Tempur Sealy fourth-quarter and annual earnings in line with expectations

jpatton1@herald-leader.comFebruary 6, 2014 

Lexington-based mattress maker Tempur Sealy International Inc. reported fourth-quarter and yearly earnings Thursday that were in line with company expectations. Sales of Tempur products in North America decreased slightly, while international sales rose 4.5 percent.

Earnings for the quarter that ended Dec. 31 were $22.9 million, down 2.6 percent from the same quarter of 2012. Earnings per diluted share for the quarter were 37 cents, compared to 39 cents in the same quarter of 2012.

Adjusted to reflect costs related to last spring's acquisition of Sealy Corp. by the company formerly called Tempur-Pedic, net income for the quarter was $41.1 million, compared with adjusted net income of $36.4 million for the fourth quarter of 2012. Adjusted earnings per share were 66 cents, compared with 60 cents in 2012.

"Sealy's fourth-quarter sales were above our expectations, and Tempur International returned to growth with sales increases in Europe, Asia and Latin America," Tempur Sealy CEO Mark Sarvary said in a news release. Tempur North America showed continued stability, with sales down 1 percent as compared to last year.

Total net sales increased 98.8 percent to $678.1 million in the fourth quarter of 2013 from $341.1 million in the fourth quarter of 2012. That was due to the inclusion of $333.5 million of Sealy net sales for the fourth quarter of 2013.

For the full year, the company reported net income of $74 million, compared with $106.8 million for all of 2012. Per share, earnings were $1.20 compared to $1.70 for 2012.

Adjusted, full-year net income was $146.4 million for 2013 as compared to $164.1 million for 2012. Adjusted earnings per share were $2.38 for 2013, compared to $2.61 for 2012.

Total net sales increased 75.7 percent to $2.5 billion for 2013 from $1.4 billion for 2012. The net sales increase was due to the inclusion of $1.1 billion of Sealy net sales for the period of March 18 to Dec. 31.

Tempur Sealy said that for 2014, net sales are expected to grow from 1 to 5 percent, to range from $2.8 billion to $2.9 billion, with adjusted earnings per share expected to be $2.60 to $2.85, including depreciation and amortization of approximately 19 cents per share associated with the Sealy purchase price allocation.

In a conference call with market analysts, Sarvary said that the company expects major launches of seven reinvented Tempur-Cloud and Tempur-Contour beds to roll out in the first quarter, with four redesigned Stearns & Foster beds to launch a little later. The lines debuted at recent shows in Las Vegas and Germany to good reviews, he said.

International markets are expected to generate $300 million in revenue, Sarvary said.

To accompany the new products, Tempur Sealy will step up advertising and marketing campaigns on television and in stores.

Chief Financial Officer Dale Williams said that first-quarter sales are expected to be flat to slightly up, with January orders somewhat soft, as retailers work through existing inventory in preparation for the new product lines. Shares of Tempur Sealy International Inc. (TPX:NYSE) closed Thursday at $49.70, up $2.27, or 4.79 percent.

Janet Patton: (859) 231-3264. Twitter: @janetpattonhl.

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