Tempur Sealy International officials reported an “excellent” second quarter, with total net sales increasing 5.2% to $804.4 million.

Earnings before interest, tax, depreciation and amortization increased 61.7% to $123.7 million. Adjusted EBITDA increased 38.1% to $124.7 million, the company said.

For the second quarter ended June 30, North American net sales increased 6.0% to $668.2 million. On a constant currency basis, North America net sales increased 6.4%, driven by the success of new products and expanded distribution, the company said.

The North America adjusted gross margin improved to 40.0%. Gross margin and adjusted gross margin improvements were primarily driven by operational improvements, pricing actions and product mix. These factors were slightly offset by new product launch costs, the company said.

Tempur Sealy reported that international net sales increased 1.6% to $136.2 million, and officials were pleased with the results.

"Thanks to the hard work of our more than 7,000 associates worldwide, the company had an excellent quarter,” said Tempur Sealy Chairman and CEO Scott Thompson. “We are gaining traction toward the goals we have set. Adjusted EBITDA and gross margins have increased for the third consecutive quarter, and adjusted EPS is up 74%. We are improving operating leverage, continuing to invest heavily in our brands, expanding distribution and successfully servicing our retailers and direct customers.”

Overall, the company said its gross margin under U.S. generally accepted accounting principles was 41.9% as compared to 38.9% in the second quarter of 2015. GAAP operating income increased 92.7% to $100.2 million.

Operating income in the second quarter of 2016 included $1.0 million of integration costs.

Operating income in the second quarter of 2016 included $6.7 million of integration costs and $11.7 million of additional costs related to the company's 2015 Annual Meeting and related executive management transition and retention compensation. Adjusted operating income increased 43.8% to $101.2 million, or 12.6% of net sales, as compared to $70.4 million, or 9.2% of net sales, in the second quarter of 2015, the company said.

GAAP net income increased 0.5% to $21.3 million as compared to $21.2 million in the second quarter of 2015. The company incurred a $47.2 million loss on extinguishment of debt associated with the completion of a new credit facility and new senior notes offering in the second quarter of 2016 and related repayment of existing debt.

Adjusted net income increased 67.3% to $55.7 million, the company said. The company ended the second quarter of 2016 with consolidated funded debt less qualified cash of $1.6 billion. During the second quarter of 2016, the company repurchased 2.1 million shares of its common stock for a total cost of $122 million.

As of June 30, the company had $178 million available under its existing share repurchase authorization, officials said.

The Board of Directors has authorized an additional $200 million to its existing share repurchase authorization.

The company also updated its financial guidance for 2016. For the full year 2016, the company currently expects adjusted EBITDA to range from $525 million to $550 million, officials said.

(Source: Furniture Today)