Tempur Sealy (NYSE: TPX) reported Q3 EPS of $1.02, $0.19 worse than the analyst estimate of $1.21. Revenue for the quarter came in at $729.5 million versus the consensus estimate of $745.17 million.

• Total net sales increased 2.5% to $729.5 million as compared to $711.5 million in the third quarter of 2017. On a constant currency basis(2), total net sales increased 3.4%, with an increase of 3.0% in the North America business segment and an increase of 4.9% in the International business segment.
• Gross margin under U.S. generally accepted accounting principles ("GAAP") was 41.1% as compared to 43.1% in the third quarter of 2017. Gross margin in the third quarter of 2018 included $4.9 million of restructuring charges and $3.7 million of supply chain transition costs. Adjusted gross margin(2) was 42.3% as compared to 43.3% in the third quarter of 2017.
• GAAP operating income decreased 12.9% to $84.7 million as compared to $97.3 million in the third quarter of 2017. Operating income in the third quarter of 2018 included $9.4 million of restructuring charges and $3.7 million of supply chain transition costs. Adjusted operating income(2) decreased 2.5% to $97.8 million as compared to $100.3 million in the third quarter of 2017.
• GAAP net income decreased 5.2% to $42.3 million as compared to $44.6 million in the third quarter of 2017.Adjusted net income(2) increased 0.9% to $56.1 million as compared to $55.6 million in the third quarter of 2017.
• Earnings before interest, tax, depreciation and amortization ("EBITDA")(2) decreased 1.5% to $112.7 million as compared to $114.4 million for the third quarter of 2017. Adjusted EBITDA(2) decreased 1.3% to $127.7 million as compared to $129.4 million in the third quarter of 2017.
• GAAP earnings per diluted share ("EPS") decreased 4.9% to $0.77 as compared to $0.81 in the third quarter of 2017. Adjusted EPS(2) increased 1.0% to $1.02 as compared to $1.01 in the third quarter of 2017.

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, "Our recent Tempur-Pedic and Sealy Hybrid product introductions have been the best-received in the company's history, and have gained significant share in the marketplace. Tempur-Pedic mattress units accelerated during the quarter, with growth of 29% in North America. In North America, we are currently rolling out our higher-end Tempur LuxeAdapt product, and in early 2019 our Breeze products will be launched, rounding out our completely new line of Tempur-Pedic mattresses. The team is confident that the combination of these innovative new products, our expanding direct to consumer business, and our ongoing productivity initiatives will continue to enhance our world wide competitive position."

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