Tempur Sealy Q4 Results Top Estimates, But Issues Weak 2014 EPS Outlook

(RTTNews) - Mattress maker Tempur Sealy International, Inc. (TPX) reported a profit for the fourth quarter that declined three percent from last year, despite sales doubling, reflecting significantly lower margins. Both adjusted earnings per share and quarterly sales topped analysts' expectations.

The company also provided earnings guidance for the full-year 2014, below Street view, but annual sales in line.

The results for the quarter reflect transaction and integration costs related to the acquisition of Sealy Corp. The Company completed its acquisition of Sealy in March 2013.

"Overall our fourth quarter was in line with our expectations. Sealy's fourth quarter sales were above our expectations and Tempur International returned to growth with sales increases in Europe, Asia and Latin America. Tempur North America showed continued stability with sales down 1% as compared to last year," CEO Mark Sarvary said in a statement.

The Lexington, Kentucky-based company reported net income of $22.9 million or $0.37 per share for the fourth quarter, lower than $23.5 million or $0.39 per share in the prior-year quarter.

Excluding items, adjusted net income for the latest quarter was $41.1 million or $0.66 per share. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter nearly doubled to $678.1 million from $341.1 million in the same quarter last year, and topped ten Wall Street analysts' consensus estimate of $664.47 million.

Net sales in the North American segment edged down 0.7 percent to $226.2 million, and international segment net sales grew 4.5 percent to $118.4 million from last year. Sealy sales totaled $333.5 million.

Gross profit margin declined 980 basis points to 40.2 percent, primarily due to the inclusion of Sealy products, which has lower margins. For fiscal 2013, the company reported net income of $74.0 million or $1.20 per share, lower than $106.8 million or $1.70 per share in the prior year. Excluding items, adjusted net income for the year was $2.38 per share.

Net sales for the full year surged 75.7 percent to $2.46 billion from last year. Analysts expected the company to report earnings of $2.34 per share on revenues of $2.45 billion for the full-year 2013.

Looking ahead to fiscal 2014, Tempur-Pedic expects adjusted earnings in a range of $2.60 to $2.85 per share, on projected net sales between $2.80 billion to $2.90 billion. Street is currently looking for full-year 2014 earnings of $2.91 per share on annual revenues of $2.84 billion.

"We enter 2014 unified and coordinated and expect to further execute on each of our four key strategic growth initiatives. Our recent new product introductions in Tempur North America, Sealy and Tempur International are just a few of the initiatives we have in place to drive growth in 2014," Sarvary added.

TPX closed Thursday's regular trading session at $49.70, up $2.27 or 4.79% on a volume of 1.71 million shares. The stock gained a further $0.48 or 0.97% in after-hours trading.