through unit has reap uniquely business, the resilient to Over anticipate return grown over expansion the position, improving recent will decades, prior Sealy and both category an time. growth. industry our made that

and actions extensive global vertically The iconic a company. solidified of second manufacturing bedding leading continued of to integrated I'd new item These rollout capabilities. as our products highlight is our XXXX, like our in successful position premium expansion

and bases in The markets, new consumer-centric price bed new all an in expanding introducing total Internationally, market positive shopping innovation mattress collections launched and the mattresses The of well traction X,XXX new that we driving expanded as products successfully as and new over for broad points pillows range XXXX. above for been and our globally. of legacy ultra-premium starting customers, at XX our consumer innovation and positive. lineup reaction the at mattresses, addressable prices including Tempur to has consumers

of markets customize streamlined side, On the to products we needs to efficiently our to cost diverse manufacturing maximize product meet have ability and construction the channels. the enhance efficiencies, customers' new in

introducing These products. portfolio and same new significantly traffic. Stearns their in in of sales the our growth and also drove & are market the Stearns expect and & The portfolio over higher realized growth entire portfolio increase portfolio dealing when growth. a mattress product the for XXXX floor TEMPUR-Breeze Tempur by the rollout foundation achieved TEMPUR-Breeze Foster to U.S. the brands Foster a at delivered Adapt completed sales category ASP X% generation of In double-digit while our and reduced period. year-over-year In The strong U.S. refresh we complete next and premium notable time retailers outperformed XXXX, full with ASP,

focused meeting in own and line generations includes to This aches the Tempur The of track innovative The pains. record. R&D Tempur deliver products uniquely our designed on Material build most products of prior are Material. reduced new of Tempur one adjustable mattresses, standard and the paired will XX% more robust line Sealy's on Adapt smart advanced our Adapt needs proven highest than bases pressure success the relief consumer with

holiday. the newest mattresses the XX,XXX new First we reach Memorial Crawfordsville, in largest XXXX, state-of-the-art for and we in begin Adapt as We the Quarter have plant over Day opened completion Indiana. to prepare to and our expect In rollout ready also substantial before

our serve facility ability footprint, Northeast Midwest, enhances new customers. in existing located This our to manufacturing complements the

branded long-term to for support the Our for components capture to variety OEM expanded capabilities new bedding nonbranded products wide manufacture manufacturing The to our operations. and and facility business. us allow U.S. footprint will the our rapidly products projected of and a growing demand has

of go-to-market Our model third the diversification is highlight our approach. and business

at with on is they initiatives however point, visibility quality to every price long-term off-line. the the the our and customers increase aim and wherever and to consumer both of products lead choose We follow shop. provide to One

support portfolio broader are growing line company-owned expand and We'll market and also products, strategy, diversification wholesale relationships are our industry-leading growth into in and and Stearns through our innovation new the In look the through our All our of initiatives retail OEM investments business to of e-commerce development further expansion long-term we Foster growth. increasing existing these channels stores. through our sustainable in our business direct-to-consumer pursuit of pursuing initiatives brand. & with grow and of

increased XXXX billion in has XX%. compound XXXX, in over rate to For example, annual our million $XXX direct-to-consumer $X.X a channel growth of from

This of stores was into and hundreds in Stearns and of world successful websites. part, launch new thanks e-commerce Sealy company-owned the Foster & the our to the expansion around

Additionally, of generate opportunities offering and with millions and label label in and we began for dollars in further OEM hundreds in private profitable OEM And today, growth private products of we XXXX. sales beyond. XXXX

growth wholesale existing in broad-based distribution. Lastly, new been across and has our

in our the fact, additional products April, expanding retailers. we'll stores of In into be big-box bedding largest with U.S. one

a efforts initiatives. the gross fixed in leveraging team multiple of XXX consolidated Fourth, year-over-year margin I'd XX.X%, our cost structure is growth fourth our significant in of quarter points improvement basis from This margin. year-over-year delivered our drive We to the result gross XXXX. over to in like profitability of to consolidated highlight expansion by

our new and all and mentioned, product to manufacturing go-to-market strategy of diversification plant our margin. processes in As investments improved contributed gross have innovation

to we increase people. our efficiency, As product we in continue drive advertising, to invest greater ability our and development

EPS to pool from We free larger a drive leverage. net flow of also growth cash reduce our benefit and

track a the we we during of While results retail expect environment remain have cycles. record to challenging delivering dynamic,

$X.X fact, initiatives, and our and we our focused were deliver profit ever profits. just In year shy of profit for on and agile stay and higher highest to figures. capture gross XXXX, annual in we both In full to plan of stay sales XXXX, gross billion sales $X.X sales in long-term generated opportunities billion which the

Our highlight XXXX and and protect social environment, our to detailed on in as the we last recently is report. our our improve values published corporate commitment communities

website. is available The IR on report our

zero the in manufacturing $XXX million. over shared over donated year, including zero through We manufacturing our year, U.S. last million, our maintaining more This Mexican contributions XX,XXX waste Tempur at our our and I'll $XX.X our total to status European Foundation that, are to our worth donation Canadian $XXX,XXX facilities and waste and status mattresses Sealy the landfill over proud of to approximately operations. at Bhaskar. XX-year With than call contributed bringing to and we turn our achievements cumulative over landfill

Bhaskar Rao

of you, was share per billion, In Quarter were and adjusted Fourth $X.X approximately the XXXX, consolidated Thank Scott. earnings $X.XX. sales

incurred in facility. of which primarily $XX These all with have are pro planned million are our quarter, the forma adjustments senior of the consistent adjustments in Mattress to cost related our Firm. We credit of with the terms acquisition connection of

decreased a channel sales Quarter. to XX%. unfavorable profit efficiencies, in by Turning reported partially Net North mix. and North XX.X%, channel direct decreased commodities X% X% primarily offset to increased the margin the results. driven gross Fourth America basis, adjusted favorable by improved and wholesale operational America the On product

investments by continued margins, by offset of improved American improved in driven to growth initiative. Product mix gross XX.X% the by is primarily initiatives. being OEM North partially adjusted driven margin our growth operating

on Fourth a Now on turning basis Quarter. currency sales the to a International. basis X% reported in increased Net X% constant and

to XX.X% unfavorable partially our mix. margin commodities, the As improved year, by to compared prior International gross driven offset by

operating higher by from operating Our in expense offset partially in growth decreased driven investments margins. by improvements XX.X%, margin initiatives, gross international to

operate expanding One and store footprint, our now of stores over initiatives our we growth retail globally. is XXX

for generated flow report closing and hand credit XXXX. plan borrowings. our Fourth our X.XXx, end increased delayed to of cash Mattress of cash to and by million We're transaction term entered draw have we $X.X is connection the $XXX range sheet loan pleased the million. and This we was cash Now on In debt within portion consolidated and in of we flow our our the Fourth successfully acquisition, historical combination with under $XX into a of $XX items. cash the plan leverage existing fund less late of Quarter, to Xx. X the revolver incremental through and billion, facility acquisition of a balance of existing with to was ratio Firm million. At availability Upon the the financing in that anticipated target Quarter, operating the our cash

with history leverage flexibility, our is for this the historic Our consistent of plan capital. and financial balancing cost acquisition of financing

executed closing assuming transaction have in in on 'XX. credit delayed raising new be the incremental by with expect strategy and net the refinancing of this loan. closing anticipate We now term XXXX the X.XXx, and the draw of to elements and a We half to X successfully between our leverage facilities closer second already of borrowings

return range the in leverage our to expect first X to target XX to ratio We after months X of closing.

we expect in the guidance, XXXX to $X.XX our of adjusted EPS $X.XX. to to turning Now be range

which Our stable unit recovery versus on the mid-single increasing sales also expectation that to guidance slight in half volumes based considers bedding versus is first prior the second are year, low XXXX. implies our and of digits XXXX. industry the half U.S. headwinds in the This

to wins our sales U.S. from distribution due in the product support continued Our million launches new new we the overseas. of success and advertising $XXX the the about new to outperforming leading spend brands products. industry and as continue And

this in the items at to adjusted phasing of want $X range. the EBITDA of of All billion for note resulting XXXX. midpoint X approximately I

down trend Quarter the be year-over-year year will year. high down believe will mitigating. are expect the industry the end negative We First we digits unit XXXX, later units be while seen the to growth believe through we past U.S. return believe and over year-over-year for some, in single industry industry will the this we units the bedding likely of First,

new being mark of start beginning spoke new and us growth. capacity. opened capacity recently which a provide our into our we our historical will facility will result seasonality previously, with servicing to our distribution to our to April, that this our between bit growth we support will volume The Second, phasing off. new Crawfordsville capacity long-term incremental this In Scott the in

in in this expect between into near-term resulting of EPS the shipping the pressure our grow profit first new being Crawfordsville, and and quarter, likely the $X.XX. category As outlook, we of to $X.XX we timing distribution

We expect starting EPS to the growth return second year-over-year quarter in to of delivering 'XX.

year full of adjusted XX% As the at guidance. midpoint we our we grow expect to EPS our noted,

our by maintenance driven guidance million as to projects approximately following $XX a of growth is level of a and spend of $X.XX, normalized representing million dividend capital allocations of approximately significantly CapEx prior quarterly and Our This $XXX down XXXX. million, an of spend of of years XXXX. XX% spend increase relative are considers also in from capital complete. $XXX major the more

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

For that, approximately the back million full XXX XX% of share million of to to to year rate of on a With a shares. the with of diluted turn $XXX XXXX, Interest $XXX I'll we $XXX approximately tax $XXX million million. of Scott. expect D&A million over count call expense

Scott Thompson

Nice Bhaskar. you, Thank job.

up Before me Firm. Mattress provide brief we of request. call FTC acquisition the with Fourth for opening let Quarter, pending a certified substantial update completion questions, In our on the the second

to We through will anticipate continue continue transaction advance to First the these work the with conversations Quarter. FTC process. We the approval

we Tempur continue are make joint to In disclosed, transaction in late contingent and proactively divestiture engaging previously on plan XXXX. to progress Firm we parallel, As expect connection upon Firm a suppliers. with to pursuing integration mid with to continue In and the close Mattress Mattress the and Sealy planning. acquisition,

quarterly available performance. quarter. Firm's summary, team. Mattress call on our Mattress We for and performance for expectations. close Firm's their on our with Mattress we information encourage up on Operator? that, Mattress progress Lastly, track, open And on the you the with the Firm I'll results questions. website more most consistent financial joining recent were a In with recently their made to their Firm transaction comment for forward towards the to is look review brief which website, financial

Operator

[Operator Instructions] Susan And Sachs. coming our Maklari first Goldman question be will from of

Susan Maklari

about as How you relative side? consumer out bit backdrop, unit start we sequential the potential seems macro to with, the in little have demand? guess, year, that to do through. we a start see bit and this Fourth bottomed a see why is And Quarter mentioned it come some to about could to the you are move down? that rates Maybe the else for that, like think improvement talk a we I stimulating what don't improvement You to thinking on the perhaps we

Scott Thompson

pointed easier have first comps, probably that's out. got we thing be obviously, is Well, the which to

low we an obviously, at talking the about are thing, Second we're all-time volume. in when U.S.

are new at We're going standpoint. you we've shoots. and really the green we you are rock good of our bedding rates bottom on going product look at from if an are Obviously, where down. historical show, industry trending mentioned, just from there's Vegas a environment we and some got innovation out -- So and back the there in industry. we're some the bedding in And interest as their say, coming We've into have refocus 'XX. some of very larger increasing We've coming that's budgets retailers, seen out product new got interesting. them I'm to some several others advertising, advertising also got also

like around I've in of yes, feels We're balancing bottom. the bottom. So it around used the the general, kind term bouncing

our you at look And positive. of the look it's very up month, Fourth at sales online If October to it January, double world I throughout order in we difficult the the forecast. by our January, quarter. parse at And digits. and January period. it's it's the own got and in book better look Quarter, obviously, back in get If good to look at this in and it U.S. not If it, then kind you go then was

shoots, So at dampen see. of to we'd as it looks details, but some like you it's look positive, some that order concentrated in larger the but the green to as like when some is customers. book It's broad-based not have you

their And talk are quarter. floor double And general, the XX%. retailers If being talk it's XX% to about and listen is retailers, in January digits. January, then about only the them, down traffic the to you you when down you to of think go -- talking

the we bouncing mixed saying description some of to and all around the continuing So to what best bottom seems I'm but signals, currently. be are kind it's clearly mixed, get

Operator

of Peter from Keith coming Piper Sandler. be will question next our And

Peter Keith

year-on-year? could EBITDA a Bhaskar, launch provide bit it's in about question a are also and year-on-year of you the EPS hoping QX. but costs how costs financial I start-up from for you was bit quantify facility Maybe a costs or impact thinking color on of these little guys input then And

Bhaskar Rao

Absolutely.

So time. let me take at those a one

category, the revenue. And -- news that our we is things news a good some couple really prior going year. also out out what's excited on We you the a of out is did the We of earlier specifically, about If that happening great in happening also called there. Adapt. is is think about where the called expectations a have Quarter phasing than Tempur from Adapt Breeze we're First

that's So between the of Second a couple Quarter. pennies First and

it you of couple basis, a as increase relates for on about so that question of about about quarter, a that Specifically, the to asked D&A year-over-year you at the X $XX million out when as parse of sets. Crawfordsville, a think whole,

still a out for some XX very As called seen XX, full we XXXX. It's At expectations. let's of with it. from point, left perspective, XXXX. relates our points constructive. benefit year consistent it to relates cost costs as input where And input Quarter call the Third We've we we in it that remain tailwinds bps to coming out, it,

So where we remain that's input is our to positive said of and would commodity full then relates that still launch Red to it Sea, with in are the cost what's year we All a launch we on flat. is be mindful expenses, that costs, it today. but closing expectations are happening basis the expect as out basically

some earlier the XQ the prior However, between Breeze and given year. than called was that phasing with a there timing as out, XQ I bit happens where Adapt of in is it is

Scott Thompson

for little And and Quarter are what basically capacity. I'll Crawfordsville. on full. while industry we're a investment turning is us. Bhaskar plant plants And adding seeing pile that's the you're on First Obviously, in and a just that highlight closing the the bit others in huge capacity, reducing

cost The We orders. news of product, busy. the products is which in cost just show you building but fixed to and cost the statement a the income will profits plant before the the up Second product we've got plant, come revenues the through whole the need get income good the the from in the when got get statement. it's and fixed will Quarter. so show of timing And through coming inventory, plant you got We've because the the has go on the of of up coming the

future excited that operation. So really about we're the of

Operator

Griffin coming James. question next of Bobby be will from Our Raymond

Robert Griffin

little guide XXXX Bhaskar, Can then midpoint. the just kind industry bit to at we or maybe starting units at the X% to guidance, point drivers get mostly the build help your of with those flat Scott Just Is to to look Tempur price? and I So it, hoping, when building in a the was context sales X% gains, as size of, unpack the call it you what's us share anything from the industry there? performance. walk blocks building blocks to assumed Sealy's market around mix, the some to and maybe of

Scott Thompson

in Sure. have April. two Guess those want have show will details. I'll do executed, foundationally, But Bhaskar we big wins let you up [Indiscernible]? distribution the and that been sales

Bhaskar Rao

Absolutely.

So that flat just starting indicated is is our full we the that with for it expectation category, as be the will year.

as as there bill. a will you called out be well, However,

let's that singles big the up in half the in first back So in the down numbers -- low and call down round half.

then So that in when with is is about spoke a areas. as sales to of and it couple X distribution a different new X to you from Scott think bill you of from growth phasing the go see and the X, you that the

bit. to the excited we're category a do international in could our green about specifically beyond. that momentum fourth We're third in Adapt, and about us It launch. getting and what quarter. that shoots would a seeing XXXX grow super that excited there and the continues in quarter, in continuing We for international saw the we're products growth improvement we're seeing internationally. very product in expect in We the the new standpoint, out new from the little The disaggregating what

So international then that And we would of the back the now see expectation bouncing in in to growth all is quarters. the U.S.

taking what So about would be way It is we what that gains the is get to we think is expectation is really assumed into always outperform share share the our hand. the in is -- the to new But we've this. the to tied that the have that that's guide. wins market is our in continue we When imply market. expectation that that's our would U.S. distributions, internationally. Obviously, --

Operator

will Bank Jason be from our of And question of Haas coming next America.

Jason Haas

a distribution if curious some big little gain? distribution that more color more Are cited? bit in the gains one could broad I'm that you Was retailer? seeing on box reference you provide really you to

Scott Thompson

ones. combat needle in-house say We've would hand-to-hand more that it. moving. always, so way got revenues in, the a And I like it, be that two big distribution smaller gains it will starting call the large side, are April, guess are come there's two little there but to on fair then two a there's

Operator

coming next from of Our will be Seth Wedbush. question Basham

Seth Basham

SG&A are seems what margin advertising you margins like question and color about but with It between total to and Hoping other margin efficiency? on the outlook it improved some SG&A. line from gross for be operational is the sales And growth, My side, but on is in you for from probably expect 'XX. gross for about seems expecting improvement, the likely expectations more growth costs? commodities, deleverage like

Bhaskar Rao

Scott, that you to me want up?

Scott Thompson

on year-on-year a margin. perspective, profit out is we expectation Seth. improvement be gross good call would nice our from that would It see gross So

prior benefits XXXX. We we XXXX. that, be starting drivers, on the momentum as half put momentum to excited the question. We in we to out, that to a of operations, the call a just our would the turn historically. get of big commodities would see reference EBITDA about couple continue briefly in of build a in I started The U.S. spilled is into So We're that spoke invested that that. We very expect that in around would seeing I customers to and continuing to some back tailwind. expectation

then year. floor versus model phasing big between some a be continue. On that, $XX would would million. previously, Crawfordsville should $XX headwind. tailwind be there's basis, yes, would So for tailwind prior I But that be that And around slight something us as it I to picture, year-on-year as well. mentioned expectation the our quarters think be us It for a a launch. relates would a million to

Crawfordsville when rate about for with new So there, would facilities. again, a have that over time this if Crawfordsville, think and manage headwind various our us we I it other would without to that wins not However, was on distribution difficult incurring be

the profit So gross that's story. really

couple As continue manage things, business about an operating we I is think to of long-term this a perspective, for from expense growth.

we're expect would in on bit things of outlook going us So is perspective, to overall basis. flat going just invest internationally, just being is, those give out business would new and that When parsing year-over-year perspective. American on think that growth I OpEx the advertising on that growing support a North rate to that that you really market. think addressable about we an will basis we're deleverage on the to a And that of into invest

bricks that you expect from direct-to-consumer is on the and a to only global of all be rate that advertising. put very incremental together, to we So in story. mortar, our Also, not which we when about blends continue business, the what investments excited potential

stores. on basis, In a doors fact, have our million XX sorry, quarter, brick first -- XX quarter around grown first from year-over-year -- the to

the initiative So continue we're to invest in that well going to as as e-comm.

we but that a and are represented Tempur. brands opportunity now us. robust all business you we as as know, U.S. the to parsing As just Sealy of e-commerce our international, big And in remains as a China a spoke bit, well then Stearns, have for

going money we're there. So spend some to

it making the rate to growth. But we're relates it as what's up slightly to in future driving really, investments an flat perspective. from again, OpEx is what's, really So

Operator

Capital will Markets. question coming be Brad next of Our from Thomas KeyBanc

Bradley Thomas

that I we look a of a as of was could bit more product bit the rollouts and and international opportunities about of hoping some talk the the segment. little outlook forward. more timing we perhaps have the some for about margin you new

Scott Thompson

product Sure. And really can a right I gone international advertising Bhaskar's I'll price think probably from, right what about the from I we're standpoint, points. rollout. the it's international It's at from see the think, the you beginning talk bit comments earlier the about got doing feel an standpoint. we we've just now little well. And

a little call a But anything? is manufacturing returns we think Bhaskar while the number bullish international -- to add It's that multiyear to -- we're very of a in an it you process sign spending advertising the think quite because right. get strategy. get us want We're more standpoint. innings we'll But money we are taken from get good. the the a early for years right, be going product, do all international a on in a to quite growth it

Bhaskar Rao

improvements What and I is, given would to as I gross about margin view, we just from necessarily say going seasonality. timing is of margin see typical as -- on to year, on this not a a the and continue that think and it increase growth itself. momentum distribution would the from prior again, in standpoint, new with items. some as than One mentioned is gain those We're do as we leverage operational a in as that more back sales, -- Crawfordsville, And margin we consistent into margin ramp expect gross first half, margin year, therefore, build really the we been the from giving line, given well gross throughout gross of margins go a as the years then that up will growth is expectation year-on-year. driven that standpoint, overall, by we from different that couple a us is would the half

Operator

will be Lasser. coming question next from Michael Our

Michael Lasser

margin either assuming incremental bedding continues you upside steam? gain How year think or as recovery next year, unfolds? And on the about to that potential into the sales do the downside

Scott Thompson

let then a Bhaskar it. speak interesting. It's to It's will answer interesting question. going second I'm and Okay. a really for

On good. the it's obviously upside,

of we've position out system when for you our cost some because talked the we company we as company lot kind we've about for this was bit see. I take think some got Do have got you with I'm there a the out And positioned, there, reason, cost about flexibility going part it company reason, take call the ability growth to on growth. downside I a missed call. that to you're environment call downside, little reposition for for for aggressively we of want to we've industry, the bit, money, if we've call Bhaskar? to a aggressively on in the the some talk to want the is of if that someone a was out spending case don't working in earlier And if that good a

Bhaskar Rao

I What contribution somewhere blended historically incremental basis, I've profit, a Absolutely. to thought way say the call XX%. the about is XX% business, would this between it, on

that feels a being bit in sit XX%, equal. I it closer that historically. is things we have today, where As been here to above And maybe versus context all

the consumer expectations pointed going EBITDA obsolete. have positive when starts of are about as obsolete, coming from those Again, And bedding be not out, back we come standpoint, going not a positive an will standpoint. There contribution from will, is and profit category. mix mattresses units we a they As the back.

However, think recover. that something this as about industry be begins would to mix to

Operator

coming will question next Hughes Our be from Keith Truist. of

Keith Hughes

your Indiana. capacity facility on new the get will full how question the A to up Quarter? you Once And will actually of that hit pouring Second full much in in capacity, represent? you

Scott Thompson

question. complicated Really

by future, and think -- optimize we've about a is The stuff. the not the to shifts, probably little you're and second depending it it. some it for you're think Crawfordsville the in X Tempur Let shift, about going, drag you being get capacity, when second pouring and to it's with on OEM depends optimized that think both look, you quarter, shifts, running first way other X go the contributing, gives of of around about And all bedding as in foam. No, it we should have -- into words Crawfordsville bit hit capacity what a should plants on full me and far whether will years of regular you should it a totally and kind quarter, as time put the market quarter. has to capacity third talk optimized, you flexibility. foam the But the us great second But foreseeable couple is, we about probably ability out okay? is,

Keith Hughes

the some volume future you're move to to do you do to that. follow-up well? backward spring Do in in starting production given -- of in Particularly, spring question Okay. One you'll like think you production, the as you're terms more integration industry? on the going think

Scott Thompson

partnership We something looked for got Yes. at. We for us. great are already. our that doing always job market, job own here got Mexico, bit other the for make [JV]. do They springs a in That's sure. our And I we our own few We've springs. good don't springs Leggett manufacturers U.S. fabulous a of We've a some with the us. know. make good we've Asian in we a make make

standpoint. that's to call it think spring the we'll use build of call what the economics manufacturers a a now, we from strategy and we're we'll right outsourced the our relationships best-in-class continue at with spring and very to mix own kind but blended and I'll of both, some pluses, I the look in have of continue So in-sourced happy current and

Operator

Our will of from Loop. next Champine question come Laura

Laura Champine

Could we get Mattress divestiture any how anything the then next more you're saying context steps? acquisition? TPX on Firm just formulated related the comfortable about plan And to

Scott Thompson

me in me call a But will it's The flexible. like much dog. there. Yes, area, you're there's lawyers a interest What not going tell to that you, good any give get been FTC whip goes there on and and call would after and than that, I than you that process can't the activity. and formal other tell the is other is, ongoing really I the probably to you package in color

Laura Champine

year, you to little a little talk we not about Maybe I peril. did be [ASP] controversial? cause a that can mean (sic) and AUR and mattresses expected will bit less this

Bhaskar Rao

page that make the sure we're sales ASP, on price? same that's to And just average

Laura Champine

Correct. Correct.

Bhaskar Rao

Absolutely.

way excited thinking Breeze with happening have continues we're very to Adapt. is, the legs. So currently about it that again, about what's

First from there. is So out we the where of make in That complete great. just sure It's be and grounded. Quarter, ahead it's largely Adapt a were then we're standpoint. to will Breeze

exclude So is will that together Adapt the very momentum if of that nice build. is X what's live expectation is, harmoniously Breeze impact and And the will our about you models.

let's we flattish. On call to mean significant that not the not is dollars. sitting materially when expectation basis, it, an be one overall what So going about and there's our would here that will U.S., think it way to units how we're as think the about difference is a relates other, be that today you expecting or ASP

out, like I going is speaking as flattish, before, that across call there implication world. the is to is referenced consumer the I the happening So we broadly Again, there's consumer the as a year momentum be that's to come going think and We half from back little eventually, a would back. what back this is ASP that getting of the feel bit about beyond.

is to back, and those mindful it EBITDA, that they consumer incremental at is as back of back will points; it something come units but come where that as all be come back to. So come they however, does price

Operator

of Our next America. of William be will from question Reuter Bank coming

William Reuter

ASP at success strength comments be on last lower question. Are This mix? you know have there. expect price you kind greater But to so you Stearns ASP But points? you year, any a that of Or contributing seeing trade currently mentioned down some flat. & on that I greater seeing Foster currently? be flat? you are rollout may seeing to Are you last follows

Scott Thompson

we're the That's units. On has that the better so. a narrowed but has say or units to gap some, been would year mix, Yes. around we generally seeing mix. that higher trend than do I see priced for the continue lower-priced a

on think any seen in it general, end. think And we increases. in few strength I'm I haven't pricing over if to commodity talked basis correct stabilized. and what ASP aren't commodity the there's like-for-like put thing is deterioration last like And see Bhaskar's the the like-for-like me us due is market as to bit higher a on I the quite a of wrong, about, price years in expecting a behind the basis, of We increases feels

Operator

of Jonathan question will Jefferies. Matuszewski from next come Our

Jonathan Matuszewski

partners, a spend and XXXX. their bit sounds budgets retail change with Bhaskar your expand advertising could hoping conversations little them for in year-over-year hearing Scott like in of some increases was signaling with regarding you're I upon mindset you recent from a to you them

what's bit own color So in their more us could changing for to terms ad spend? context mindset any that of their little a aggressive in provide get added

Scott Thompson

the Look, at retail bit you decrease. absorbed have a look The when retailers a of of business cost. model, quite sales it's fixed quite bit got

think so sales you're going. obvious do your you're if a and thing And to to I get trying the retailer

or sure investment we've to that's see continues, can content, at And extent returns. in If have get spend be whether advertising part and about industry leaned has like because floor the said, flag look more the of high story you And and the not think to the other been retailers on bit and you in some hopefully, has manufacturer our more you down. but leaning heavy. And your a get individual invested that good little the for I of that consumer and the of on waving a people your off confidence, market content, quality return driven we're takes good advertising Clearly, traffic to turnaround -- head top [Indiscernible], understanding bit make -- industry, to a the back share any pony succeed. X advertised, need have are course, in but aggressive the standards, think leaning or sure I XXXX the to think and category, getting that, getting up we're is the by the category also manufacturers just some marketplace in. about to we'll have are and doing the of in, I going people got advertising historical we're, it retailer asking others fairly I we've in been and not a for that my

Operator

at closing like questions turn to back the Scott time. remarks. I'm And would further for this call to showing now no Thompson I

Scott Thompson

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

Operator

Certainly, this you concludes today's for Thank participating. conference call.

disconnect. may You now

Tempur Sealy International (TPX) 8 Feb 242023 Q4 Earnings call transcript