Tempur-Pedic International Inc. a leading manufacturer, marketer and distributor of premium mattresses and pillows worldwide, announced financial results for the fourth quarter and year ended December 31, 2012. The Company also issued financial guidance for 2013.
FOURTH QUARTER FINANCIAL SUMMARY
Earnings per diluted share (EPS) under U.S. generally accepted accounting principles (GAAP) in the fourth quarter of 2012 were $0.39, and reflect the tax provision recorded in connection with the anticipated repatriation of foreign earnings together with certain transaction and integration costs related to the proposed Sealy acquisition, and other restructuring costs. Adjusted EPS were $0.60 in the fourth quarter of 2012 as compared to GAAP EPS of $0.84 in the fourth quarter of 2011.
GAAP net income in the fourth quarter of 2012 was $23.5 million. The Company reported adjusted net income of $36.4 million for the fourth quarter of 2012 as compared to GAAP net income of $56.3 million in the fourth quarter of 2011. For additional information regarding adjusted EPS and adjusted net income (which are non-GAAP measures), please refer to the reconciliation and other information included in the attached schedule.
Net sales decreased 7% to $341.1 million in the fourth quarter of 2012 from $366.8 million in the fourth quarter of 2011. Net sales in the North American segment decreased 9% and International segment net sales decreased 4%.
Mattress sales decreased 5% globally in the fourth quarter of 2012. Mattress sales decreased 5% in the North American segment and decreased 7% in the International segment. Pillow sales decreased 8% globally. Pillow sales decreased 26% in North America and increased 11% internationally.
Gross profit margin was 50.0% as compared to 52.1% in the fourth quarter of 2011. The gross profit margin decreased primarily as a result of product mix and higher new product costs, offset partially by improved efficiencies in manufacturing and distribution.
Operating income was $51.3 million, or 15.0% of sales as compared to $85.8 million, or 23.4% of sales in the fourth quarter of 2011 reflecting the Company's reduced gross margin and deleverage of certain operating expenses related to lower sales. Operating income in the fourth quarter of 2012 included $7.6 million of transaction and integration costs related to the proposed Sealy acquisition, as well as $1.5 million of restructuring charges.
The Company generated $36.2 million of operating cash flow as compared to $69.7 million in the fourth quarter of 2011.
FULL YEAR FINANCIAL SUMMARY
GAAP EPS for the full year 2012 were $1.70, and reflect the tax provision recorded in connection with the anticipated repatriation of foreign earnings together with certain transaction and integration costs related to the proposed Sealy acquisition, and other restructuring costs. Adjusted EPS were $2.61 for the full year 2012 as compared to GAAP EPS of $3.18 for the full year 2011.
GAAP net income for the full year 2012 was $106.8 million. The Company reported adjusted net income of $164.1 million for full year 2012 as compared to GAAP net income of $219.6 million for the full year 2011. For additional information regarding adjusted EPS and adjusted net income (which are non-GAAP measures), please refer to the reconciliation and other information included in the attached schedule.
Net sales decreased 1% to $1,402.9 million for the full year 2012 from $1,417.9 million for the full year 2011. Net sales in the North American segment decreased 4% and International segment net sales increased 6%.
Gross profit margin was 50.9% for the full year 2012 as compared to 52.4% for the full year 2011. The gross profit margin decreased primarily as a result of product mix and increased promotions and discounts.
Operating income for the full year 2012 was $248.3 million, or 18% of sales as compared to $340.5 million, or 24.0% of sales for the full year 2011. Operating income for the full year 2012 included $11.1 million of transaction and integration costs related to the proposed Sealy acquisition, $1.5 million of restructuring charges, and $10.3 million of benefit related to an adjustment to long-term incentive stock compensation following a re-evaluation of the probability of meeting certain required financial metrics.
The Company generated $189.9 million of operating cash flow for the full year 2012 as compared to $248.7 million for the full year 2011.
The Company repurchased 5.0 million shares for $150.0 million during 2012.
Chief Executive Officer Mark Sarvary commented, "Our performance during the fourth quarter was in line with our projections, both in North America and internationally. We continued to see signs of stabilization in our North American business driven by initiatives we launched in the third quarter. Next week at the Las Vegas Market industry show we will announce further initiatives, including several new products that we believe will return Tempur-Pedic to growth in North America in 2013. Internationally, our fourth quarter results were consistent with our recent projections, but reflect a softening in demand due to macroeconomic weakness in Europe as expected. We are excited about new product introductions in our international business in 2013. We remain very confident in our Company's growth potential and our strong brand, and are very excited about our proposed combination with Sealy Corporation."
About the Company
Tempur-Pedic International Inc. manufactures and distributes mattresses and pillows made from its proprietary TEMPUR 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.
