LEXINGTON, Ky. — Tempur Sealy International said that quarter-to-date order trends have improved from previous expectations and the company now estimates total third quarter net sales to grow more than 30% compared to the prior year.
The change in expectation was primarily driven by improving order trends on U.S. Tempur-Pedic products. The company continues to experience capacity constraints for U.S. Sealy products, including supply chain limitations outside the company’s control. TSI said it is working closely with suppliers to find solutions for component shortfalls to support the elevated U.S. Sealy demand.
“Over the past five years, we have made tremendous progress in strengthening the foundation of our company,” said Tempur Sealy Chairman and CEO Scott Thompson. “The strong foundation we have in place with our brands, products, operations and people have positioned us well to capitalize on industry growth for years to come.”
He said the company continues to see strong growth that is broad-based across geographies and channels.
“Tempur-Pedic branded products are now growing materially higher than the growth on Sealy products in the U.S. which has raised our profit expectations for the quarter,” Thompson said. “Free cash flow has also been strong and our confidence in positive industry trends has increased.
“Accordingly, in September, we are using operating cash flow to repay the $200 million 364-day incremental term loan we closed in the second quarter. This repayment will remove certain restrictions on share repurchases and dividends and result in an annual interest saving of approximately $5 million,” he continued. “Additionally, with this improved outlook, we expect to reach the higher end of the payout under our long-term aspirational plan at the end of the third quarter.”
The company’s board of directors has approved the early termination of its shareholder rights plan to now expire at the close of business on Sept. 14. The limited duration rights plan was adopted on March 27 with a previous expiration date of March 26, 2021. Shareholders are not required to take any action as a result of this expiration.