Tempur Sealy offers update on Mattress Firm deal, announces 3rd-quarter financial results

On a conference call today, Tempur Sealy International Inc. announced financial results for the third quarter ended Sept. 30 and revised financial guidance for the full year 2023.

It also addressed a burning question that’s been on everyone’s mind.

“Regarding the pending Mattress Firm transaction, we continue to expect to formally respond to the Federal Trade Commission’s second request in the fourth quarter and to close the transaction in mid to late 2024,” said company Chairman and CEO Scott Thompson. “I am pleased to share that Tempur Sealy and Mattress Firm continue to make joint progress in synergies planning. In addition, Tempur Sealy has signed post-closing supply agreements with numerous companies providing Mattress Firm with access to certain consumer-desired products, solidifying important supplier relationships ahead of the expected close. Additional discussions regarding supplier relationships are ongoing.”

In summary, its third-quarter numbers were:

  • Total net sales decreased 0.5% to $1,277.1 million this year as compared to $1,283.3 million in the third quarter of 2022, with a decrease of 3.2% in the North American business segment and an increase of 12.3% in the international business segment.
  • Gross margin was 44.9% as compared to 42.2% in the third quarter of 2022.
  • Operating income decreased 8.9% to $183.2 million as compared to $201.0 million in the third quarter of 2022.
  • Net income decreased 14.6% to $113.3 million as compared to $132.7 million in the third quarter of 2022.

“We realized robust third-quarter operating cash flows and expanding gross margins while our sales and earnings were solid against a challenged operating environment,” says Thompson. “We believe the company outperformed the broader bedding market. This outperformance and double-digit growth in international sales partially mitigated a challenged U.S. bedding market, which was softer than anticipated in the quarter.

“Similar to the second quarter, we demonstrated the strength of our business model and its ability to produce reasonable returns, even in a less robust market,” he continues. “Improvements in operations and supply contracts, combined with the impact of consumer-specific strategies drove significant gross margin expansion, positioning the company well for the future.”

As previously disclosed, the company identified a cybersecurity event on July 23, 2023, involving certain of the company’s information technology systems.

It incurred $13.5 million of costs in connection with this event primarily consisting of $9.6 million of manufacturing and network disruption costs incurred to ensure business continuity and $3.9 million primarily related to professional fees incurred for incident response, containment measures and stabilization of its information systems.

Following the forensic investigation, the company concluded there was no material impact to its financial results in the third quarter of 2023.

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