by Decrease in North America sales are offset by increase in international sales
LEXINGTON, Ky. — Bedding major Tempur Sealy International reported gains in sales and net income for its third quarter ended Sept. 30.
The company posted net sales of $1.3 billion, up 1.8% from $1.27 billion in the same period last year. A .8% decrease in the North American sales segment was offset by a 12.4% increase in international sales.
Net income totaled $130 million, or 73 cents per share, compared with $113.3 million, or 64 cents per share, the same period last year.
It also reported operating income of $201.8 million, up 10.2% from $183.2 million the same period last year. Meanwhile, adjusted operating income totaled $223.7 million, up 4.2% from $214.7 million last year.
The company said that its gross margin was 45.4% compared with 44.9% last year while its adjusted gross margin was 46.2% compared to 45.9% the same period last year.
Company Chairman and CEO Scott Thompson said the company is pleased with its third-quarter performance.
“Our global market outperformance, led by double-digit growth in our international segment, resulted in consolidated sales growth year over year despite the global bedding industry continuing to perform significantly below historical trends,” he said. “Sales growth coupled with our operational efficiency initiatives and diverse business platform resulted in solid growth in both adjusted EBITDA and adjusted EPS. We continue to see our investments in product, people and advertising as foundational to our long-term success.”
By segment, the company reported the following highlights:
+ North America net sales totaled $1.015 billion, down .8% from $1.024 billion the same period last year. It said this was primarily driven by “continued macroeconomic pressures impacting U.S. consumer behavior.”
+ Also in the North America segment, net sales through the wholesale channel decreased .8% to $878.4 million, compared with $885.1 million the same period last year. Net sales through the direct channel decreased 1.2% to $136.9 million, compared with $138.6 million last year.
+ Gross margin in the North American segment was 42%, unchanged from last year, while adjusted gross margin fell 10 basis points to 43.1% compared to 43.2% in the third quarter of last year. The company said the decline was primarily driven by “the mix impact of the new distribution win for our OEM business, partially offset by favorable commodity costs and operational efficiencies.”
+ North America operating margin was 19%, down slightly from 19.1% in the third quarter of last year and adjusted operating margin fell 20 basis points to 20.1% compared with 20.3% in the third quarter of last year, related to the decline in gross margin and operating expense deleverage.
+ International net sales rose 12.4% to $284.7 million, compared with $253.4 million last year. The company said this was primarily driven by the success of new product launches. On a constant currency basis, it said that international net sales rose 10.5% as compared to the third quarter of 2023.
+ Net sales through the wholesale channel increased 15.5%, to $103.4 million compared to $89.5 million in the third quarter of 2023. Net sales through the direct channel increased 10.6%, to $181.3 million compared to $163.9 million in the third quarter of 2023.
+ International gross margin improved 70 basis points to 57.3% compared to 56.6% in the third quarter of 2023. The company said the improvement was primarily driven by operational efficiencies.
+ International operating margin was 18.2% compared to 15.8% in the third quarter of 2023. Operating margin improved 200 basis points as compared to adjusted operating margin of 16.2% in the third quarter of 2023. The company said the improvement was primarily driven by operating expense leverage and the improvement in gross margin, partially offset by Asia joint venture performance. It reported no adjustments to operating margin in the third quarter of 2024.
+ The company said its corporate operating expense decreased to $43.2 million as compared to $52.3 million in the third quarter of 2023, while its adjusted operating expense was $32 million compared to $34.2 million in the third quarter of 2023, “primarily driven by reduced variable compensation expense.”
+ The company also said it ended the third quarter with total debt of $2.3 billion and consolidated indebtedness less netted cash of $2.2 billion.
