Tempur-Pedic Reports Higher 4th Quarter Net Sales & Profit

Furniture World Magazine

Tempur-Pedic Reports Fourth Quarter and Full Year Earnings Thursday January 24, 4:05 pm ET - Net Sales Up 13% in Fourth Quarter - Full Year Net Sales Exceed $1.1 Billion LEXINGTON, Ky., Jan. 24 /PRNewswire-FirstCall/ -- Tempur-Pedic International Inc. (NYSE: TPX - News), the leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, today announced financial results for the fourth quarter and year ended December 31, 2007. The Company also announced financial guidance for 2008. FOURTH QUARTER 2007 FINANCIAL SUMMARY -- Earnings per share (EPS) increased to $0.52 per diluted share in the fourth quarter of 2007 as compared to $0.36 per diluted share in the fourth quarter of 2006. EPS in the fourth quarter of 2006 was reduced by a $10.7 million pre-tax charge to income for a loss on extinguishment of debt. -- Net sales rose 13% to $289.0 million in the fourth quarter of 2007 from $256.6 million in the fourth quarter of 2006. Retail sales increased 17% worldwide. -- The Company achieved net sales growth across all product lines both domestically and abroad. Worldwide mattress revenue increased 14%. FULL YEAR 2007 FINANCIAL SUMMARY -- EPS was $1.74 per diluted share for the full year 2007 as compared to $1.28 per diluted share for the full year 2006, an increase of 36%. -- Net sales for the full year 2007 totaled $1.107 billion, 17% higher than net sales for the full year 2006. Retail channel sales worldwide increased 21%. The Company reported net income of $141.5 million for the full year 2007 as compared to $112.3 million in the full year 2006. Net income results include stock-based compensation expense, which increased 76% to $6.7 million in 2007 as compared to $3.8 million in 2006. In addition, net income results in 2007 reflect a one-time favorable tax rate reduction related to the elimination of certain valuation allowances for net operating loss carry forwards in two foreign tax jurisdictions. President and Chief Executive Officer H. Thomas Bryant commented, "Tempur- Pedic achieved outstanding results in 2007 and we are pleased that we exceeded the goals we established at the beginning of the year. The company delivered growth across all product lines both domestically and abroad. In the retail channel, we substantially improved account productivity while expanding floor space. We introduced several new products around the world, which have been received very positively. And, most important to our long term objectives, we improved brand awareness, increased market share and expanded capacity by opening the world's largest mattress factory. In addition, we maintained the profitability of the business while absorbing the increased cost of starting up our Albuquerque manufacturing facility. "In the fourth quarter, despite a slowing macro environment, Tempur-Pedic achieved double digit retail sales growth driven by solid mattress sales growth. Gross profit margin trended to the highest quarterly level of the year, although channel and product mix modestly impacted it relative to our prior expectations. "We approach 2008 with confidence, yet a degree of caution as a result of the uncertainty in the U.S. economy. Given this uncertainty, we believe it is prudent to plan more conservatively in terms of 2008 sales growth. However, as noted before, we strongly believe the mattress industry is in the early stages of a long-term shift away from innersprings to specialty bedding. In addition, while Tempur-Pedic is already the industry leader for profitability, we remain focused on our goal of ultimately becoming the worldwide bedding leader in terms of both sales and profitability. "In 2008, our aim is to build on the progress made in 2007. We will continue our efforts to expand market share around the world driven by growing brand awareness. We plan to accomplish this by continuing to implement our advertising campaign in the U.S. and introduce it into international markets. We will also focus on expanding floor space as this is a key driver of market share. "In addition, we believe expanding product offerings will help Tempur- Pedic continue to substantially outperform the industry. We are planning to unveil several new mattresses and pillows around the world during 2008. For example, next week, we will introduce a new mattress model in the U.S., The AlluraBed by Tempur-Pedic(TM). This model, featuring a very luxurious pillow- top made from our world renowned TEMPUR-HD(TM), will have a suggested retail price point of $3,999 for a queen size mattress. "From an operational perspective, we have several initiatives underway to continue improving productivity and drive margin gains. These initiatives cross all areas of our company including manufacturing, distribution, and sourcing as well as staying lean in terms of operational expenses. As a result, we anticipate expanding operating leverage will help drive earnings per share growth. Bryant concluded, "We enter 2008 with a solid operating and financial position. We have a diverse business model and a growing assortment of compelling products. Because our products are sold in over 70 countries, our financial performance is geographically diverse. Our go-to-market strategy of building brand awareness and focusing on premium price points has proven to be a significant competitive advantage. We are focused on long term growth opportunities and will continue to invest in new products, new markets, and research and development. In summary, we are very confident in our long term prospects and look forward to what we expect will be a very successful new year." Share Repurchase Program During the fourth quarter of 2007, the Company purchased 0.7 million shares of its common stock for a total cost of $19.9 million. Under its existing share repurchase authorization, the Company has $280.1 million available for repurchase. 2008 Financial Guidance The Company issued full year 2008 guidance for net sales and earnings per share. It currently expects net sales for 2008 to range from $1.195 billion to $1.250 billion, an increase of 8% to 13% over 2007. It currently expects EPS for 2008 to range from $2.03 to $2.20 per diluted share. This guidance reflects an increase of 17% to 26% compared to 2007 EPS of $1.74 per diluted share. The Company's earnings guidance reflects the Company's traditional practice of incurring heavier marketing expenditures as a percentage of sales in the first quarter of each year. The Company also noted its expectations are based on information available at the time of this release, and are subject to changing conditions, many of which are outside the Company's control. This guidance does not take into account the anticipated effect of any additional share repurchases. About the Company: Tempur-Pedic International Inc. (NYSE: TPX - News) manufactures and distributes mattresses and pillows made from its proprietary TEMPUR® pressure-relieving material. It is the worldwide leader in premium sleep, the fastest growing segment of the estimated $13 billion global mattress market. 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 70 countries under the TEMPUR® and Tempur-Pedic® 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.