Tempur Sealy Reports First Quarter Results
Tempur Sealy reported first quarter 2024 net sales of $1.2 billion, consistent with the prior year. The company saw strong consolidated gross margins increase to 43.1%. EPS was $0.43 with adjusted EPS of $0.50. Record first quarter cash flow from operations reached $130 million. Total net sales decreased 1.5% to $1,189.4 million compared to the first quarter of 2023. North America business segment sales decreased by 2.0%, while International sales remained consistent. Gross margin improved to 43.1%. Operating income decreased by 8.2%, and net income decreased by 10.6%. Adjusted net income decreased by 3.4%. EPS decreased by 10.4%, and adjusted EPS decreased by 5.7%. Leverage ratio improved to 2.85 times. Financial guidance for 2024 includes an adjusted EPS range of $2.60 to $2.90, reflecting a 15% increase from the prior year.
Record first quarter cash flow from operations of $130 million.
Strong consolidated gross margins increased to 43.1%.
Adjusted gross margin improved to 43.4%.
Leverage ratio improved to 2.85 times.
Financial guidance for 2024 includes an adjusted EPS range of $2.60 to $2.90, representing a 15% increase from the prior year.
Total net sales decreased by 1.5% compared to the first quarter of 2023.
Operating income decreased by 8.2%, and net income decreased by 10.6%.
Adjusted net income decreased by 3.4%.
EPS decreased by 10.4%, and adjusted EPS decreased by 5.7%.
- First Quarter 2024 Net Sales of
- Strong Consolidated Gross Margins up
- EPS of
- Record First Quarter Cash Flow from Operations of
FIRST QUARTER 2024 FINANCIAL SUMMARY
- Total net sales decreased
1.5% to$1,189.4 million $1,208.1 million 2.0% in theNorth America business segment and consistent sales in the International business segment. On a constant currency basis(1), total net sales decreased2.1% , with a decrease of2.3% in theNorth America business segment and a decrease of1.6% in the International business segment. - Gross margin was
43.1% as compared to41.4% in the first quarter of 2023. Adjusted gross margin(1) was43.4% as compared to41.8% in the first quarter of 2023. - Operating income decreased
8.2% to$131.5 million $143.3 million 2.6% to$149.4 million $153.4 million - Net income decreased
10.6% to$76.3 million $85.3 million 3.4% to$89.7 million $92.9 million - Earnings per diluted share ("EPS") decreased
10.4% to$0.43 $0.48 5.7% to$0.50 $0.53 - Leverage based on the ratio of consolidated indebtedness less netted cash(1) to adjusted EBITDA(1) was 2.85 times as compared to 3.24 times in the trailing twelve months ended March 31, 2023.
KEY HIGHLIGHTS | |||||
(in millions, except percentages and per common share amounts) | Three Months Ended | % Reported | |||
March 31, 2024 | March 31, 2023 | ||||
Net sales | $ 1,189.4 | $ 1,208.1 | (1.5) % | ||
Net income | $ 76.3 | $ 85.3 | (10.6) % | ||
Adjusted net income (1) | $ 89.7 | $ 92.9 | (3.4) % | ||
EPS | $ 0.43 | $ 0.48 | (10.4) % | ||
Adjusted EPS (1) | $ 0.50 | $ 0.53 | (5.7) % | ||
Company Chairman and CEO Scott Thompson commented, "We are pleased to report solid first quarter sales, earnings and record operating cash flow against a global backdrop which appears to be at a historical nadir. The strong reception to our newly launched innovative products and our ongoing investment in compelling marketing to support the industry, combined with our broad-based omni-channel reach and our commitment to driving operational efficiencies, drove our industry outperformance in the first quarter. Although we look forward to the market's recovery, this recessionary environment provides opportunity to highlight the strength of our global business model and our leading competitive position. We continue to invest in our key initiatives and expect to emerge from the current downturn positioned well for long term success.
Thompson continued, "Regarding the pending Mattress Firm transaction, which we have been working on for two and half years, we believe it will unlock benefits for customers and shareholders. We continue to work closely with the FTC to advance the transaction approval process. As previously disclosed, we anticipate the FTC will complete its review in the second quarter and we are targeting closing the transaction in 2024. We look forward to bringing the Mattress Firm team onboard."
Business Segment Highlights
The Company's business segments include
International net sales decreased
International net sales through the wholesale channel increased
International gross margin improved 140 basis points as compared to the first quarter of 2023. The improvement was primarily driven by favorable commodity costs and operational efficiencies. International operating margin improved 20 basis points as compared to the first quarter of 2023. The improvement was primarily driven by the improvement in gross margin, partially offset by operating expense deleverage.
Corporate operating expense increased to
Consolidated net income decreased
The Company ended the first quarter of 2024 with total debt of
Financial Guidance
For the full year 2024, the Company reaffirmed its expectations for an adjusted EPS(1) range of
The Company noted that its expectations are based on information available at the time of this release, and are subject to changing conditions and risks, many of which are outside the Company's control. The Company is unable to reconcile forward–looking adjusted EPS, a non–GAAP financial measure, to EPS, its most directly comparable forward–looking GAAP financial measure, without unreasonable efforts, because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact EPS in 2024.
Dividend Declared
The Company's Board of Directors declared a quarterly cash dividend of
Conference Call Information
Tempur Sealy International, Inc. will host a live conference call to discuss financial results today, May 7, 2024, at 8:00 a.m. Eastern Time. The call will be webcast and can be accessed on the Company's investor relations website at investor.tempursealy.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.
Non-GAAP Financial Measures and Constant Currency Information
For additional information regarding EBITDA, adjusted EBITDA, adjusted EPS, adjusted net income, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash (all of which are non-GAAP financial measures), please refer to the reconciliations and other information included in the attached schedules. For information on the methodology used to present information on a constant currency basis, please refer to "Constant Currency Information" included in the attached schedules.
Forward-Looking Statements
This press release contains statements that may be characterized as "forward-looking," within the meaning of the federal securities laws. Such statements might include information concerning one or more of the Company's plans, guidance, objectives, goals, strategies, and other information that is not historical information. When used in this release, the words "assumes," "estimates," "expects," "guidance," "anticipates," "might," "projects," "plans," "proposed," "targets," "intends," "believes," "will," "contemplates" and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company's expectations regarding the announced Mattress Firm acquisition including the related regulatory approval process, the Company's expected quarterly results, full year guidance and outperformance relative to the broader industry, the Company's quarterly cash dividend, the Company's expectations regarding geopolitical events (including the war in
Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from any that may be expressed herein as forward-looking statements. These potential risks include the factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. There may be other factors that may cause the Company's actual results to differ materially from the forward-looking statements. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.
About Tempur Sealy International, Inc.
Tempur Sealy is committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor and retailer of bedding products worldwide, we know how crucial a good night of sleep is to overall health and wellness. Utilizing over a century of knowledge and industry-leading innovation, we deliver award-winning products that provide breakthrough sleep solutions to consumers in over 100 countries.
Our highly recognized brands include Tempur-Pedic®, Sealy® and Stearns & Foster® and our popular non-branded offerings consist of value-focused private label and OEM products. At Tempur Sealy we understand the importance of meeting our customers wherever and however they want to shop and have developed a powerful omni-channel retail strategy. Our products allow for complementary merchandising strategies and are sold through third-party retailers, our over 750 Company-owned stores worldwide and our e-commerce channels. With the range of our offerings and variety of purchasing options, we are dedicated to continuing to turn our mission to improve the sleep of more people, every night, all around the world into a reality.
Importantly, we are committed to carrying out our global responsibility to protect the environment and the communities in which we operate. As part of that commitment, we have established the goal of achieving carbon neutrality for our global wholly owned operations by 2040.
Investor Relations Contact:
Aubrey Moore
Investor Relations
Tempur Sealy International, Inc.
Investor.relations@tempursealy.com
(1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below. |
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (in millions, except percentages and per common share amounts) (unaudited) | |||||
Three Months Ended | |||||
March 31, | Chg % | ||||
2024 | 2023 | ||||
Net sales | $ 1,189.4 | $ 1,208.1 | (1.5) % | ||
Cost of sales | 676.8 | 708.2 | |||
Gross profit | 512.6 | 499.9 | 2.5 % | ||
Selling and marketing expenses | 265.0 | 256.7 | |||
General, administrative and other expenses | 121.0 | 104.5 | |||
Equity income in earnings of unconsolidated affiliates | (4.9) | (4.6) | |||
Operating income | 131.5 | 143.3 | (8.2) % | ||
Other expense, net: | |||||
Interest expense, net | 34.3 | 32.8 | |||
Other (income) expense, net | (0.3) | 0.1 | |||
Total other expense, net | 34.0 | 32.9 | |||
Income before income taxes | 97.5 | 110.4 | (11.7) % | ||
Income tax provision | (20.7) | (24.5) | |||
Net income before non-controlling interest | 76.8 | 85.9 | (10.6) % | ||
Less: Net income attributable to non-controlling interest | 0.5 | 0.6 | |||
Net income attributable to Tempur Sealy International, Inc. | $ 76.3 | $ 85.3 | (10.6) % | ||
Earnings per common share: | |||||
Basic | $ 0.44 | $ 0.50 | (12.0) % | ||
Diluted | $ 0.43 | $ 0.48 | (10.4) % | ||
Weighted average common shares outstanding: | |||||
Basic | 173.6 | 172.0 | |||
Diluted | 178.0 | 176.8 | |||
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in millions) | |||
March 31, 2024 | December 31, 2023 | ||
ASSETS | (unaudited) | ||
Current Assets: | |||
Cash and cash equivalents | $ 92.5 | $ 74.9 | |
Accounts receivable, net | 483.6 | 431.4 | |
Inventories | 489.6 | 483.1 | |
Prepaid expenses and other current assets | 96.2 | 113.8 | |
Total Current Assets | 1,161.9 | 1,103.2 | |
Property, plant and equipment, net | 875.8 | 878.3 | |
Goodwill | 1,077.2 | 1,083.3 | |
Other intangible assets, net | 710.3 | 714.8 | |
Operating lease right-of-use assets | 619.7 | 636.5 | |
Deferred income taxes | 15.4 | 15.6 | |
Other non-current assets | 125.5 | 122.2 | |
Total Assets | $ 4,585.8 | $ 4,553.9 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable | $ 345.2 | $ 311.3 | |
Accrued expenses and other current liabilities | 434.2 | 427.1 | |
Short-term operating lease obligations | 121.5 | 119.6 | |
Current portion of long-term debt | 47.3 | 44.9 | |
Income taxes payable | 10.0 | 5.3 | |
Total Current Liabilities | 958.2 | 908.2 | |
Long-term debt, net | 2,526.4 | 2,527.0 | |
Long-term operating lease obligations | 558.0 | 574.8 | |
Deferred income taxes | 127.2 | 127.9 | |
Other non-current liabilities | 80.6 | 82.6 | |
Total Liabilities | 4,250.4 | 4,220.5 | |
Redeemable non-controlling interest | 8.8 | 10.0 | |
Total Stockholders' Equity | 326.6 | 323.4 | |
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | $ 4,585.8 | $ 4,553.9 | |
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) | |||
Three Months Ended | |||
March 31, | |||
2024 | 2023 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income before non-controlling interest | $ 76.8 | $ 85.9 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 39.2 | 33.8 | |
Amortization of stock-based compensation | 9.2 | 10.8 | |
Amortization of deferred financing costs | 0.9 | 1.0 | |
Bad debt expense | 3.8 | 1.7 | |
Deferred income taxes | 0.1 | 0.7 | |
Dividends received from unconsolidated affiliates | 4.9 | 1.5 | |
Equity income in earnings of unconsolidated affiliates | (4.9) | (4.6) | |
Foreign currency adjustments and other | 0.1 | (0.8) | |
Changes in operating assets and liabilities | 0.1 | (30.2) | |
Net cash provided by operating activities | 130.2 | 99.8 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property, plant and equipment | (31.5) | (52.1) | |
Other | 0.3 | 0.1 | |
Net cash used in investing activities | (31.2) | (52.0) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from borrowings under long-term debt obligations | 478.1 | 509.8 | |
Repayments of borrowings under long-term debt obligations | (481.8) | (477.4) | |
Proceeds from exercise of stock options | 0.3 | 0.8 | |
Treasury stock repurchased | (43.8) | (35.7) | |
Dividends paid | (24.9) | (20.8) | |
Repayments of finance lease obligations and other | (5.8) | (5.1) | |
Net cash used in financing activities | (77.9) | (28.4) | |
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (3.5) | 2.2 | |
Increase in cash and cash equivalents | 17.6 | 21.6 | |
CASH AND CASH EQUIVALENTS, beginning of period | 74.9 | 69.4 | |
CASH AND CASH EQUIVALENTS, end of period | $ 92.5 | $ 91.0 | |
Summary of Channel Sales
The following table highlights net sales information, by channel and by business segment, for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31, | |||||||||||
(in millions) | Consolidated | International | |||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||
Wholesale (a) | $ 885.8 | $ 912.6 | $ 776.9 | $ 804.3 | $ 108.9 | $ 108.3 | |||||
Direct (b) | 303.6 | 295.5 | 124.2 | 115.3 | 179.4 | 180.2 | |||||
$ 1,189.4 | $ 1,208.1 | $ 901.1 | $ 919.6 | $ 288.3 | $ 288.5 | ||||||
(a) | The Wholesale channel includes all third party retailers, including third party distribution, hospitality and healthcare. |
(b) | The Direct channel includes company-owned stores, online and call centers. |
TEMPUR SEALY INTERNATIONAL, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(in millions, except percentages, ratios and per common share amounts)
The Company provides information regarding adjusted net income, EBITDA, adjusted EBITDA, adjusted EPS, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash, which are not recognized terms under GAAP and do not purport to be alternatives to net income, earnings per share, gross profit, gross margin, operating income (expense) and operating margin as a measure of operating performance, or an alternative to total debt as a measure of liquidity. The Company believes these non-GAAP financial measures provide investors with performance measures that better reflect the Company's underlying operations and trends, providing a perspective not immediately apparent from net income, gross profit, gross margin, operating income (expense) and operating margin. The adjustments management makes to derive the non-GAAP financial measures include adjustments to exclude items that may cause short-term fluctuations in the nearest GAAP financial measure, but which management does not consider to be the fundamental attributes or primary drivers of the Company's business.
The Company believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results from operations and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company's business, to evaluate its consolidated and business segment performance compared to prior periods and the marketplace, to establish operational goals and to provide continuity to investors for comparability purposes. Limitations associated with the use of these non-GAAP financial measures include that these measures do not present all of the amounts associated with the Company's results as determined in accordance with GAAP. These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable financial measures defined by GAAP. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. For more information about these non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure, please refer to the reconciliations on the following pages.
Constant Currency Information
In this press release the Company refers to, and in other press releases and other communications with investors the Company may refer to, net sales, earnings or other historical financial information on a "constant currency basis," which is a non-GAAP financial measure. These references to constant currency basis do not include operational impacts that could result from fluctuations in foreign currency rates. To provide information on a constant currency basis, the applicable financial results are adjusted based on a simple mathematical model that translates current period results in local currency using the comparable prior corresponding period's currency conversion rate. This approach is used for countries where the functional currency is the local country currency. This information is provided so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby facilitating period-to-period comparisons of business performance.
Adjusted Net Income and Adjusted EPS
A reconciliation of reported net income to adjusted net income and the calculation of adjusted EPS are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.
The following table sets forth the reconciliation of the Company's reported net income to adjusted net income and the calculation of adjusted EPS for the three months ended March 31, 2024 and 2023:
Three Months Ended | |||
(in millions, except per share amounts) | March 31, 2024 | March 31, 2023 | |
Net income | $ 76.3 | $ 85.3 | |
Transaction costs (1) | 14.8 | 5.2 | |
Operational start-up costs (2) | 3.1 | 1.7 | |
ERP system transition (3) | — | 3.2 | |
Adjusted income tax provision (4) | (4.5) | (2.5) | |
Adjusted net income | $ 89.7 | $ 92.9 | |
Adjusted earnings per common share, diluted | $ 0.50 | $ 0.53 | |
Diluted shares outstanding | 178.0 | 176.8 | |
Please refer to Footnotes at the end of this release. |
Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income (Expense) and Adjusted Operating Margin
A reconciliation of gross profit and gross margin to adjusted gross profit and adjusted gross margin, respectively, and operating income (expense) and operating margin to adjusted operating income (expense) and adjusted operating margin, respectively, are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.
The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended March 31, 2024:
1Q 2024 | |||||||||||||
(in millions, except percentages) | Consolidated | Margin | North America | Margin | International | Margin | Corporate | ||||||
Net sales | $ 1,189.4 | $ 901.1 | $ 288.3 | $ — | |||||||||
Gross profit | $ 512.6 | 43.1 % | $ 352.8 | 39.2 % | $ 159.8 | 55.4 % | $ — | ||||||
Adjustments: | |||||||||||||
Operational start-up costs (2) | 3.1 | 3.1 | — | — | |||||||||
Total adjustments | 3.1 | 3.1 | — | — | |||||||||
Adjusted gross profit | $ 515.7 | 43.4 % | $ 355.9 | 39.5 % | $ 159.8 | 55.4 % | $ — | ||||||
Operating income (expense) | $ 131.5 | 11.1 % | $ 134.4 | 14.9 % | $ 44.8 | 15.5 % | $ (47.7) | ||||||
Adjustments: | |||||||||||||
Transaction costs (1) | 14.8 | — | — | 14.8 | |||||||||
Operational start-up costs (2) | 3.1 | 3.1 | — | — | |||||||||
Total adjustments | 17.9 | 3.1 | — | 14.8 | |||||||||
Adjusted operating income (expense) | $ 149.4 | 12.6 % | $ 137.5 | 15.3 % | $ 44.8 | 15.5 % | $ (32.9) | ||||||
Please refer to Footnotes at the end of this release. |
The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended March 31, 2023:
1Q 2023 | |||||||||||||
(in millions, except percentages) | Consolidated | Margin | Margin | International | Margin | Corporate | |||||||
Net sales | $ 1,208.1 | $ 919.6 | $ 288.5 | $ — | |||||||||
Gross profit | $ 499.9 | 41.4 % | $ 344.0 | 37.4 % | $ 155.9 | 54.0 % | $ — | ||||||
Adjustments: | |||||||||||||
ERP system transition (3) | 3.2 | 3.2 | — | — | |||||||||
Operational start-up costs (2) | 1.7 | 1.7 | — | — | |||||||||
Total adjustments | 4.9 | 4.9 | — | — | |||||||||
Adjusted gross profit | $ 504.8 | 41.8 % | $ 348.9 | 37.9 % | $ 155.9 | 54.0 % | $ — | ||||||
Operating income (expense) | $ 143.3 | 11.9 % | $ 136.0 | 14.8 % | $ 44.2 | 15.3 % | $ (36.9) | ||||||
Adjustments: | |||||||||||||
Transaction costs (1) | 5.2 | — | — | 5.2 | |||||||||
ERP system transition (3) | 3.2 | 3.2 | — | — | |||||||||
Operational start-up costs (2) | 1.7 | 1.7 | — | — | |||||||||
Total adjustments | 10.1 | 4.9 | — | 5.2 | |||||||||
Adjusted operating income (expense) | $ 153.4 | 12.7 % | $ 140.9 | 15.3 % | $ 44.2 | 15.3 % | $ (31.7) | ||||||
Please refer to Footnotes at the end of this release. |
EBITDA, Adjusted EBITDA and Consolidated Indebtedness less Netted Cash
The following reconciliations are provided below:
- Net income to EBITDA and adjusted EBITDA
- Ratio of consolidated indebtedness less netted cash to adjusted EBITDA
- Total debt, net to consolidated indebtedness less netted cash
Management believes that presenting these non-GAAP measures provides investors with useful information with respect to the Company's operating performance, cash flow generation and comparisons from period to period, as well as general information about the Company's leverage.
The Company's credit agreement (the "2023 Credit Agreement") provides the definition of adjusted EBITDA. Accordingly, the Company presents adjusted EBITDA to provide information regarding the Company's compliance with requirements under the 2023 Credit Agreement.
The following table sets forth the reconciliation of the Company's reported net income to the calculations of EBITDA and adjusted EBITDA for the three months ended March 31, 2024 and 2023:
Three Months Ended | |||
(in millions) | March 31, 2024 | March 31, 2023 | |
Net income | $ 76.3 | $ 85.3 | |
Interest expense, net | 34.3 | 32.8 | |
Income taxes | 20.7 | 24.5 | |
Depreciation and amortization | 49.0 | 45.0 | |
EBITDA | $ 180.3 | $ 187.6 | |
Adjustments: | |||
Transaction costs (1) | 14.8 | 5.2 | |
Operational start-up costs (2) | 3.1 | 1.7 | |
ERP system transition (3) | — | 3.2 | |
Adjusted EBITDA | $ 198.2 | $ 197.7 | |
The following table sets forth the reconciliation of the Company's net income to the calculations of EBITDA and adjusted EBITDA for the trailing twelve months ended March 31, 2024:
Trailing Twelve Months Ended | |
(in millions) | March 31, 2024 |
Net income | $ 359.1 |
Interest expense, net | 131.4 |
Loss on extinguishment of debt (5) | 3.2 |
Income tax provision | 99.6 |
Depreciation and amortization | 188.8 |
EBITDA | $ 782.1 |
Adjustments: | |
Transaction costs (1) | 58.6 |
Cybersecurity event (6) | 14.3 |
Operational start-up costs (2) | 11.8 |
Fair value remeasurement (7) | 11.0 |
Adjusted EBITDA | $ 877.8 |
Consolidated indebtedness less netted cash | $ 2,501.9 |
Ratio of consolidated indebtedness less netted cash to adjusted EBITDA | 2.85 times |
Please refer to Footnotes at the end of this release. |
Under the 2023 Credit Agreement, the definition of adjusted EBITDA contains certain restrictions that limit adjustments to net income when calculating adjusted EBITDA. For the trailing twelve months ended March 31, 2024, the Company's adjustments to net income when calculating adjusted EBITDA did not exceed the allowable amount under the 2023 Credit Agreement.
The ratio of consolidated indebtedness less netted cash to adjusted EBITDA is 2.85 times for the trailing twelve months ended March 31, 2024. The 2023 Credit Agreement requires the Company to maintain a ratio of consolidated indebtedness less netted cash to adjusted EBITDA of less than 5.00 times.
The following table sets forth the reconciliation of the Company's reported total debt to the calculation of consolidated indebtedness less netted cash as of March 31, 2024. "Consolidated Indebtedness" and "Netted Cash" are terms used in the 2023 Credit Agreement for purposes of certain financial covenants.
(in millions) | March 31, 2024 |
Total debt, net | $ 2,573.7 |
Plus: Deferred financing costs (8) | 20.7 |
Consolidated indebtedness | 2,594.4 |
Less: Netted cash (9) | 92.5 |
Consolidated indebtedness less netted cash | $ 2,501.9 |
Please refer to Footnotes at the end of this release. |
Footnotes:
(1) | In the first quarter of 2024, the Company recorded |
(2) | In the first quarter of 2024, the Company recorded |
(3) | In the first quarter of 2023, the Company recorded |
(4) | Adjusted income tax provision represents the tax effects associated with the aforementioned items. |
(5) | In the trailing twelve months ended March 31, 2024, the Company recognized |
(6) | In the trailing twelve months ended March 31, 2024, the Company recorded |
(7) | In the trailing twelve months ended March 31, 2024, the Company recorded a fair value remeasurement of |
(8) | The Company presents deferred financing costs as a direct reduction from the carrying amount of the related debt in the Condensed Consolidated Balance Sheets. For purposes of determining total debt for financial covenant purposes, the Company has added these costs back to total debt, net as calculated per the Condensed Consolidated Balance Sheets. |
(9) | Netted cash includes cash and cash equivalents for domestic and foreign subsidiaries designated as restricted subsidiaries in the 2023 Credit Agreement. |
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SOURCE Tempur Sealy International, Inc.
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