Tempur Sealy Shares Plunge 12% As Q2 Results Miss View, Slashes 2013 Outlook

(RTTNews) - Shares of Tempur Sealy International, Inc. (TPX) plunged more than 12 percent in extended trading on Thursday after the mattress maker reported results for the second quarter that missed analysts' expectations. The company also slashed its earnings and sales guidance for the full-year 2013.

The company reported a loss for the quarter compared to a profit last year, hurt by higher costs and expenses, charges as well as significantly lower margins. The company completed the acquisition of smaller peer Sealy Corp. in mid-March for $2.20 per share in deal valued at about $1.3 billion, including outstanding debt. The results for 2012 do not include the Sealy results of operations.

"We are pleased with the performance of the rest of our portfolio. Both Sealy and Tempur International net sales were in line with our projections for the second quarter. The integration with Sealy continues to progress well, cost synergies are being realized ahead of plan, and we are more confident than ever that the combination provides significant competitive advantage," CEO Mark Sarvary said in a statement.

The Lexington, Kentucky-based company reported a net loss of $1.6 million or $0.03 per share for the second quarter, compared to net income of $29.1 million or $0.45 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $22.3 million or $0.36 per share. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.40 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter doubled to $660.6 million from $329.46 million in the same quarter last year, but missed ten Wall Street analysts' consensus estimate of $662.80 million by a whisker. The company attributed the sales growth to the inclusion of $345 million of Sealy sales. The company's business segments now include Tempur North America, Tempur International, and Sealy.

Net sales for Tempur North American decreased 4.9 percent, and Tempur international net sales declined 2.3 percent from last year. Sealy net sales for the quarter were $345 million.

Consolidated bedding sales increased to $599 million from last year's $289 million. Gross profit margin for the quarter contracted 12.1 percentage points to 38.6 percent as a result of the inclusion of Sealy, which has lower margins than the Tempur North America and Tempur International segments.

"The steps we have taken to return Tempur North America to growth are appropriate, but are taking longer than expected. As a result we are lowering our financial outlook for the full year," Sarvary added.

Looking ahead to fiscal 2013, Tempur Sealy slashed its guidance to now be in a range of $2.25 to $2.40 per share from the previous forecast of about $2.75 per share. The company also now projects revenues between $2.425 billion and $2.450 billion, down from prior forecast of about $2.5 billion.

Street is currently looking for full-year 2013 earnings of $2.75 per share on annual revenues of $2.50 billion.

TPX closed Thursday's regular trading session at $41.96, down $0.52 or 1.22% on a volume of 2.07 million shares. The stock plunged a further $5.21 or 12.42% in after-hours trading.