Attached files
| file | filename |
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| 8-K - FORM 8-K - TEMPUR SEALY INTERNATIONAL, INC. | d304844d8k.htm |
 ™
Exhibit 99.1 |
 2
Mark Rupe
Vice President |
 3
Agenda
Webcast participants may email questions to:
investor.relations@tempurpedic.com
February 22, 2012
Welcome / Agenda
Mark Rupe
Overview & Growth Initiatives
Mark Sarvary
Financial Overview
Dale Williams
Q&A |
 Forward-Looking Statements
Note Regarding Trademarks, Trade Names and Service Marks:
Tempur, Tempur-Pedic, The TEMPUR-Cloud Supreme, The TEMPUR-Cloud, The
RhapsodyBed by Tempur-Pedic, The TEMPUR-CloudPillow, The TEMPUR-Cloud
Luxe, TEMPUR Advanced Ergo System, The AlluraBed by Tempur-Pedic, The Sensation
Mattress by Tempur, The NeckPillow by Tempur-Pedic, The SymphonyPillow by
Tempur-Pedic, The ComfortPillow by Tempur-Pedic, The RhapsodyPillow by Tempur-Pedic, The TEMPUR-Contour Collection, The TEMPUR-
Contour, The TEMPUR-Contour Signature, The TEMPUR-Contour Select, The
TEMPUR-Simplicity Collection, and The TEMPUR-Traditional Pillow are trademarks,
trade names or service marks of Tempur-Pedic International Inc. and its
subsidiaries. All other trademarks, trade names and service marks in this presentation
are the property of the respective owners.
4
There are a number of risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements contained in this presentation. Numerous factors, many
of which are beyond the Company’s control, could cause actual results to differ materially from those expressed as
forward-looking statements. These risk factors include general economic and industry conditions,
particularly in the retail sector, as well as consumer confidence and availability of
consumer financing; uncertainties arising from global events; the effects of changes in foreign exchange rates on the
Company’s reported earnings; consumer acceptance of the Company’s products; industry
competition; the efficiency and effectiveness of the Company’s advertising campaigns and
other marketing programs; the Company’s ability to increase sales productivity and expand distribution channels; the
Company’s dependence on its significant customers; the Company’s ability to address issues
in certain underperforming international markets; the Company’s ability to continuously
improve its product line, maintain efficient, timely and cost-effective production and delivery of its products, and manage
its growth; the effects of strategic investments on the Company’s operations; changes in foreign
tax rates; rising commodity costs; the Company’s ability to retain members of its senior
management team; the effects of increased interest rates; the market price for the Company’s common stock prevailing from
time to time; and the nature of other investment opportunities presented to the Company from time to
time. Additional information concerning these and other risks and uncertainties are discussed in the
Company's filings with the Securities and Exchange Commission, including without limitation the
Company's annual report on Form 10-K under the headings "Special Note Regarding Forward-Looking
Statements" and "Risk Factors". Any forward-looking statement speaks only as of
the date on which it is made, and the Company undertakes no obligation to update any
forward-looking statements for any reason, including to reflect events or circumstances after the date on which such statements are made or
to reflect the occurrence of anticipated or unanticipated events or circumstances. This presentation may contain “forward-looking statements,” within the meaning of federal
securities laws, which include information concerning the Company’s plans, objectives,
goals, strategies, future revenues or performance, financing needs and other information that is not historical information.
When used in this presentation, the words “estimates,” “expects,”
“anticipates,” “projects,” “plans,” “intends,” “believes,” and variations of such words or
similar expressions are intended to identify forward-looking statements. All forward-looking
statements, including without limitation, the Company’s expectations regarding improving
the quality and range of existing products; increasing brand awareness and brand consideration; the impact of the
introduction of new products, including the TEMPUR-Cloud® line and TEMPUR-Simplicity
Collection; international and domestic growth opportunities; increasing market share; improving
gross margin; expanding and improving distribution channels; manufacturing capacity and utilization; consumer
preferences and behavior; the effectiveness of new cost structures; meeting financial obligations;
cost and operating expense reductions and cash flow generation; and the Company’s enhanced
earnings power are based upon current expectations and beliefs and various assumptions. There can be no
assurance that the Company will realize these expectations or that these beliefs will prove correct. |
 5
Mark Sarvary
President & Chief Executive Officer |
 6
Tempur-Pedic Overview
Macro-Industry Update
Tempur-Pedic Growth Strategies & Initiatives
Key Topics |
 7
Tempur-Pedic Overview |
 8
Company Thesis
Established:
Leader in the $6B premium segment of the $20B global mattress and pillow
market Differentiated:
Most highly recommended brand by owners, most desired brand for
non-owners Industry-leading brand advertising, nearly $1B over past
decade Innovative:
Systematic proven track record of delivering successful new products (Sensation,
Cloud, Contour) Profitable:
Growing:
3% US mattress unit market share
Management estimates
leader
in
non-spring
mattresses
and
premium
mattresses
preferred,
branded
product
line
Uniquely consumer focused and marketed product
Industry-leading margins and cash flows
Significant top line growth opportunity
Consumer
Worldwide
Simplicity and International Cloud/Original in 2012, and backlog of 2 years of new products |
 9
Tempur Vision
People who sleep on Tempur sleep better than those
who don’t
Our goal is to become the world’s
favorite mattress and pillow brand
To achieve our goal we will:
1.
Make sure everyone knows they would sleep better on Tempur
2.
Make sure there is a Tempur mattress and pillow that appeals to everyone
3.
Make sure that Tempur is available to everyone
4.
Make sure Tempur continues to deliver the best sleep
Make sure our cost structure is optimized to enable marketing and product
investments |
 10
In 2009, We Introduced Our 5-Year (2014) Goal
Note 1: Management estimates
Note 2: For a discussion of the Company’s performance, please refer to the 2009
10K filing. 2009 Actual
2014 Goal
Sales
$831M
$2B
Gross Margin
47.4%
50.0%
Operating Margin
17.4%
25.0%
2009 Investor Day |
 We
Are Well On Our Way To Achieving The 2014 Goal 11
Note 1: Management estimates
Note
2:
For
a
discussion
of
the
Company’s
performance,
please
refer
to
the
2011
10K
filing.
2011 Actual
2014 Goal
Sales
$1.4B
$2B
Gross Margin
52.4%
50.0%
Operating Margin
24.0%
25.0% |
 12
2011 Performance
For
a
discussion
of
the
Company’s
performance,
please
refer
to
the
2011
10K
filing.
2011 Actual
Y/Y Chg
Sales
$1.4 B
+28%
Gross Margin
52.4%
+220 bps
Operating Margin
24.0%
+180 bps
EBITDA
$391 M
+35%
Net Income
$220 M
+40%
EPS
$3.18
+47% |
 13
Tempur-Pedic Range Of Products
The
ComfortPillow
by
Tempur-Pedic
®
The
NeckPillow
by
Tempur-Pedic
™
The
TEMPUR-Cloud
™
Supreme
The
Sensation
Mattress
by
Tempur
®
The
Advanced
Ergo
Adjustable
Base
by
Tempur-Pedic
™
TEMPUR-Traditional
™
Pillow
The
TEMPUR-Simplicity™
Medium
The
TEMPUR-Contour™
Select
The
CloudPillow
by
Tempur-Pedic
® |
 14
Tempur Products
For a discussion of the Company’s performance, please refer to the 2009 10K
filing. ($ in billions)
Sales
$0.8
2009
Tempur
Tempur-HD |
 15
Tempur Products
For a discussion of the Company’s performance, please refer to the
Company’s 10K filings. ($ in billions)
Sales
$0.8
2009
Tempur
Tempur-HD
$1.1
$1.4
2010
Tempur
Tempur-HD
Cloud
2011
Tempur
Tempur-HD
Cloud |
 16
Tempur Products
Note 1: Management estimates
Note
2:
For
a
discussion
of
the
Company’s
performance,
please
refer
to
the
Company’s
10K
filings. |
 17
Tempur Products
Note 1: Management estimates
Note
2:
For
a
discussion
of
the
Company’s
performance,
please
refer
to
the
Company’s
10K
filings. |
 Introducing Our New 5-Year Goal
18
Sales
$3B
EPS
$8
2016 Goal
Management estimates
™ |
 Introducing Our New 5-Year Goal
19
Sales
$3B
EPS
$8
2016 Goal
the World.
Management estimates |
 20
Global Manufacturing Presence
Denmark
(500K sq ft)
New Mexico
(800K sq ft)
> $2.5B of sales capacity across three
existing manufacturing facilities
Capacity utilization approximately 50%
Opportunity to expand New Mexico capacity
with relatively low amount of capital
deployment
Management estimates
Virginia
(500K sq ft) |
 21
State-of-the-Art Research & Development
Multi-faceted R&D facilities in Denmark and Virginia:
>50
Employees
–
PhDs,
Advanced
Degrees…
Chemistry and process research, development and
testing
Commercialization and product development
Product testing |
 22
Strong, Established Management Team
Prior Experience
Years
Name
Position
Prior Experience
Consumer
Products
Inter'l
with
Tempur
Mark Sarvary
President and CEO
President, Campbell Soup North America
CEO, J. Crew Group
4
President, Stouffer's Frozen Food Division at Nestle
Rick Anderson
EVP and President,
VP,
Gillette
North
America Gillette / P&G
6
Matt Clift
EVP, Global Operations
VP / GM Lexmark International
Lexmark / IBM
7
Lou Jones
EVP and General Counsel
General Counsel, Papa John's International
SVP, Blockbuster, Inc.
3
David Montgomery
EVP and President,
President, Rubbermaid Europe
International
VP, Black & Decker Europe, Middle East, Africa
9
Brad Patrick
EVP, Human Resources
SVP, Sara Lee Corporation
Gillette / P&G
1
Delta Air Lines
Dale Williams
EVP and CFO
CFO, Honeywell Control Products
CFO, Saga Systems
9
CFO, GE Information Systems |
 23
Macro-Industry Update |
 24
Global Bedding Industry is Large and Growing
Note 1: Includes mattresses, foundations, and pillows
Note 2: Management estimates
Note 3: 2010 CSIL report
Global Market Opportunity
Mattresses, Foundations and Pillows |
 25
Note 1: 2010 Annual ISPA Report of Sales and Trends
Note 2: Non-spring data not available prior to 2004
Note 3: Management estimates
US Mattress Unit and Dollar Volume |
 26
Tempur-Pedic Growth Strategies & Initiatives
|
 27
Tempur Vision
People who sleep on Tempur sleep better than those
who don’t
Our goal is to become the world’s
favorite mattress and pillow brand
To achieve our goal we will:
1.
Make sure everyone knows they would sleep better on Tempur
2.
Make sure there is a Tempur mattress and pillow that appeals to everyone
3.
Make sure that Tempur is available to everyone
4.
Make sure Tempur continues to deliver the best sleep
Make sure our cost structure is optimized to enable marketing and product
investments |
 28
Growth Strategy –
Overview
Introduce New Products to Increase Addressable Market
Tempur Brand Advertising
Global investment in advertising
“Heavy up”
local market advertising
Dealer integrated advertising
Increase Retail Advocacy
Global Distribution |
 29
New Products |
 TEMPUR-Cloud™
30
Tempur-Cloud has been a major success in North America and
Internationally Introduced in North America in November 2009
Introduced in International markets beginning in March 2011
Management estimates |
 TEMPUR-Contour
31
Tempur-Contour was a comprehensive line upgrade of the original Tempur
offering Introduced in North America in June 2011
Gained incremental distribution and exceeded expectations
Management estimates
™ |
 Many
Others As Well…. 32
Sensation
Traditional pillow
Opening price point Ergo Adjustable
Slippers |
 33
2012 Major Initiative: “Fixing the “Barbell”
Source: Management estimates based on ISPA and Traqline
($ in Millions)
Queen set price at retail |
 Introducing
34
™ |
 TEMPUR-Simplicity
35
™ |
 Continuing the Revolution in Consumer Research
36
15
months of
consumer
research and
development
2,500
total
consumers
12
rounds of
consumer testing
on three models
for three feels
14,000+
prototype
evaluations |
 Source: Third Party Research, 2011
TEMPUR-Simplicity
Consumer Testing Results
37
TEMPUR-Simplicity Collection
Competitor 1
Competitor 2
Competitor 3
Competitor 4
™ |
 38
New Proprietary Tempur-Pedic Technology
New TEMPUR ®
formulations
Firm, medium and soft options for every sleep
preference
Absorbs motion so partner movement is less
likely to disturb sleep
10-year full warranty |
 39
Growing Appeal
Prices effective 4/3/12. Queen size sets featured. |
 Growing Appeal
40
More new products to come… |
 41
Brand Advertising |
 Tempur Relative Ad Spend
42
Note 1: Based on Kantar Media, 2011 (through October 2011) based on rate card value not negotiated
rates; digital spending and co-op spending not included.
Note 2: Management estimates
US Consumer Advertising
Tempur-Pedic
94%
The 3 "S's"
Total
6% |
 Accelerating Ad Spend in 2012
43
Cumulative ad spend of nearly $1B over past decade
Tempur Global Advertising Spend
Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K
filings. Note 2:
Management estimates
|
 Investing to Build an Iconic Brand
44
Ad Spend Ratio
Note 1: Based on 2010 Ad Age Top 50 U.S. Ad Spend
Note 2: For a discussion of the Company’s performance, please refer to the 2011 10K filing.
Note 3: Management estimates
|
 Continue To Advertise
45
™ |
 46
Ask Me Brand Campaign |
 47
Heavy
Up
Media
–
Test
Market
Results
Heavy up advertising -
tested over 2 years
Yielded almost double the growth
Will expand in 2012
Prime time network heavy up
Management estimates |
 Media
Highlights – February 2012
48
Management estimates |
 49
Retailer Advertising |
 50
Advertising Spend by Retailers
Note 1: Based on 2010 Ad Age Top 50 U.S. Ad Spend Note 2: Management
estimates |
 51
Industry Campaigns |
 52
Industry Campaigns |
 53
Tempur Introduces: Integrated Advertising Fund Program
Retailer ad directly integrated with Tempur consumer communication
Exclusively features Tempur and is consistent with guidelines
Tempur contributes modestly to help fund integrated ad
Tested in 2010 and 2011, expanded in 2012 |
 Integrated Advertising
Tempur National Ad
Retailer Integrated Tempur Ad
54 |
 55
Dealer Advocacy |
 Dealer Advocacy Programs
Consumer Education
Dealer Profitability
Retail Associate Support
56 |
 Direct Consumer Education
57
9
million
US
website
visits
–
up
50%
in
2011
5
million
International
website
visits
–
up
58%
in
2011
Management estimates |
 Dealer Profitability -
Industry AUSP Growth
58
(Average Mattress Unit
Selling Price at Retail)
Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K
filings. Note 2: 2010 Annual ISPA Report of Sales and Trends
Note 3: Management estimates
|
 Dealer Profitability -
Dealer Margin Growth
59
Management estimates
0%
5%
7%
8%
11%
15%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2005
2009
2012
Baseline
Lowest Margin
Model
Highest
Lowest
Highest
Lowest
Highest
+800bps
+500bps
+1,100bps
+700bps
+1,500bps
2005
2009
2012
Dealer Margin vs 2005 Baseline |
 Retail Salesforce Training & Support
•
Doubled sales force since 2009
•
Tempur Mobile
•
Sophisticated systems
60 |
 Tempur-Pedic ®
Elite Retailer
61
Elite Retailer is a powerful program that identifies and differentiates premier
dealers to consumers, and directs Tempur website visitors to shop with
them |
 62
International |
 63
International
International segment is 30% of sales and more profitable than North America
Low share of $13B international market
Australia,
Austria,
New
Zealand,
China,
South
Korea,
and
Canada
acquired
since
2006
Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K
filings. |
  International Collections
64
Original
Sensation
Cloud
Collection
Collection
Collection
Firmer feel
Traditional feel
Softer feel
Basic
19, 21, 25
19, 21, 25
19, 21, 25
Deluxe
22, 27
22, 27
22, 27
Royal
25
Supreme
30
Tempur
Collection
–
offers
retailers
differentiated
range
Very
successful
Sensation
and
Cloud
introductions
–
gained
incremental
distribution
Management estimates |
 International Distribution
65
Extensive distribution with significant opportunity for future growth
Increased
slot
presence
within
stores
equally
important
–
Sensation/Cloud
Company-owned flagships
China
Japan
Holland
Singapore
Norway
Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K
filings. |
 International Advertising Markets
66
Weightless campaign
Limited
but
growing
awareness
–
in
strategic
markets
awareness
increased
meaningfully
26%
13%
0%
5%
10%
15%
20%
25%
30%
Advertised Markets
All Other International
2011 International Net Sales Growth
Note 1: For a discussion of the Company’s performance, please refer to the Company’s 10K
filings. Note 2:
Management estimates
|
 Weightless Brand Campaign
67 |
 68
Weightless Brand Campaign |
 69
Summary |
 70
Summary
Established:
Industry leader of a $20B growing global market
Differentiated:
Unique, preferred product with strong brand supported by ubiquitous
advertising
Innovative:
Proven track record of introducing multi-$100M new product lines
Profitable:
Industry-leading profitability, and clear path to improvement
Growing:
Well
on
track
to
achieve
5
year
goal,
now
targeting
$3B,
2x
current
size,
by 2016
Management estimates |
 71
Dale Williams
Executive Vice President & Chief Financial Officer
|
 72
Financial Overview |
 73
Net Sales
2011 Net Sales increased 28%
+30% in North America
+24%
Internationally,
+16%
constant
currency
basis
($ in millions)
For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
 74
Sales
Growth
Trajectory
–
Geographic
Segments
Note 1: International Sales Growth on Constant Currency basis.
Note 2: For a discussion of the Company’s performance, please refer to the Company’s 10K and
10Q filings.
(28%)
(19%)
(12%)
40%
56%
59%
47%
31%
37%
29%
30%
26%
(17%)
(19%)
(7%)
3%
15%
15%
11%
6%
9%
18%
17%
24%
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
2009
2010
2011
Year on Year Growth/Decline
North America
International (Constant Currency) |
 75
Mattresses Drive Global Business
International
North America
2011 Net Sales
North America
revenue up 30% in 2011, driven by Cloud and Contour collections and
improved Ergo attach rates
International revenue up 24% in 2011, driven by Cloud introduction and
advertising For a discussion of the Company’s performance, please refer to the
Company’s 2011 10K filing. |
 76
Gross Margin
Considerable margin opportunity related to ongoing productivity program,
engineering and volume leverage
For a discussion of the Company’s performance, please refer to the Company’s 10K
filings. |
 77
Gross Margin Drivers
Management estimates
+
Productivity program
+
Productivity program
+
Volume leverage
+
Volume leverage
+
Price/mix
Price/mix
-
Commodities
-
Commodities
-
Floor model discounts
?
Geographic mix
-
Geographic mix
+500bps
2012 - Future
2009 - 2011 |
 78
Significant Opportunity To Continue Cost Reduction
Management estimates
Strong
visibility
in
productivity
program
delivering
175
bps
per
year
of
cost
reduction
over
the next 5 years
Focus Area
Operational Excellence
Yield
LEAN / Six Sigma
Productivity
Direct Costing
Sourcing
Competition
Supplier Managed Inventory
Co-Engineering
Contract Terms
Engineering
Process Enhancements
Returns / Warranty Reduction
Supply Chain Strategy
Truckload Utilization
Demand Driven Supply Chain
Direct Ship
LEAN Supply Chain
Network Optimization
Home Delivery Efficiencies
New Product Development
Design for Manufacturability
Material / Process Development
Fixed Cost Leverage
Product Breadth
Appropriate Capital Investment
Project Examples |
 Operating Margin
Operating margin increased 180 bps in 2011, while expanding advertising investment
to approximately 10.5% of sales (+175
bps) 79
For a discussion of the Company’s performance, please refer to the Company’s prior 10K
filings. |
 Excellent Cash Flow Dynamics With Significant Growth Potential
80
In 2011, we repurchased 6.5 million shares for $368 million
Repurchased $1.2 billion since 2005
($ in millions)
For a discussion of the Company’s performance, please refer to the Company’s 10K
filings. |
 81
Depreciation & Amortization vs. Capital Expenditures
Multi-year add back to net income as D&A should exceed Capex
Capex in 2012 includes additional spending for strategic projects, IT systems, and
new headquarters
($ in millions)
For a discussion of the Company’s performance, please refer to the Company’s 10K filings. |
 2016
Goal Implies Continued Solid Future Growth 82
Management estimates
($ in billions) |
 Introducing Our New 5-Year Goal
83
Sales
$3B
EPS
$8+
2016 Goal
the World.
Management estimates |
 84
Q&A |
 ™ |