PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Tempur Sealy International, Inc. and its subsidiaries for the three months ended March 31, 2021 and 2020, including statements of income, comprehensive income, balance sheets, stockholders' equity, and cash flows, along with detailed notes on significant accounting policies, net sales, acquisitions, debt, leases, and segment information [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Three Months Ended March 31, 2021 vs. 2020 (in millions) | Metric | 2021 | 2020 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Net sales | $1,043.8 | $822.4 | $221.4 | 26.9% | | Gross profit | $458.9 | $357.1 | $101.8 | 28.5% | | Operating income | $188.4 | $105.3 | $83.1 | 78.9% | | Income from continuing operations before income taxes | $171.4 | $84.5 | $86.9 | 102.8% | | Net income attributable to Tempur Sealy International, Inc. | $130.5 | $59.7 | $70.8 | 118.6% | | Diluted Earnings per share | $0.62 | $0.28 | $0.34 | 121.4% | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Three Months Ended March 31, 2021 vs. 2020 (in millions) | Metric | 2021 | 2020 | Change ($) | Change (%) | | :------------------------------------------------ | :----- | :----- | :--------- | :--------- | | Net income before non-controlling interests | $130.7 | $59.8 | $70.9 | 118.6% | | Other comprehensive loss, net of tax | $(10.8) | $(23.0) | $12.2 | -53.0% | | Comprehensive income attributable to Tempur Sealy International, Inc. | $119.7 | $36.7 | $83.0 | 226.2% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021 vs. December 31, 2020 (in millions) | Metric | March 31, 2021 | December 31, 2020 | Change ($) | Change (%) | | :--------------------------------------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $290.5 | $65.0 | $225.5 | 346.9% | | Total Current Assets | $1,214.3 | $968.4 | $245.9 | 25.4% | | Total Assets | $3,542.1 | $3,308.6 | $233.5 | 7.1% | | Total Current Liabilities | $895.7 | $974.8 | $(79.1) | -8.1% | | Long-term debt, net | $1,822.4 | $1,323.0 | $499.4 | 37.7% | | Total Liabilities | $3,214.9 | $2,795.1 | $419.8 | 15.0% | | Total Stockholders' Equity | $318.3 | $504.6 | $(186.3) | -36.9% | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total Stockholders' Equity decreased from **$504.6 million** as of December 31, 2020, to **$318.3 million** as of March 31, 2021, primarily due to treasury stock repurchases of **$299.8 million** and dividends paid of **$14.8 million**, partially offset by net income of **$130.5 million**[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Three Months Ended March 31, 2021 vs. 2020 (in millions) | Cash Flow Activity | 2021 | 2020 | Change ($) | Change (%) | | :------------------------------------------------ | :----- | :----- | :--------- | :--------- | | Net cash provided by operating activities from continuing operations | $86.3 | $15.0 | $71.3 | 475.3% | | Net cash used in investing activities from continuing operations | $(24.4) | $(64.0) | $39.6 | -61.9% | | Net cash provided by financing activities from continuing operations | $168.9 | $188.1 | $(19.2) | -10.2% | | Increase in cash and cash equivalents | $225.5 | $132.1 | $93.4 | 70.7% | | Cash and cash equivalents, end of period | $290.5 | $197.0 | $93.5 | 47.5% | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Summary of Significant Accounting Policies](index=9&type=section&id=(1)%20Summary%20of%20Significant%20Accounting%20Policies) - The Company designs, manufactures, and distributes bedding products (mattresses, foundations, adjustable bases, pillows, accessories) through Wholesale and Direct channels[30](index=30&type=chunk) - It also earns royalties from licensing Sealy® and Stearns & Foster® brands[31](index=31&type=chunk) - The Company holds **50% ownership** in Asia-Pacific joint ventures and a UK joint venture for Sealy® and Stearns & Foster® products, accounted for using the equity method[32](index=32&type=chunk) Inventories (in millions) | Category | March 31, 2021 | December 31, 2020 | | :--------------- | :------------- | :---------------- | | Finished goods | $171.3 | $170.2 | | Work-in-process | $10.6 | $12.6 | | Raw materials and supplies | $136.9 | $129.3 | | **Total** | **$318.8** | **$312.1** | - Accrued sales returns increased from **$44.9 million** at December 31, 2020, to **$48.2 million** at March 31, 2021, with **$36.7 million** accrued and **$33.4 million** charged during the period[35](index=35&type=chunk) - Accrued warranty expense remained stable at **$44.3 million** at March 31, 2021, compared to **$44.2 million** at December 31, 2020, with **$5.8 million** accrued and **$5.7 million** charged during the period[39](index=39&type=chunk) - The allowance for credit losses increased from **$71.6 million** at December 31, 2020, to **$72.5 million** at March 31, 2021, reflecting **$2.5 million** accrued and **$1.6 million** in write-offs[41](index=41&type=chunk) [Net Sales](index=11&type=section&id=(2)%20Net%20Sales) Disaggregated Net Sales for Three Months Ended March 31, 2021 (in millions) | Category | North America | International | Consolidated | | :------------------ | :------------ | :------------ | :----------- | | **Channel:** | | | | | Wholesale | $765.5 | $115.9 | $881.4 | | Direct | $117.8 | $44.6 | $162.4 | | **Product:** | | | | | Bedding | $830.3 | $121.7 | $952.0 | | Other | $53.0 | $38.8 | $91.8 | | **Geographical region:** | | | | | United States | $818.5 | — | $818.5 | | All Other | $64.8 | $160.5 | $225.3 | | **Total Net Sales** | **$883.3** | **$160.5** | **$1,043.8** | Disaggregated Net Sales for Three Months Ended March 31, 2020 (in millions) | Category | North America | International | Consolidated | | :------------------ | :------------ | :------------ | :----------- | | **Channel:** | | | | | Wholesale | $624.7 | $97.7 | $722.4 | | Direct | $67.6 | $32.4 | $100.0 | | **Product:** | | | | | Bedding | $654.9 | $101.5 | $756.4 | | Other | $37.4 | $28.6 | $66.0 | | **Geographical region:** | | | | | United States | $632.5 | — | $632.5 | | All Other | $59.8 | $130.1 | $189.9 | | **Total Net Sales** | **$692.3** | **$130.1** | **$822.4** | [Acquisitions](index=11&type=section&id=(3)%20Acquisitions) - On January 31, 2020, the Company acquired an **80% ownership interest** in Sherwood Bedding for approximately **$39.1 million** cash, including **$1.2 million** cash acquired[44](index=44&type=chunk) - The acquisition resulted in **$26.7 million** in goodwill, primarily for private label product growth and synergistic manufacturing benefits[45](index=45&type=chunk) [Goodwill](index=12&type=section&id=(4)%20Goodwill) Goodwill by Segment (in millions) | Segment | December 31, 2020 | March 31, 2021 | Change ($) | | :-------------- | :---------------- | :------------- | :--------- | | North America | $610.3 | $611.9 | $1.6 | | International | $156.0 | $153.3 | $(2.7) | | **Consolidated** | **$766.3** | **$765.2** | **$(1.1)** | [Debt](index=12&type=section&id=(5)%20Debt) Debt Composition (in millions) | Debt Instrument | March 31, 2021 Amount | December 31, 2020 Amount | Maturity Date | | :---------------------- | :-------------------- | :----------------------- | :------------ | | 2019 Credit Agreement: Term A Facility | $398.4 | $409.1 | Oct 16, 2024 | | 2029 Senior Notes | $800.0 | — | Apr 15, 2029 | | 2026 Senior Notes | $600.0 | $600.0 | Jun 15, 2026 | | 2023 Senior Notes | — | $250.0 | Oct 15, 2023 | | Securitized debt | — | $33.9 | Apr 6, 2023 | | Finance lease obligations | $69.7 | $71.4 | Various | | Other | $5.0 | $5.9 | Various | | **Total debt, net** | **$1,860.1** | **$1,366.9** | | - The Company issued **$800.0 million** of **4.00% senior notes** due 2029 on March 25, 2021[53](index=53&type=chunk) - These notes are unsecured senior obligations and are redeemable starting April 15, 2024[54](index=54&type=chunk) - The Company announced its election to conditionally redeem the **$600.0 million** 2026 Senior Notes in full on June 15, 2021, at **102.750% of principal**, primarily funded by proceeds from the 2029 Senior Notes[57](index=57&type=chunk) - The remaining **$250.0 million** of 2023 Senior Notes were redeemed in Q1 2021, resulting in a **$5.0 million loss** on extinguishment of debt[58](index=58&type=chunk) - The revolving credit facility under the 2019 Credit Agreement was increased from **$425.0 million** to **$725.0 million** on February 2, 2021, with **$724.9 million** available as of March 31, 2021[51](index=51&type=chunk) - The Accounts Receivable Securitization limit was increased from **$120.0 million** to **$200.0 million** and its maturity extended to April 6, 2023, on April 6, 2021[52](index=52&type=chunk) [Leases](index=14&type=section&id=(6)%20Leases) Lease Assets and Liabilities (in millions) | Category | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets | $294.1 | $304.3 | | Finance lease assets | $59.4 | $61.2 | | Total leased assets | $353.5 | $365.5 | | Total lease obligations | $397.1 | $407.5 | Lease Expense for Three Months Ended March 31 (in millions) | Type of Expense | 2021 | 2020 | | :-------------------------------- | :----- | :----- | | Operating lease expense | $19.4 | $18.0 | | Short-term lease expense | $3.9 | $3.2 | | Variable lease expense | $6.4 | $5.3 | | Amortization of right-of-use assets (Finance) | $2.8 | $2.2 | | Interest on lease obligations (Finance) | $1.1 | $1.2 | | **Total lease expense** | **$33.6** | **$29.9** | [Stockholders' Equity](index=16&type=section&id=(7)%20Stockholders'%20Equity) - The Board of Directors authorized an increase of **$211.4 million** to the share repurchase program on February 11, 2021, and an additional **$400.0 million** on April 29, 2021[63](index=63&type=chunk) - The Company repurchased **8.4 million shares** for **$299.8 million** during Q1 2021[63](index=63&type=chunk) - Treasury stock acquired from RSU/PRSU vesting to satisfy tax obligations amounted to **$13.3 million** in Q1 2021[64](index=64&type=chunk) Accumulated Other Comprehensive Loss (AOCL) - Foreign Currency Translation (in millions) | Period | Balance at beginning of period | Other comprehensive loss | Balance at end of period | | :-------------------------------- | :--------------------------- | :----------------------- | :----------------------- | | Three Months Ended March 31, 2021 | $(58.6) | $(10.8) | $(69.4) | | Three Months Ended March 31, 2020 | $(82.2) | $(23.0) | $(105.2) | [Other Items](index=17&type=section&id=(8)%20Other%20Items) Accrued Expenses and Other Current Liabilities (in millions) | Category | March 31, 2021 | December 31, 2020 | | :------------------------ | :------------- | :---------------- | | Taxes | $145.0 | $150.4 | | Wages and benefits | $68.1 | $102.5 | | Advertising | $61.3 | $74.4 | | Operating lease obligations | $61.2 | $61.0 | | Other | $210.6 | $196.8 | | **Total** | **$546.2** | **$585.1** | [Stock-Based Compensation](index=17&type=section&id=(9)%20Stock-Based%20Compensation) Stock-Based Compensation Expense (in millions) | Type of Expense | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------------ | :-------------------------------- | :-------------------------------- | | PRSU expense | $9.6 | $0.3 | | Option expense | $0.4 | $1.2 | | RSU/DSU expense | $5.1 | $5.8 | | **Total** | **$15.1** | **$7.3** | - PRSU expense significantly increased from **$0.3 million** in Q1 2020 to **$9.6 million** in Q1 2021, reflecting new grants and the probability of achieving performance targets[69](index=69&type=chunk)[70](index=70&type=chunk) [Commitments and Contingencies](index=18&type=section&id=(10)%20Commitments%20and%20Contingencies) - The Company is involved in various legal and administrative proceedings but believes the aggregate outcome will not have a material adverse effect on its business, financial condition, liquidity, or operating results[71](index=71&type=chunk) [Income Taxes](index=18&type=section&id=(11)%20Income%20Taxes) Income Tax Provision (in millions) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------ | :-------------------------------- | :-------------------------------- | | Income tax provision | $40.5 | $23.5 | | Effective tax rate | 23.6% | 27.8% | - The effective tax rate decreased by **420 basis points** from **27.8%** in Q1 2020 to **23.6%** in Q1 2021, primarily due to the elimination of GILTI from U.S. taxable income and the deductibility of stock compensation[72](index=72&type=chunk) - The Company is involved in a dispute with the Danish Tax Authority (SKAT) regarding royalty payments for tax years 2001 through current, with uncertain income tax liabilities totaling **$180.4 million** as of March 31, 2021[73](index=73&type=chunk)[74](index=74&type=chunk) [Earnings Per Common Share](index=19&type=section&id=(12)%20Earnings%20Per%20Common%20Share) Earnings Per Common Share (in millions, except per share amounts) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Income from continuing operations, net of non-controlling interests | $130.7 | $60.9 | | Denominator for basic EPS - weighted average shares | 203.7 | 213.6 | | Denominator for diluted EPS - adjusted weighted average shares | 210.1 | 216.0 | | Basic earnings per common share for continuing operations | $0.64 | $0.28 | | Diluted earnings per common share for continuing operations | $0.62 | $0.28 | [Business Segment Information](index=19&type=section&id=(13)%20Business%20Segment%20Information) - The Company operates in two segments: North America (U.S., Canada, Mexico) and International (Europe, Asia-Pacific, Latin America excluding Mexico)[80](index=80&type=chunk) - Segment performance is evaluated based on net sales, gross profit, and operating income[80](index=80&type=chunk) Segment Performance for Three Months Ended March 31, 2021 (in millions) | Metric | North America | International | Corporate | Consolidated | | :-------------------- | :------------ | :------------ | :-------- | :----------- | | Net sales | $883.3 | $160.5 | — | $1,043.8 | | Gross profit | $363.9 | $95.0 | — | $458.9 | | Operating income (loss) | $173.4 | $46.2 | $(31.2) | $188.4 | | Capital expenditures | $18.8 | $2.0 | $2.7 | $23.5 | Segment Performance for Three Months Ended March 31, 2020 (in millions) | Metric | North America | International | Corporate | Consolidated | | :-------------------- | :------------ | :------------ | :-------- | :----------- | | Net sales | $692.3 | $130.1 | — | $822.4 | | Gross profit | $281.2 | $75.9 | — | $357.1 | | Operating income (loss) | $101.6 | $26.4 | $(22.7) | $105.3 | | Capital expenditures | $21.6 | $2.1 | $2.5 | $26.2 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of the Company's financial condition and results of operations for the three months ended March 31, 2021, compared to the same period in 2020, highlighting significant growth in sales and income, ongoing supply chain challenges, and strategic financial actions [Business Overview](index=22&type=section&id=Business%20Overview) - Tempur Sealy International is a global leader in bedding products, operating in North America and International segments, distributing through Wholesale and Direct channels[86](index=86&type=chunk) - Its brand portfolio includes Tempur®, Tempur-Pedic®, Sealy®, and Stearns & Foster®[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - The bedding industry is structured for sustained growth driven by product innovation, consumer confidence, housing formations, and population growth[90](index=90&type=chunk) - The Company expects consolidated net sales growth to exceed **20%** for the full year 2021[92](index=92&type=chunk) - The rapid increase in demand for bedding products, coupled with supply chain constraints (encased innerspring components and chemicals), unfavorably impacted Sealy and Sherwood sales growth in Q1 2021[93](index=93&type=chunk) - These constraints are expected to mitigate significantly by the end of Q2 2021[93](index=93&type=chunk) - Commodity costs unfavorably impacted gross margin in Q1 2021[94](index=94&type=chunk) - Pricing actions were implemented in Q4 2020 and April 2021 to mitigate these headwinds, with an expected negative impact of approximately **$25 million** on gross margin in Q2 2021[94](index=94&type=chunk) - The Company launched the Tempur-Ergo Smart Base Collection with Sleeptracker® technology in North America in Q1 2021 and is refreshing its Sealy portfolio, with the largest rollout in Sealy's history expected to complete in H2 2021[96](index=96&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Key Financial Highlights for Three Months Ended March 31, 2021 vs. 2020 (in millions, except EPS) | Metric | 2021 | 2020 | Change ($) | Change (%) | | :-------------------------------- | :------- | :------- | :--------- | :--------- | | Total net sales | $1,043.8 | $822.4 | $221.4 | 26.9% | | Gross margin | 44.0% | 43.4% | 0.6 pts | | | Operating income | $188.4 | $105.3 | $83.1 | 78.9% | | Net income | $130.5 | $59.7 | $70.8 | 118.6% | | Diluted EPS | $0.62 | $0.28 | $0.34 | 121.4% | | EBITDA | $230.1 | $134.5 | $95.6 | 71.1% | [Net Sales](index=26&type=section&id=Net%20Sales) - Consolidated net sales increased **26.9%** to **$1,043.8 million** (**25.1%** on a constant currency basis)[99](index=99&type=chunk) - North America net sales increased **27.6%** (**$191.0 million**), driven by a **22.5% increase** in Wholesale and a **74.3% increase** in Direct channel sales (primarily e-commerce)[104](index=104&type=chunk) - International net sales increased **23.4%** (**$30.4 million**), or **13.8%** on a constant currency basis, with Direct channel sales up **28.1%** on a constant currency basis[109](index=109&type=chunk) [Gross Profit](index=26&type=section&id=Gross%20Profit) Gross Profit and Margin for Three Months Ended March 31 (in millions, except percentages) | Segment | 2021 Gross Profit | 2021 Gross Margin | 2020 Gross Profit | 2020 Gross Margin | Margin Change | | :-------------- | :---------------- | :---------------- | :---------------- | :---------------- | :------------ | | North America | $363.9 | 41.2% | $281.2 | 40.6% | 0.6% | | International | $95.0 | 59.2% | $75.9 | 58.3% | 0.9% | | **Consolidated** | **$458.9** | **44.0%** | **$357.1** | **43.4%** | **0.6%** | - Consolidated gross margin improved by **60 basis points** to **44.0%**[108](index=108&type=chunk) - North America's gross margin improved by **60 basis points** due to brand and channel mix (**140 bps**), partially offset by supply chain operational inefficiencies (**100 bps**)[108](index=108&type=chunk) - International's gross margin improved by **90 basis points**, driven by favorable mix (**160 bps**) and operational efficiencies (**150 bps**), partially offset by increased commodity costs (**220 bps**)[110](index=110&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) Total Operating Expenses for Three Months Ended March 31 (in millions) | Segment | 2021 | 2020 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Consolidated | $277.2 | $251.6 | $25.6 | 10.2% | | North America | $190.5 | $179.6 | $10.9 | 6.1% | | International | $55.5 | $49.3 | $6.2 | 12.6% | | Corporate | $31.2 | $22.7 | $8.5 | 37.4% | - Consolidated operating expenses increased by **$25.6 million** (**10.2%**) but decreased by **400 basis points** as a percentage of net sales[113](index=113&type=chunk) - North America's increase was driven by advertising investments, partially offset by decreased customer-related charges (Q1 2020 included **$11.7 million** for Art Van Furniture bankruptcy)[117](index=117&type=chunk) - International's increase was due to advertising and marketing investments[117](index=117&type=chunk) - Corporate expenses rose due to variable compensation[117](index=117&type=chunk) - Research and development expenses increased by **$0.7 million**, or **12.1%**, to **$6.5 million** in Q1 2021[114](index=114&type=chunk) [Operating Income](index=27&type=section&id=Operating%20Income) Operating Income and Margin for Three Months Ended March 31 (in millions, except percentages) | Segment | 2021 Operating Income | 2021 Operating Margin | 2020 Operating Income | 2020 Operating Margin | Margin Change | | :-------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | :------------ | | North America | $173.4 | 19.6% | $101.6 | 14.7% | 4.9% | | International | $46.2 | 28.8% | $26.4 | 20.3% | 8.5% | | **Consolidated** | **$188.4** | **18.0%** | **$105.3** | **12.8%** | **5.2%** | - Consolidated operating income increased by **$83.1 million**, with operating margin improving by **520 basis points** to **18.0%**[118](index=118&type=chunk) - North America's operating margin improved by **490 basis points** due to operating expense leverage, gross margin improvement, and reduced customer-related charges[118](index=118&type=chunk) - International's operating margin improved by **850 basis points**, driven by improved Asia-Pacific joint venture performance, operating expense leverage, and gross margin improvement[123](index=123&type=chunk) [Interest Expense, Net](index=28&type=section&id=Interest%20Expense,%20Net) - Interest expense, net, decreased by **$8.0 million**, or **39.4%**, to **$12.3 million** in Q1 2021, primarily due to reduced average outstanding debt levels and lower interest rates on variable-rate debt[119](index=119&type=chunk) [Income Tax Provision](index=28&type=section&id=Income%20Tax%20Provision) - The income tax provision increased by **$17.0 million** to **$40.5 million** in Q1 2021, reflecting higher income before income taxes[121](index=121&type=chunk) - The effective tax rate decreased by **420 basis points** to **23.6%**, primarily due to the elimination of GILTI from U.S. taxable income and the deductibility of stock compensation[122](index=122&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2021, the Company had **$1,102.6 million** in liquidity, including **$290.5 million** cash on hand and **$724.9 million** available under its revolving credit facility, plus **$87.2 million** under its securitization facility[145](index=145&type=chunk) - Net working capital improved significantly to **$318.6 million** as of March 31, 2021, from a deficit of **$6.4 million** at December 31, 2020[124](index=124&type=chunk) - Cash provided by operating activities from continuing operations increased by **$71.3 million** to **$86.3 million** in Q1 2021, driven by strong operational performance[126](index=126&type=chunk) - Cash used in investing activities from continuing operations decreased by **$39.6 million** to **$24.4 million** in Q1 2021, primarily due to the Sherwood Bedding acquisition in Q1 2020[127](index=127&type=chunk) - Cash provided by financing activities from continuing operations decreased by **$19.2 million** to **$168.9 million** in Q1 2021[128](index=128&type=chunk) - This included **$800.0 million** from 2029 Senior Notes issuance, partially offset by debt repayments (**$1,148.6 million**), treasury stock repurchases (**$313.1 million**), and dividends paid (**$14.3 million**)[128](index=128&type=chunk) - Total debt increased to **$1,873.1 million** as of March 31, 2021, from **$1,370.3 million** at December 31, 2020[131](index=131&type=chunk) - The ratio of consolidated indebtedness less netted cash to adjusted EBITDA per credit facility was **1.95 times**, well within the **5.00 times** covenant limit[134](index=134&type=chunk)[146](index=146&type=chunk) - The Company's capital allocation strategy focuses on supporting the business, returning shareholder value through share repurchases and quarterly dividends (**$0.07 per share** declared for Q2 2021), and opportunistic acquisitions[146](index=146&type=chunk) - It plans to repurchase at least **6% of shares outstanding** in 2021[148](index=148&type=chunk) [Non-GAAP Financial Information](index=34&type=section&id=Non-GAAP%20Financial%20Information) - The Company uses non-GAAP financial measures like adjusted net income, adjusted EPS, adjusted operating income, EBITDA, and adjusted EBITDA per credit facility to provide a clearer view of underlying operations and trends, excluding items that cause short-term fluctuations[149](index=149&type=chunk)[150](index=150&type=chunk) Reconciliation of Net Income to Adjusted Net Income (in millions, except per share amounts) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $130.5 | $59.7 | | Loss from discontinued operations, net of tax | $0.2 | $1.2 | | Loss on extinguishment of debt | $5.0 | — | | Customer-related charges | — | $11.7 | | Incremental operating costs | — | $2.3 | | Accounting standard adoption | — | $1.5 | | Tax adjustments | $(1.1) | $(3.9) | | **Adjusted net income** | **$134.6** | **$72.5** | | **Adjusted earnings per share, diluted** | **$0.64** | **$0.34** | Reconciliation of Operating Income to Adjusted Operating Income (in millions, except percentages) for Three Months Ended March 31, 2020 | Metric | Consolidated | North America | International | Corporate | | :------------------------ | :----------- | :------------ | :------------ | :-------- | | Operating income (expense) | $105.3 | $101.6 | $26.4 | $(22.7) | | Customer-related charges | $11.7 | $11.7 | — | — | | Incremental operating costs | $2.3 | — | $2.3 | — | | Accounting standard adoption | $1.5 | $1.5 | — | — | | **Adjusted operating income (expense)** | **$120.8** | **$114.8** | **$28.7** | **$(22.7)** | Reconciliation of Net Income to EBITDA and Adjusted EBITDA per Credit Facility (in millions) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $130.5 | $59.7 | | Interest expense, net | $12.3 | $20.3 | | Loss on extinguishment of debt | $5.0 | — | | Income taxes | $40.5 | $23.5 | | Depreciation and amortization | $41.8 | $31.0 | | **EBITDA** | **$230.1** | **$134.5** | | Loss from discontinued operations, net of tax | $0.2 | $1.2 | | Customer-related charges | — | $11.7 | | Incremental operating costs | — | $2.3 | | Accounting standard adoption | — | $1.5 | | **Adjusted EBITDA per credit facility** | **$230.3** | **$151.2** | - For the trailing twelve months ended March 31, 2021, Adjusted EBITDA per credit facility was **$858.7 million**[163](index=163&type=chunk) - The ratio of consolidated indebtedness less netted cash to adjusted EBITDA per credit facility was **1.95 times**[166](index=166&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There have been no material changes to the Company's critical accounting policies and estimates in 2021[170](index=170&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's exposure to market risks, primarily foreign currency exchange rates and interest rates, and its strategies for managing these risks [Foreign Currency Exposures](index=38&type=section&id=Foreign%20Currency%20Exposures) - The Company's earnings are exposed to foreign currency exchange rate changes due to global operations[171](index=171&type=chunk) - A strengthening U.S. dollar negatively impacts operating results upon translation[171](index=171&type=chunk) - Foreign currency exchange rate changes positively impacted adjusted EBITDA per credit facility by **1.7%** in Q1 2021[171](index=171&type=chunk) - The Company hedges a portion of its foreign currency transaction exposure using foreign exchange forward contracts[172](index=172&type=chunk) - A hypothetical **10.0% adverse change** in exchange rates would result in an estimated **$6.8 million potential loss** in fair value of these contracts, largely offset by gains from underlying assets and liabilities[172](index=172&type=chunk) [Interest Rate Risk](index=39&type=section&id=Interest%20Rate%20Risk) - As of March 31, 2021, the Company had approximately **$403.4 million** in variable-rate debt[173](index=173&type=chunk) - A hypothetical **100 basis point increase** in interest rates would cause an estimated **$4.0 million reduction** in income before income taxes[173](index=173&type=chunk) [ITEM 4. Controls and Procedures](index=39&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2021, with ongoing evaluation of new ERP system controls - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2021[174](index=174&type=chunk) - A new ERP system was implemented in Q1 2021 for the Tempur U.S. distribution subsidiary, resulting in modified and new internal controls over financial reporting[175](index=175&type=chunk) - The Company is continuously evaluating the operating effectiveness of these controls[175](index=175&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=39&type=section&id=ITEM%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 10, 'Commitments and Contingencies,' in the financial statements [ITEM 1A. Risk Factors](index=40&type=section&id=ITEM%201A.%20Risk%20Factors) There are no new material risk factors to report for the current period [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's common stock repurchases during the three months ended March 31, 2021, under its authorized share repurchase program Common Stock Purchases for Three Months Ended March 31, 2021 | Period | Total number of shares purchased | Average Price Paid per Share | Total number of shares purchased as part of publicly announced plans or programs | | :--------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------ | | January 1, 2021 - January 31, 2021 | 736,605 | $27.13 | 261,705 | | February 1, 2021 - February 28, 2021 | 1,982,779 | $32.95 | 1,980,528 | | March 1, 2021 - March 31, 2021 | 6,122,789 | $37.19 | 6,108,392 | | **Total** | **8,842,173** | | **8,350,625** | - The Board of Directors increased the share repurchase authorization by an additional **$211.4 million** in February 2021, and further to **$400.0 million** in April 2021[180](index=180&type=chunk) [ITEM 3. Defaults upon Senior Securities](index=40&type=section&id=ITEM%203.%20Defaults%20upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period [ITEM 4. Mine Safety Disclosures](index=40&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company [ITEM 5. Other Information](index=40&type=section&id=ITEM%205.%20Other%20Information) No other information is required to be disclosed under this item [ITEM 6. Exhibits](index=41&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed as part of this Quarterly Report on Form 10-Q, including indentures, purchase agreements, amendments to credit and security agreements, compensation plans, certifications, and XBRL-formatted financial statements [Signatures](index=42&type=section&id=Signatures) The report is duly signed on behalf of Tempur Sealy International, Inc. by its Executive Vice President and Chief Financial Officer, Bhaskar Rao, on May 6, 2021

Tempur Sealy International, Inc. (TPX) "Our growth reflects strong industry demand, our worldwide leadership position, and the success of our omnichannel distribution strategy" Pictured above: Tempur-Pedic flagship store in Manhattan © 2021 Tempur Sealy International, Inc. 1 TEMPUR+SEALY PURPOSE To Improve the Sleep of More People, Every Night, All Around the World | --- | --- | --- | --- | |--------------------------------------------------------------------------------------------------------------------- ...

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Securities registered pursuant to Section 12(g) of the Act: None For the transition period from to . For the fiscal year ended December 31, 2020 or Delaware 33-1022198 (I.R.S. Employer Identification No.) 1000 Tempur Way Lexington, Ke ...

Financial Performance Highlights - In Q4 2020, global sales grew 21% year-over-year, driven by broad-based demand across geographies and channels [12] - Adjusted EBITDA reached a record $240 million, an increase of 57%, and adjusted EPS was $0.67, up 97% [12][41] - For the full year 2020, global sales grew 18% to $3.7 billion, with adjusted EBITDA increasing 54% to $780 million [14] Business Line Performance - North American sales increased 21% in Q4, with the wholesale channel up 19% and the direct channel up 30% [43] - International sales grew 26% on a reported basis, marking the largest quarterly growth rate for the International segment in the company's history [45] - North American gross profit margin improved 150 basis points to 43.4%, while international gross margin improved 150 basis points to 59.9% [44][46] Market Performance - North America sales growth was driven by strong performance in both retail and online channels, with online sales doubling compared to the prior year [12] - The Asia Pacific market showed strong sales performance, while European markets faced significant restrictions due to COVID-19 [63] - The company expects international sales to grow in 2021 despite challenges in Europe [77] Company Strategy and Industry Position - The company is focused on expanding its share of the North American OEM bedding market, estimating potential sales could exceed $600 million annually in five years [53] - Investments in advertising and product innovation are expected to support growth and maintain competitive positioning [28][61] - The company aims to achieve carbon neutrality for its global operations by 2040 and has made significant progress in ESG initiatives [38] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong consumer demand and a healthy industry [11][60] - Supply chain issues are expected to mitigate significantly by early Q2 2021, allowing for improved financial performance [13] - The company anticipates sales growth between 15% and 20% for 2021, with EPS expected to be between $2.30 and $2.50 [56] Other Important Information - The company repurchased $130 million of shares in Q4 2020 and over $330 million for the full year [52] - The leverage ratio improved from 2.9x to 1.7x, indicating a strong balance sheet [35] - The company plans to invest significantly in marketing to support its brands and new product launches [28][87] Q&A Session Summary Question: Revenue guidance breakdown - Management expects share gains and capacity additions to contribute to revenue growth, with an estimated $100 million in lost sales due to supply constraints in Q4 [66][67] Question: Drivers of consumer mattress demand - The pandemic has accelerated health and wellness trends, leading to increased consumer focus on mattress quality [71] Question: Guidance variables for EBITDA - Management indicated that supply chain improvements and commodity pricing will be monitored closely, with confidence in passing through price increases to consumers [74][75] Question: International market outlook - Growth is expected in Asia, while Europe faces challenges due to lockdowns, but overall international sales are anticipated to increase [77] Question: Confidence in sales outlook - New distribution channels and strong advertising investments are driving sales growth, with direct-to-consumer business performing well [81][84] Question: Marketing investment trends - The company plans to make the largest advertising investment in its history, focusing on digital and social media [87] Question: Product launches and pricing - New product launches in 2022 will target international markets, with a focus on increasing addressable market [106] Question: Raw material inflation impact - Management acknowledged inflationary pressures but expressed confidence in the ability to pass through price increases more rapidly than in previous years [108]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-31922 TEMPUR SEALY INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpo ...

Tempur Sealy International Inc. (NYSE:TPX) Q3 2020 Results Earnings Conference Call October 29, 2020 8:00 AM ET Company Participants Aubrey Moore - IR Scott Thompson - Chairman, President and CEO Bhaskar Rao - EVP and CFO Conference Call Participants Peter Keith - Piper Sandler Keith Hughes - Truist Securities Curtis Nagle - Bank of America Bobby Griffin - Raymond James Atul Maheswari - UBS Brad Thomas - KeyBanc Laura Champine - Loop Capital William Reuter - Bank of America Seth Basham - Operator Good day ...

For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-31922 TEMPUR SEALY INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Delaware 33-1022198 Registrant's telephone n ...

Tempur Sealy International Inc. (NYSE:TPX) Q2 2020 Earnings Conference Call July 30, 2020 ET Company Participants Aubrey Moore - Investor Relations Scott Thompson - Chairman, President and CEO Bhaskar Rao - Executive Vice President and CFO Conference Call Participants Curtis Nagle - Bank of America Bobby Griffin - Raymond James Atul Maheswari - UBS Peter Keith - Piper Sandler Seth Basham - Wedbush Securities Keith Hughes - SunTrust Laura Champine - Loop Capital Brad Thomas - KeyBanc Capital Markets Robert D ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-31922 TEMPUR SEALY INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporati ...

Tempur Sealy International Inc. (NYSE:TPX) Q1 2020 Earnings Conference Call April 29, 2020 8:00 AM ET Company Participants Aubrey Moore - IR Scott Thompson - Chairman, President and CEO Bhaskar Rao - EVP and CFO Conference Call Participants Bobby Griffin - Raymond James Keith Hughes - SunTrust Curtis Nagle - Bank of America William Reuter - Bank of America Atul Maheswari - UBS John Baugh - Stifel Bobby Friedner - Piper Sandler Seth Basham - Wedbush Brad Thomas - KeyBanc Capital Markets Operator Ladies and g ...