Shares surged 10 percent to $29.90 in after-hours trading
LEXINGTON, Ky. (July 24, 2012) Mattress-maker Tempur-Pedic International Inc. (NYSE: TPX) today announced that it had a net income of $29.1 million for the second quarter of 2012, down 45 percent over last year’s second quarter, which had a net income of $53.1 million.
Tempur-Pedic’s net sales decreased 4 percent to $329.5 million in the second quarter of 2012 from $342.2 million in the second quarter of 2011. Net sales in the North American segment decreased 8 percent and international segment net sales increased 8 percent. On a constant currency basis, international segment net sales increased 17 percent.
Even though the news was not good, shares of the mattress maker surged 10 percent to $29.90 in after-hours trading.
Other Q2 highlights
— Earnings per diluted share (EPS) were $0.45 in the second quarter of 2012 as compared to EPS of $0.76 per diluted share in the second quarter of 2011.
— Mattress sales decreased 4 percent globally. Mattress sales decreased 8 percent in the North American segment and increased 11 percent in the international segment. On a constant currency basis, international mattress sales increased 20 percent. Pillow sales decreased 2 percent globally. Pillow sales decreased 10 percent in North America and increased 5 percent internationally. On a constant currency basis, international pillow sales increased 12 percent.
— Gross profit margin was 50.7 percent as compared to 52.9 percent in the second quarter of 2011. The gross profit margin decreased primarily as a result of increased promotions and discounts, deleverage and product mix, offset partially by geographic mix.
— Operating profit margin was 14.4 percent as compared to 24.2 percent in the second quarter of 2011 reflecting deleverage throughout the income statement.
— The Company generated $42 million of operating cash flow as compared to $48.2 million in the second quarter of 2011.
— The Company purchased 4.9 million shares of its common stock for a total cost of $138 million. As of June 30, the company had $100 million available under its existing share repurchase authorization.
“As we stated on June 6, changes in the competitive environment in North America during the second quarter had an adverse impact on our performance,” said CEO Mark Sarvary. “We are taking actions across our operations to realign our expense structure appropriately. At the same time we are focused on a series of new initiatives designed to strengthen our competitive position. At next week’s industry tradeshow in Las Vegas we will unveil several of these new initiatives to our customers.”
Tempur-Pedic also revised its financial forecast for 2012, saying it expects its full year 2012 net sales to be approximately $1.43 billion. In addition, the company updated its full year 2012 earnings guidance and currently expects diluted earnings per share to be approximately $2.80, principally reflecting a lower weighted average shares outstanding for 2012.