LEXINGTON, Ky., March 27, 2020 /PRNewswire/ -- At Tempur
Sealy International, Inc. (NYSE: TPX, "Company") the health and
safety of employees, customers, and all business partners is the
utmost concern. The Company has taken and continues to take
precautionary measures to mitigate health risks during the evolving
situation resulting from the novel coronavirus ("COVID-19").
Scott Thompson, Tempur Sealy
International Inc. Chairman and CEO said, "We have implemented
measures to protect the health and safety of our employees,
including restricting travel and face-to-face meetings, allowing
individuals to work from home where possible, and adopting all
region-specific public health protocols applicable to our
operations around the world. While providing a healthy and safe
work environment is our top priority during these unprecedented
times, our entire organization is also focused on our commitments
to our customers, suppliers, and shareholders. We are also working
with various government and healthcare organizations to provide
products and services in this time of crisis. For more than a
decade, Tempur Sealy has donated tens of thousands of mattresses
annually to charities and organizations in need across the country.
For the immediate future, we are focusing all of the power of our
philanthropic efforts on getting our products to governments,
healthcare organizations and charities that have a need related to
the pandemic."
"Prior to the global COVID-19 health concerns, our iconic brands
and products had been performing very well throughout the world. We
had been experiencing growth in all markets and especially strong
growth in North America, with over
30 percent growth compared to the first quarter of 2019. Most
recent trends have shown very weak demand in the U.S. and
Europe, with orders down over 50
percent versus the same period in the prior year. Following the
slowdown in activity from the COVID-19, we have recently been
experiencing improving trends in Asian markets with year-over-year
growth in Korea, Japan, and
Singapore and improving sequential
growth in China. Based on the most
current trends and current information, we are estimating the
consolidated first quarter 2020 net sales to increase approximately
15 to 20 percent year-over-year."
"Our business model has a highly variable cost structure, is
broadly distributed geographically and is supported by an
omni-channel approach. We will carry our strong operating momentum
going into this downturn. We expect near-term profits to be
significantly impacted but see our long-term competitive position
strengthening through the downturn," continued Thompson.
The Company also announced the actions to mitigate the near-term
impact of the material slowdown in business activity while
positioning the Company for the recovery period. The Company ceased
all share repurchase activity once U.S. orders became negative as
compared to the prior year, delayed certain capital projects, and
canceled or suspended non-critical projects. Due to the
rapidly-changing nature of this environment, the Company is
withdrawing its previously-issued full-year financial guidance and
will not provide updated full-year financial guidance until the
operating environment becomes clear.
Additionally, to provide greater financial flexibility in
response to the continued impact of COVID-19, the Company elected
to hold $200 million of cash by
borrowing on its revolving senior secured credit facility. Total
remaining availability under that facility is at least $100 million and is drawable. The Company has no
major loan maturities until 2023 and its senior secured credit
facility matures in 2024.
Rights Plan
The Company also announced in a separate release today that the
Board of Directors has adopted a limited duration shareholder
rights plan (the "Rights Plan") and declared a dividend
distribution of one right for each outstanding share of common
stock. The record date for such dividend distribution is April
7, 2020. The Rights Plan will expire, without any further action
being required to be taken by the Company's Board of Directors, on
March 26, 2021. The Company's Board
of Directors intends to consider an earlier termination of the
Rights Plan if market and other conditions warrant.
Further details of the Rights Plan will be contained in a
Current Report on Form 8-K and in a Registration Statement on Form
8-A that the Company will be filing with
the Securities and Exchange Commission (SEC).
Employment Contract
Due to the current business conditions, the Board of Directors
unanimously requested, and Mr. Thompson agreed, to extend his
employment contract to December 31,
2022, with an annual evergreen clause thereafter. No other
changes were made to the terms of his employment agreement.
Thompson concluded, "There were several attributes to the
business that attracted me to working at Tempur Sealy which
included its iconic brands and consumer preferred products and also
included its variable cost structure and cash flow attributes that
allow the business to flex naturally with changing market
conditions. While we expect material headwinds in the near-term, we
are optimizing business operations to best position the company for
long-term success. The executive team, employees, and I remain
committed to leading Tempur Sealy through this rapidly changing
environment."
Forward-Looking Statements
This press release contains statements that may be characterized
as "forward-looking" within the meaning of the federal securities
laws, which includes information concerning one or more of the
Company's plans, objectives, goals, strategies, and other
information that is not historical information. When used in this
release, the words "expects," "will," and variations of such words
or similar expressions are intended to identify such statements.
These forward-looking statements include, without limitation,
statements relating to the Company's liquidity, the Company's
expectations regarding future performance, share repurchase
program, and capital projects. Any forward-looking statements
contained herein are based upon current expectations and beliefs
and various assumptions. There can be no assurance that the Company
will realize these expectations or that these beliefs will prove
correct.
Numerous factors, many of which are beyond the Company's
control, could cause actual results to differ materially from any
that may be expressed as forward-looking statements. These risk
factors include risks associated with the duration, scope and
severity of COVID-19 and its effects on the Company's business and
operations, including the disruption or delay of production and
delivery of materials and products in the Company's supply chain; a
temporary or prolonged shutdown of manufacturing facilities or
retail stores; general economic, financial and industry conditions,
particularly conditions relating to liquidity, financial
performance and related credit issues present in the retail sector,
which may be amplified by the effects of COVID-19; consumer
confidence and the availability of consumer financing;
uncertainties arising from national and global events, including
the long-term effects of COVID-19 on the national and global
economy; the effect of future legislative or regulatory changes,
including changes in international trade, duties, tariffs and other
aspects of international trade policy; the effects of consolidation
of retailers on revenues and costs and consumer acceptance of and
changes in demand for the Company's products.
Other potential risk factors include the risk factors discussed
under the heading "Risk Factors" in ITEM 1A of Part 1 of the
Company's Annual Report on Form 10-K for the year
ended December 31, 2019. There may be other factors that may
cause actual results to differ materially from the forward-looking
statements contained herein. The Company undertakes no obligation
to update any forward-looking statement contained herein to reflect
events or circumstances after the date on which such statement is
made.
About the Company
Tempur Sealy International, Inc. (NYSE: TPX) develops,
manufactures, and markets mattresses, foundations, pillows and
other products. The Company's products are sold worldwide
through third party retailers, its own stores, and online. The
Company's brand portfolio includes many highly recognized brands in
the industry, including Tempur®, Tempur-Pedic®, Sealy® featuring
Posturepedic® Technology, and Stearns & Foster®. World
headquarters for Tempur Sealy International is in Lexington, KY. For more information,
visit http://www.tempursealy.com or call
800-805-3635.
Investor Relations Contact
Aubrey Moore
Investor Relations
Tempur Sealy International, Inc.
800-805-3635
Investor.relations@tempursealy.com
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SOURCE Tempur Sealy International, Inc.