- Earnings call transcript Q3 2022

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Operator

Welcome to Sleep Number’s Quarter Three 2022 Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would like to introduce Dave Schwantes, Vice President of Finance and Investor Relations. you. Thank

begin. may You

Dave Schwantes

Investor sleepnumber.com. at the Please welcome release David conference refer non-GAAP discuss period Sleep on of and the purpose for this joining to website call. Schwantes, release This President supplemental Please is access to to Finance am and Shelly conference today is quarter our telephone that the call news of our Ibach, results this us. Corporation of the and reconciliation be Chief or XXXX will our Dave Chair, release on news and call. of President earnings refer Thank CEO; financial Vice may recorded With our to afternoon, The available in details me in Number just fiscal are and discussed to information the news the and primary third ended. I Relations. certain Callen, Good also replay. being measures a you included Officer. financial for our be Financial

turn XX-K call annual your and our comments. actual now commentary report materially. over other in number may uncertainties responses her in company's and of to news detail with to These questions are to some for our However, statements. risks include on and the SEC. certain vary a filings will I earnings The our outlined Form discussed forward-looking statements Shelly in the and periodic release future may results forward-looking subject

Shelly Ibach

XX XXXX score thank our quarter call. earnings My last for was joining night. and afternoon, you Good SleepIQ third

on taking also actions strengths, sheet conditions I'll expectations. perform. of best-in-class inflationary and judiciously macro team macro and direct challenges this results prior are constraints, culture as in These had business pressuring third us improves. preserve commitment in environment, to Today, this an balance strong combined competitive demand. are reduce we're supply worsened how and that with describe Our individuality strategic prioritizing a high and update And brand shortfall quarter, We'll XXXX to enable provide and our engagement, we'll factors to wellbeing environment. our will essential the how challenging attributes highlight sustaining causing implication for supply our environment effort navigate drive purpose they the strengthen flexibility, outperform to External results the we're costs which initiatives in and and our health a outlook. are

were XX% a $XX chips $XXX down XXXX Third semiconductor quarter of million because lows. with pressure QX reflecting decline operating was profit sales and consumer net near were sentiment from expenses of gross million, operating record constrained supply of margin significant million. $XX

guided Third previously diluted $X.XX share pressures. were quarter earnings even better per we with the additional than

year We balance the expect to the and environment of for challenging into consumer XXXX. remain the

pandemic, affect Sleep into to or or $X.XX a In lockdown natural outlook delivery political and global fragile on operating $X. and Based continues EPS events single chain remain failure threaded significant optimization geo specialization equipment addition, as years built easily shock, by as several an supply cost simple a COVID for the as as and destabilized semiconductors efficiency Number our to we chip revised pressures, forecast. global to disaster. ongoing of and uneven, inventory interrupted timelines have depleted, With XXXX flow volumes, these

Our maintaining also operate balance long-term volatility, to our strong enables while sheet this through effectively us focus.

semiconductor actions steps taking chips supplier. improve flexibility we financial in deliberate future more preserve our operating flow share to further are the first, navigate remarks. his from reduce David details environment. financial Additionally, we will to But uneven cost I'll this as and are we the demand and provide taking constrained in of

which XX%, an favor closer expected elongated consideration consumers need has to QX was lower value. and as in than down demand extraordinary Our was purchase

hampering are assortment full our lead produced times without environment, actions mixed operating results. our that believe this also products long demand. We In of have and

the weaker results For the had Day when consumer results the need but highest holiday. weekend expected was over both than Labor before example, strong experienced, we and after

Here have what we is learned.

an consumer indicate tool. a important sentiment It that to econometric category Our variables low mattress the suggests and continues XX% model be headwind.

offers, consumer actions significant is customer consumer slow brand While is steps prior down sales, leading but wellness understandably Therefore, been one in the focused traffic headwinds the Digital environment, funnel. stellar. purchase. cautious strong our health enough very we benefits not and economic year inability and purchase adjustable value and levels, deeper good able additional chips, to to to offer better the assortment current take potential have to to strong such X%, remains procure smart our of is repeat as health referral our and we've communicating Because near semiconductor on our customers our into loyalty FlexFit is and bases. the drive our is customers of

limitations life-changing efficiency community. by which As the on Sleeper demand the purpose, demand improve. X, we October focus conditions an us innovation implications our the of short have innovations our macro term the timing our On history, environment the in our introduce prioritize position XXX smart we once impact to has chip deteriorated sleep that and growth our and Smart adverse continue we product pre-sold Climate delivery these greatest bed, on renewed to to generate guided actions. and our With had offerings long balanced shortage and effectiveness

represents, of as overall Climate or too sleeps is Climate too one being see or too of cooling While bed. sales as this addresses of during say XXX small early portfolio, cold part the heating. hot a sleeps too active them cold. really we're XX% couples hot This XXX smart meaningful to expected, our with excited and of

your term our smart bed health weakness engagement. to deeper, warming fall sleep, uses in this near sustains microclimate. brand better you asleep address focused even addition In feet demand, with ambient on natural innovation help to as work is body's improves is faster, sleep to actions temperature smart We your remained deliberate personalized sleeper innovative your to cycles what air balance a take and create that to designed to for we sleep. quality strong It

smart with representing of billion than sleep active our We sessions sleepers almost longitudinal hours X smart more beds, have billion data. and XX X.X engaging over million sleep

Our with our all-time features sleep XXX, smart the With remains entirely smart of bed support implemented new Climate health user near new with our that we monthly highs. our portfolio. engagement beds will average platform technology

this XXXX. We expect new bed to QX transition to fully starting platform in smart

while more beds with readily Importantly, current to critical components to driving demand. disruptions caused are our designed newest the chain semiconductor issues, beyond supply These ability and available innovations by utilize persistent chips. chip they smart newer, our are fewer move also inventory

of are pursuit demand, margin in and tenacious solutions that their improve supply. teams Our

excuse With we December achieve a FlexFit assortment restore a our our base plan chip good major multi-year to in the and milestone end preassembled in the expected with flow XXX% completion smart better By of FlexFit into smart, and we of smart adjustable me, January. of XXXX journey this will to year, beds.

recovery a Next and year, we to XXXX inefficiency. advanced continue and supply to are key orders when rapid beyond. margin chain reduce efforts there will initiative Improving improve to customer rate is for gross changes our

environment. through persistence adaptability, business and Our team purpose the day every macro remarkable Their unrelenting the health and conditions inspires resourcefulness the sleep difficult current our to wellbeing navigate higher of and appreciated. society quality are by to precipitated improve greatly

long-term navigate pursuing significant current opportunities. while actions external to We continue the prioritize strategic to challenges

are compelling innovations, to life future potential as changing pioneering shrinking and our recovers. our the modes, We value profitable delivering advancing competitive consumers, for and growth new brand economy sleep

year. for David remainder and quarter Now, detail outlook on additional of the provide will the the third

David Callen

pressures intensified Macro Shelly. costs. all fronts; in and you, Thank supply demand, three QX chip COGS input on

further we range XXXX reduced result, our to $X. expectations to of $X.XX a As EPS

beds. down Specifically, updated with in demand and late expectations offerings, will a Day. a performance which EPS strong have in despite our to support consumer smart XX,XXX affected about XX,XXX deliveries, QX supplier to about mid-teen to QX and Chip worsened XX,XXX to one demand We reflected last supply come Labor are more Current year-over-year to expected also worsened now to reluctant preference too be for guidance. XX% chips a down negatively QX now from QX mix reflects year expect which for margin. versus solid constrained value be this

demand As in supply changes net XXXX chip half back a sales. in backlog less now expect result of benefit the and we assumed

mix than COGS in the receipts costs input part backlog availability. with A labor pull premiums, service. the supply timing higher and experience on is earliest less also from demand volumes weather net customer dependent as and freight each were back This call less operations guidance like our results chip and we to assumption primarily it from our demand brokerage of uneven flow. chip unfavorable forward value. assumes to and prioritized and expected disruptions inefficient revise half than lower is dates, expedited also possible about half $XX and backlog While previous subject million approximately to sales

a of previous result, is be lower and first in expected half, about XX% our As the points gross or XXX XXXX than basis expectations. half back margin the to

support ROI outsourced significant consulting targeted initiatives, a services all of Specific reductions across in pausing costs. structural are financing. reduction the and these across primarily $XXX XX% priorities, are support, come and program the areas professional wrap-up lower include incentive XX% of of About About reductions we are plans reductions and strategic costs, we cost challenging work, and operating As versus companywide business. reducing suspension from actions of brand XX% expenses about million XXXX, the resource lower selling, lower of from and staffing about business. variable media

are further this uncertain continue we additional contingencies environment. in reductions as We cost working consider to

QX financial resulted million, quarter. consecutive for fourth with sales deeper Let's $XXX deliveries look year-over-year Semiconductor the of constrained lower into net take decline. chip This year-over-year in QX supply XX% a a our combined results. demand XX%

more internal forecast, X in below the percentage internal than points ARU was forecast. was smart beds quarter XXX,XXX the our However, X,XXX our though our delivered

the and and and costs million better operating points profit our $XX sales, initiatives launch bed sales of the controls than utilization Grappling inefficient improved basis to efficient cost quarter of fill of claw of high operations gaps. of supply half air Operating forecast Selling lower time, XXX was down customer preassembled supply are use R&D parts XX% to ClimateXXX enabled of on-time incentive result observing our Net XXX offset we were is and in efficient Clearly, $XXX brokerage gross spending cost back $XX This a and prior unfavorable favorable margins satisfied our chip drove about customer next expenses innovations the loaded third for million pressures while prioritized margin as XXX% versus and of Innovation electronic from this down the line was financing of flow new preparation XX% with costs to input latest were our are and year. chip inefficient of elevated smart compensation. net freight to in the chip track, points all and million more XX to year. the delivered with Over our annualized as mix. we full year move controls partially bed changing forecast upgrades uneven less through fully game year. both experience lower flow including beds costs, expediting net our flow. beds and QX smart $XXX of sales by not to pressures X.X% with versus percent media. Our expect million margin cost first chip supply. $XXX volume, and basis and and smart level cost G&A system-wide demand the of prior due the disruptive million drive and on insufficient to lower XX.X% as labor we on

share cushion our than the We on our per our higher as million profits breakeven in had At times proactively QX, given and of times EBITDA, for increased end deliveries credit we four EBITDAR, the business. Our additional with disruptions to of covenant facility. $X.XX consecutive provides offset was year-to-date of and expected X.XX half below our prudent first our facility ended forecasts leverage through supply macro leverage earnings available higher more from expected than despite liquidity current revised cash will $XX X.X chip leverage while to operations exceeded million uncertainties. macro remain navigate disrupted of generated guidance COGS debt indicate under of our $XXX continued the and After XXXX. pressures QX than more we expense than quarters guidance we X of bed This times amendment controls QX smart pressures.

we top provide contemplate are building next assumptions some for and call. are financial of We fourth our here meantime, quarter our plans XXXX In the insights broad will year. mind as earnings on

We are thrive. liquidity taking actions on to ensure costs we and

Consumer pressured constraints side business. of is other least half the macro to year. next the On of likely first the through at be sentiment current on

chip chip data to improving We move of key continues next expect products with suppliers. our on supply early exchanges top Pursuit sleep a year to be improved new and based innovations priority. third tier

beds in nowhere We margins taking expect sleep opportunity XXXX. are to improve health the interest else. of And will XXX to program insights late incentive comp half, based introduce our in and performance progressing the and smart data cost available new line actions wellness on and for costs first be headwinds we while while costs structure, reducing sleep,

Our enable profits as to breakthrough macro initiatives intact subside. long-term are and strategic growth pressures

line questions. improve long-term with risks aggressively as proven pursue to lives Operator, performance open for drive solutions. the we near-term continue navigate sleep to as We opportunities quality we outsized please

Operator

Brad KeyBanc line first [Operator Instructions] the of from from Thomas Markets. question Your Capital comes

open. is line Your

Brad Thomas

Thanks the backlog a thanks off a question where detail for and color little just Wanted taking more in to Hi, provide hoping start you is good around the today for dollars. all first around question. with afternoon. could my and that

notes in end terms so wondering just think where were if you where guidance year? you'll the at I'm, contemplates are I you What about Thanks. today? of last accurate the be million range $XXX quarter, are at of the my

David Callen

it the of of We $XXX to Glad this backlog. with volume a million timing the and to equivalent and Brad. can we'll number and additional sales tried communicate here primarily as net I've and volume on go be that of timing ended is as is about But Sure, from then factors, dependent we're also color. deliveries always, provide of sales excess Where quarter in QX of And a well. go weather bit saw how can keep we like as things a had constraint effect labor through updated we'll that's and on it by Hurricane about now we affected in with Ian as little be thinking year. an Florida. the availability you right deliveries

Brad Thomas

you – backlog. could just normal in then net And the that's elevation unusual David, that's a the remind level versus me,

still So magnitude. XXXX potential there's right? to the be have benefit that whatever a you by end in this you that add Is that could year that fail more

David Callen

the QX that's previous on we we last on right. – that and would improvement exactly that the we flow an available Brad, have call, Yes, were in our and call indicated expecting for had chips total as XX% to happen in didn't help in benefiting in expecting fourth us in with a less deliveries total. That we're half result, QX the about quarter, the backlog than XX% more QX. in and so back

Brad Thomas

you sitting what estate can demand whether a the with lease about thinking Great. at Real in here trends, you're this tracking and XXXX how doing about bit tracking of point? signings you're little talk terms

David Callen

we the very, payback happy finding the Well and as are continue market initiatives opportunities very very fast on our always store our and with we to be expansion still investments in are great marketplace.

the at We this provide for QX in put XXXX on plan insights call. – full a point, additional some you we'll haven't together Brad

in that same to the of continue Again, I'll you the growth appropriately we being new to and in next business are over on but much can always time profitable more one we through we'll at store specific as as drive comp that's existing course the of as call. insights more lever QX want drivers year conservative sales that stores sales, a are for than We provide our invest because long-term. the sense

Brad Thomas

I'll turn David. thanks Great, over others. to

David Callen

Brad. Thanks

Operator

from next Piper from Sandler. of question comes the Peter Your line Keith

line Your is open.

Matt Egger

Two you've the And to any cancellations free Egger kind increase me. to ones talked Thanks secondly I conversion Hi, just the about plan this model We're with in taking your on of change for or either the the is our or then transition curious think subscription from SleepIQ. been Peter. if rates? Matt there's for for question. quick

like perspective? what curious consumer from Thanks. that Just maybe will look – from the

David Callen

and we But one this. that's smart in changing not So we Conversion were despite life they But high. do my model, of ongoing doing think a be about Consumers cancel come any your yet got our that, breaking out at bit change something any I best this point. that's for subscription that the I but future meaningful we can normal guidance before That's into I customers and an getting not like continue really then that, at get conversion the we're But longer their to and not to carefully rates rolled have And very research are ever on beds. lot but last basis. than give it. technologies us insights we enable at products. on have little that our them of something some that's first comment rates our watch some to tackle a for something into cancels might stores, seen you are all. have think I about weight that lead up something on having that great our our providing something teams that periods amazing question, times hinted the

Matt Egger

just I it. guess Appreciate I was Yes. curious.

like that down if what might you decide route? go look So that

Shelly Ibach

for be Well, opportunity monitoring platform, including that's which you diagnostics opens and that us and enables future our a to so capabilities to different a in ways broader subscription us referring new sure. the for and door may moving for

Matt Egger

Understood. next on the Thanks. I question. pass to

David Callen

Okay.

Operator

from Griffin Bobby from line question of the Raymond James. next Your comes

open. is liner Your

Bobby Griffin

Good for questions. afternoon. my Thanks taking

Shelly Ibach

Thanks Bobby.

Bobby Griffin

that? that units looks just constraint help just, got didn't guide better, so by Hey you everyone. versus it Over the and guys got it aspect. to implied you that X,XXX, so so delivering worse, on a that help first little can but I connect hearing the like forward guide versus connect going guess then we're me the chip us on things probably or over X,XXX units but just is question delivered internal the

David Callen

Bobby. Absolutely,

to were expecting bed we're to able just what to two take just be It's emphasize beds second break quarter. just units even earnings, of going Because we a just that be we slight things have the I when are is I smart improvement a that more we we quarter. to quarter how get model, about expecting more business to deliveries We this color model profitable which incremental the thought of the the than benefit we quarter. small remarkable got in the terms third much relative more in of different gets. of in about. that $X.XX in That's about get drove X,XXX talking third and provide what it And delivered the there for pretty were So through leverage were had reminder out. guided the

So that in keeping just mind.

Now, to expectations. QX let's turn

getting we're going I That chips, not As out quarter that's those out QX enough reality the chips said to flow the to for XX% on XX% in and the comments, QX. too to late turned my XX,XXX were able the we that deliveries to more in expecting door the that coming the chips early that call in door expecting fact them timing be all the enough we of of get of flow in to get were has coming the in of are be to December previously. happen. are that quarter chips late deliveries about us too The

QX. were outlook QX that's slight talking about. and got We improvement for what in So we worse

Shelly Ibach

get XX/X the smallest headway but improvements, inventory And worked Bobby not flow having on for needed no the some we and of of even chips of headway, the is chips, all we incremental to. improvements, made everything. to the have where And being we trying in situation

smart Now X. it's in the and be to et our to the sitting environment focuses skew Flexfit those actually have and are on back quarter. back two that important fourth enough Flexfit and able really does bring as And chips benefits, is top support this also will up we are and us good for set It which system our cetera. the flex really skews, temperature a well. where And X better bed loaded snore important we in

look in – us the heading and have them for right in fourth the be. and QX to having inefficiencies not returns run up flow in designed we into have and it load to of to we through have it smart the is different So for very the confident commitments and that innovative the cost we was situation. current having us for supply, It's quarter, this beyond innovation and shareholder going the guidance. that are we do forward pathway and We're really work we'll to QX have right having the being being which confident in look the team, kind superior a now and level the this, done. also we're do to opens be to long demand the from a change mean, all management such be experienced It's the barrier path, to I this future. the work and handle impacting that ability for beds know capabilities And of driving in getting in important as our have our chips the forward and we're we it we're how that, aspect now. to that we'll still that in where that deliver able we've a to benefit environment we

Bobby Griffin

I to model this unit it while level for lastly And a at I look me, this you, a want for we did relates we go next set down year question, Thank appreciate and it’s like basis, kind still year try the year. to backlog Shelly. excess that. it's the if David, and on at but of ourselves together. two-part guess

from or XX or you should what kind this at like, excess x-plus And it should we the number? benefited stays about in your then delivery, from demand backlog we how Is if imply predict that guide XXX? this units guide backlog it say there this end depth does XXX, unit year? our a like does hit year's So at hey, strip year go out to year, some of and think then next

David Callen

guidance still about way to would your last supply the living excess for of in you been go Well, challenge time to directly, I'm before. since from what nonetheless in meaningfully I the and this next challenges predicting with. give backlog. not never But it that We've backlog question been Bobby, prepared benefit machine, expect would say year; we've that some a it's less even we you it answer in I doing talked do get year. year there the backlog QX to current than in was always guidance if is because back back we

As expecting coming about from I about less back half net I'm that then talking in the is half, and highlighted million that half half $XX less and the coming is from in back of it, of sales I'm backlog service.

So as you access I I excess recall that down of from million and call, sales to on the highlighted $XXX million. backlog QX net gone backlog think had we equivalent $XXX

we back $XX first the than thought something we So half the what got about had for less million and half. in

carrying we're XXXX on QX call. excess color provide of some And on we'll XXXX. the into So backlog that some additional

Bobby Griffin

David. in. Best Okay. you, back luck. Thank jump Thank of you, I'll Shelly.

David Callen

All thanks right, Bobby.

Operator

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

is line open. Your

Seth Basham

and the Thanks demand trends afternoon. the really questions lot. good outlook. are And around My a

Labor in and color some think would could then great. what If you're it you deteriorated about how has Day give more growth and over be demand better you XXXX, us that why on drove demand thinking since

Shelly Ibach

behaviors Yes, low sentiment the in need. purchase environment Seth, to this is closer have the seen is one the we difficult, consumer from of that

on think are and event weakness for the saw biggest played afterwards. the Labor long because an those I weekend, then which So, out days really and then of before that we weakness plan Day

line and Day. to consumer behavior Labor had close we ends and that inflationary And having the pressures various been interaction, And on and we then additional environment. worry. deeper the driving purchased that with sentiment when see certainly both hikes pressure the kind and rate we of with the not consumer And need. have on assortment, to bringing interest we And conversion into the our well the funnel through also all So, again, much She of difficult do good as been customers way designed. has and getting being to that is looking brand has within that not the with so. having doing base smaller better this system our then There's from time having a beds, of environment funnel. have January lead she as purchase not a And really just the able but to X% them longer smart the year as traffic the the prior forward And traffic we're FlexFit have is benefit store customers smart back coming is of difficult. to purchase. in some

David Callen

with the We're stated you not sentiment be at headaches of in official was excited points XXXX. bear. guidance. We're question the time, innovations about chip these we're chip to of we I a of you talking for that that also your our total hopefully from same end first Then that we’re demand eliminating about providing the bringing some provide to couple did believe But supply least pressured at XXXX consumer half the of some improved and flow supply. at the will year. next about

all account you some color the we'll those into on and call. QX specific things taking of we're So give

Seth Basham

adjustable demand value, the times And you with to focus Got more in it. your quarter, sure just demand the consumers are basis? lead end by high shifting was third pressured their long to on meaningfully follow-up on that

Shelly Ibach

think line. the the I it to Right of I'm factor. we're not attributing now weeks. three been across to lead long a have Well, that. And at all two it's times

So, demand as ago, impacted assortment. as since and year X sentiment the out – a were important a dropped the the seen it absolutely wasn't them bases it's not we balanced change sentiment the more since FlexFit them sure. assortment almost for X we've had FlexFit and the And our by assortment. to our we the dropped been having to in And of And are has take so consumer low.

Seth Basham

Got it.

for follow-up David. Okay. question One last

balance the rate interest have line guys agreement, to for you higher terms Did in the or sheet, anything for everything that what X% in accrue agreement? of to changes that a made changed at else? credit to Just you leverage, looking line covenant, the else up the

David Callen

X.X We times if interest above XX it's in points rate leverage. think, do, goes an table, gradation is if the interest leverage think, the rate above you basis X.X, I higher go there I additional

others The things stuff made on elements. changed administrative withholdings and an SOFR like like that for repurchases for exercises, to considerations from we that. to option LIBOR were allowance cover are acting additional tax for share We employees

de those also shares are a an had that. that in want we placeholder team that Those minimis sure are amount potential members, the the our to we were a bucket placeholder there it's that a So – There employees place big things. of was our sake covered if about for sorry. we after in primary make for go for to put of acquisition,

Seth Basham

Thank you.

David Callen

Sure.

Shelly Ibach

add the may other that category, helpful in down QX the pressured the be mattress organic search on quite on category demand XX%. one was Seth, is

category had the digital can was stronger the our pressured. We you entire did. see category but to brand So traffic certainly

Seth Basham

Thanks Understood. again.

David Callen

Thanks, Seth.

Operator

question from UBS. [Operator of Instructions] comes line Atul Your the next from Maheswari

Your open. line is

Michael Lasser

negatively is There evening. Atul Good supply by improving is you impact better? question worse the behalf the This as on getting has those chain it. been getting first Lasser Michael piece. supply of chain global think others Why impacted supply My are that been have is chain late, from the many has when Maheswari. especially for of that do on your actually been indications

David Callen

are supply our reading that continues direct everything that thing And supply about we we else for think specific anyway. talking problem Supply supplier, most a And to relationships been I'm isn’t calls semiconductor product, been need third things on they them, partner. we've is – managing what we our and to that tier components Well, as established exchanging third we help regular because ample are they of a some they so for tier Michael, of basis, a They chips is per having good us. one about with are through has But important. way I everybody supplier data supplier our the this multiple supplier, regular have limited trying frankly, have chips. virtually their week be challenging a The are a with are so well. semiconductor to for.

are And some QX got in in been year. offering we get to starting what beds going saying for to XXXX we're solid improvements. elements as of chip dealing We here product We chip to we've example. going And delivered Shelly enable being to than us X,XXX better of back deliveries a XXXX. QX, more couple we with that in next that's late in our are important some bring see see starting supply slight highlighted,

hope in really great chip that supply is it think on I shape. been we've frames focused dealing our up So you. It's for this problem broadly chain supply I pretty that Michael, with.

Shelly Ibach

Yes, I'll of of implications shifts between has on and is but delivery points, the gaps of The have largely where the we disruptive chips from extended of this expected another. year, have semiconductor couple we a maybe to flow, allocation all add very inefficiency we Michael. that costly, of that is flow, and lead quarter and kinds and receipt one units times has chips for

doesn't industry the fragile remains And system. So, entire it's very the all semiconductor it because the inventory about flow. have in

failure, like happens small a the production, which delay global So when three-month very result supply throughout an a it a chain. a entire XX-day delay, event equipment be could in can

and Autos because have So, we position. it's smart a certainly a of beds us. similar We're are in much part it than bigger

Michael Lasser

a this is number between more customers probably outlook win you than XXXX margin. are be long the question Because experience how spend you these does back. order the disappointment X% that? next have it influence Could and lower the experiencing XXXX? term quarter, for to a little of really that may operating to margin company The in sleep and quarter, customer follow-up last My some how X% revs does the to bit had quarter,

while you get flow to a eventually experienced through on take going sales, And so while there. it's incremental the to

David Callen

mistaken. premise Michael, Well is your

Let's there. just start

Our and hearing customer to according we're has what very metrics, strong been and loyalty and brand love seeing. the

puts profit just me, but point that of the line And XXX call worth started will when shareholder that performance margin it points of we when regular gross either on superior or do basis million delivers and we in to NOP. at full pressure that protect from your those – $XXX near with to it gross think basis and or started of of supply the the have or innovations and have your points points with question pressure we've Michael, some that called to Eventually, when chip future. massive you drive inflation. margins or $XXX taken to worth line input influx basis. are our of not said But dollars record continue of the math, We've if answer and at impact Frankly, it it value. nearly basis, to on get Aside rate. about, pricing million a able to we will satisfied isn't basis basis margins rate call XX% the XXX dollar gross your be hurts points flow to of claw these look annualized. operating million, where that, to steps we consumer lows even about sentiment at a we're excuse offset back you pressure we XXX $XXX XXX of our cost that at increases We've at

is. We are excited where the about future

the some new right the Climate as set even Shelly well, XXX will supports go new next health profit drive those As that operating pretty rates future and stage incredible the platform forward. XXX, into help highlighted, beds going as with year, innovations now opportunities our better for we us the we're launching wellness which the

Michael Lasser

Thank you very good And much. luck.

David Callen

very you Thank much.

Shelly Ibach

Thanks.

Operator

There call are closing to turn for time. remarks. the like at the would further to no company over I questions back this

Dave Schwantes

today. and releasing quarter us We'll for you well Thank joining results February. big. in our dream fourth be Sleep

Operator

This concludes today's conference call.

disconnect. may now You

Sleep Number (SNBR) 27 Oct 222022 Q3 Earnings call transcript