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TEMPUR SEALY REPORTS SECOND QUARTER 2020 RESULTS
-Strong Order Trends in May and June Across All Channels
-Net Sales Decreased 8%, U.S. Sales Increased 2%
-Targeting 25% Net Sales Increase in Third Quarter 2020
-Leverage Ratio Lowest in Tempur Sealy History

LEXINGTON, KY, July 30, 2020 - Tempur Sealy International, Inc. (NYSE: TPX) announced financial results for the second quarter ended June 30, 2020.

SECOND QUARTER 2020 FINANCIAL SUMMARY
Total net sales decreased 8.0% to $665.2 million as compared to $722.8 million in the second quarter of 2019. On a constant currency basis(1), total net sales decreased 7.3%, with a decrease of 2.9% in the North America business segment and a decrease of 26.9% in the International business segment.
Gross margin was 40.0% as compared to 43.4% in the second quarter of 2019. Adjusted gross margin(1) was 40.6% in the second quarter of 2020. There were no adjustments to gross margin in the second quarter of 2019.
Operating income decreased 34.1% to $53.4 million as compared to $81.0 million in the second quarter of 2019. Adjusted operating income(1) decreased 16.5% to $70.0 million as compared to $83.8 million in the second quarter of 2019. Operating income and adjusted operating income(1) in the second quarter of 2020 included $7.9 million of costs associated with temporarily closed company-owned retail stores and sales force retention costs as a result of the novel coronavirus ("COVID-19 charges").
Net income decreased 44.7% to $23.0 million as compared to $41.6 million in the second quarter of 2019. Adjusted net income(1) decreased 20.8% to $35.1 million as compared to $44.3 million in the second quarter of 2019.
Earnings before interest, tax, depreciation and amortization ("EBITDA")(1) decreased 21.8% to $85.2 million as compared to $109.0 million in the second quarter of 2019. Adjusted EBITDA (including COVID-19 charges)(1) decreased 10.0% to $101.7 million and adjusted EBITDA per credit facility(1) decreased 3.0% to $109.6 million as compared to $113.0 million in the second quarter of 2019.
Adjusted EBITDA per credit facility(1) excluded $24.5 million of asset impairments, incremental operating costs due to the global pandemic, COVID-19 charges and other items in the second quarter of 2020.
Earnings per diluted share ("EPS") decreased 40.5% to $0.44 as compared to $0.74 in the second quarter of 2019. Adjusted EPS(1) decreased 13.9% to $0.68 as compared to $0.79 in the second quarter of 2019. Adjusted EPS(1) included $0.11 of COVID-19 charges in the second quarter of 2020.
For the trailing twelve months ended June 30, 2020, leverage based on the ratio of consolidated indebtedness less netted cash(1) to Adjusted EBITDA per credit facility(1) was 2.83 times as compared to 3.65 times in the corresponding prior year period.
Net cash provided by operating activities increased to a record $155.4 million as compared to $41.3 million in the second quarter of 2019.
KEY HIGHLIGHTS
(in millions, except percentages)Three Months Ended% Reported Change
% Constant Currency Change(1)
June 30, 2020June 30, 2019
Net sales$665.2  $722.8  (8.0)%(7.3)%
Net income$23.0  $41.6  (44.7)%(44.2)%
EBITDA(1)
$85.2  $109.0  (21.8)%(21.5)%
Adjusted EBITDA (including COVID-19 charges) (1)
$101.7  $113.0  (10.0)%(9.7)%
Adjusted EBITDA per credit facility (1)
$109.6  $113.0  (3.0)%(2.7)%

Company Chairman and CEO Scott Thompson commented, "It was definitely a quarter of lows and highs, ending clearly on a high note for the industry and our business. Sales trends through the quarter accelerated each month and have continued to accelerate into July unabated. We believe the category is benefiting from a shift in consumer spend of discretionary dollars into the home category in which our products and brands are well-aligned to meet those consumer needs. We are currently experiencing tremendous order volume in the U.S. that is broad-based with growth across both Tempur and Sealy brands. In fact, our sales have been constrained by our Sealy manufacturing capacity and our suppliers' capacity to meet this increased demand. Over the past five years, we have worked diligently to strengthen the foundation of our company, and we are now benefiting from our powerful omni-channel presence and strong competitive position in the industry. While a level of uncertainty remains, we expect the industry tailwinds and our sales momentum to continue."
(1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below.
1

The following information was filed by Tempur Sealy International, Inc. (TPX) on Thursday, July 30, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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