Tempur Sealy (NYSE: TPX) reported Q2 EPS of $0.79, $0.12 better than the analyst estimate of $0.67. Revenue for the quarter came in at $722.8 million versus the consensus estimate of $723.28 million.

SECOND QUARTER 2019 FINANCIAL SUMMARY(1)

• Total net sales increased 9.5% to $722.8 million as compared to $659.9 million in the second quarter of 2018. On a constant currency basis(2), total net sales increased 10.8%, with an increase of 11.8% in the North America business segment and an increase of 6.9% in the International business segment.
• Gross margin under U.S. generally accepted accounting principles ("GAAP") was 43.4% as compared to 41.3% in the second quarter of 2018.
• GAAP operating income increased 39.7% to $81.0 million as compared to $58.0 million in the second quarter of 2018. Adjusted operating income(2) increased 32.2% to $83.8 million as compared to $63.4 million in the second quarter of 2018.
• GAAP net income increased 82.5% to $41.6 million as compared to $22.8 million in the second quarter of 2018. Adjusted net income(2) increased 41.1% to $44.3 million as compared to $31.4 million in the second quarter of 2018.
• Earnings before interest, tax, depreciation and amortization ("EBITDA")(2) increased 32.0% to $109.0 million as compared to $82.6 million for the second quarter of 2018. Adjusted EBITDA(2) increased 21.0% to $113.0 million as compared to $93.4 million in the second quarter of 2018.
• GAAP earnings per diluted share ("EPS") increased 76.2% to $0.74 as compared to $0.42 in the second quarter of 2018. Adjusted EPS(2) increased 38.6% to $0.79 as compared to $0.57 in the second quarter of 2018.

Tempur Sealy International, Inc. Chairman and CEO Scott Thompson commented, "Our strong momentum from the first quarter continued into the second quarter and beyond. The combination of our powerful omni-channel distribution platform and our innovative products delivered double-digit revenue and earnings growth. Our North America operations had a stand-out quarter driven by our new Breeze line of mattresses and 78% growth in our direct to consumer channel. These results, combined with our future expected earnings growth outlook, support a return to our share repurchase program. We expect our leverage ratio to move to the lower end of our targeted range of 3 to 4 times debt to adjusted EBITDA in the near-term, while at the same time, subject to market conditions, we are targeting quarterly share repurchases of approximately $50 million."

Financial Guidance

The Company raised its financial guidance for 2019. For the full year 2019, the Company currently expects adjusted EBITDA(2) to range from $450 million to $480 million, narrowing the range around the mid-point of $465 million. This increase of the mid-point is primarily driven by improved performance of North America Sealy bedding products and our North America direct business. This is slightly offset by increases to variable compensation and softness in international sales versus expectations.

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