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Tempur-Pedic International Inc., a leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, announced financial results for the first quarter ended March 31, 2010. The Company also announced a new $100 million share repurchase program and increased full year 2010 financial guidance.
Financial Summary
- Earnings per share (EPS) were $0.44 per diluted share in the first quarter of 2010 as compared to $0.18 per diluted share in the first quarter of 2009. The Company reported net income of $33.1 million for the first quarter of 2010 as compared to $13.3 million in the first quarter of 2009.
- Net sales increased 43% to $253.9 million in the first quarter of 2010 from $177.1 million in the first quarter of 2009. On a constant currency basis, net sales increased 40%. Net sales in the domestic segment increased 57%, while international segment net sales increased 24%. On a constant currency basis, international segment net sales increased 15%.
-- Mattress sales increased 42% globally. Mattress sales increased 55% in the domestic segment and 19% in the international segment. On a constant currency basis, international mattress sales increased 10%. Pillow sales increased 33% globally. Pillow sales increased 44% domestically and 26% internationally. On a constant currency basis, international pillow sales increased 18%.
- Gross profit margin was 49.2% as compared to 46.2% in the first quarter of 2009. The gross profit margin increased as a result of fixed cost leverage related to higher production volumes and improved efficiencies in manufacturing, partially offset by geographic mix, new product introductions and higher commodity costs.
-- Operating profit margin was 20.6% as compared to 14.6% in the first quarter of 2009. The increase was driven by improved gross profit margin and operating expense leverage driven by higher sales.
-- The Company generated $23.3 million of operating cash flow in the first quarter of 2010.
Chief Executive Officer Mark Sarvary commented, "We are very pleased with our first quarter results - we have increased sales and grown our market share while improving both our gross and operating margins. Our investments in marketing and research and development are driving our sales momentum and we believe they will continue to do so in the future."
Current Share Repurchase Authorization Completed and New Authorization Announced
During the first quarter of 2010, the Company purchased 3.7 million shares of its common stock at an average price of $27.07 for a total cost of $100.0 million.
The Company announced that the Board of Directors has authorized a new share repurchase program of up to an incremental $100.0 million. Stock repurchases under this program may be made through open market transactions, negotiated purchases or otherwise, at times and in such amounts as management and a committee of the Board deem appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, financing and regulatory requirements and other market conditions. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. This share repurchase program replaces the Company's prior share repurchase authorization, and may be limited, suspended or terminated at any time without prior notice.
Chief Financial Officer Dale Williams stated, "In addition to our increased financial guidance for 2010 we believe we are well positioned for substantial growth in sales, earnings and cash flow, with limited capital expenditures, over the next several years. After considerable evaluation of our capital structure, we continue to view share repurchases as an excellent means to return value to shareholders over the long term."
About the Company
Tempur-Pedic International Inc. (NYSE:TPX) manufactures and distributes mattresses and pillows made from its proprietary TEMPUR(R) pressure-relieving material. It is the worldwide leader in premium and specialty sleep. The Company is focused on developing, manufacturing and marketing advanced sleep surfaces that help improve the quality of life for people around the world. The Company's products are currently sold in over 80 countries under the TEMPUR(R) and Tempur-Pedic(R) brand names. World headquarters for Tempur-Pedic International is in Lexington, KY. For more information, visit http://www.tempurpedic.com/ or call 800-805-3635. |