Tempur Sealy Shares Gain After Acquiring Mattress Firm For $4B, Q1 Earnings Beat

Tempur Sealy International Inc TPX reported a first-quarter FY23 sales decline of 2.5% year-on-year to $1.208 billion, almost in line with the consensus of $1.210 billion.

• The bedding products firm registered an adjusted EPS of $0.53, beating the analyst consensus of $0.51.
• On a constant currency basis, total net sales decreased by 0.5%, with a decrease of 1.2% in the North American business segment and an increase of 1.7% in the International business segment.
• The gross margin for the quarter contracted 80 basis points to 41.4%, and the gross profit declined 4.4% Y/Y to $499.5 million.
• The operating margin was 14.8%, and operating income for the quarter dropped 24% to $143.3 million.
• The Lexington, Kentucky-based company held $91 million in cash and equivalents as of March 31, 2023. 
• Acquisition Of Mattress Firm: Tempur Sealy also agreed to acquire Mattress Firm Group in a cash and stock transaction valued at approximately $4 billion. The transaction is expected to close in the second half of 2024.
• Dividend: Tempur has declared a second-quarter cash dividend on its common stock of $0.11 per share. The dividend is payable on June 6, 2023. 
• Outlook: Tempur reiterated its FY23 outlook. The company sees adjusted FY23 EPS of $2.60 - $2.80, versus the consensus of $2.67.
• The company's sales outlook is for mid-single-digit year-over-year growth.

Price Action: TPX shares are trading higher by 5.45% at $39.67 on the last check Tuesday.