Sleep Number Corporation (NASDAQ: SNBR) reported Q1 EPS of $1.36, $0.64 better than the analyst estimate of $0.72. Revenue for the quarter came in at $473 million versus the consensus estimate of $433.19 million.

First Quarter Overview

• Net sales increased 11% to $473 million, including a 7% comparable sales gain and 5 percentage points of growth from new stores
• Gross profit rate increased 240 basis points (bp) to 63.9% of net sales
• Operating income increased 61% to $53 million, or 11.2% of net sales, up 350 bp versus the prior year’s first quarter while investing in growth drivers, including 25% higher year-over-year R&D spending
• Earnings per diluted share increased 70% to a record $1.36, while absorbing 11 cents of year-over-year income tax rate headwind

Cash Flows and Liquidity Review

• Generated $85 million in net cash from operating activities, up 25% versus the prior year; trailing twelve-month net cash from operating activities of $206 million grew 37% versus prior year comparable period
• Reduced 2020 planned capital expenditures to approximately $35 million versus previous plan of $60 million, with $10 million incurred in the first quarter
• As previously disclosed, we suspended share repurchases for balance of the year
• Leverage ratio of 2.6x EBITDAR at the end of the first quarter (covenant maximum of 4.5x)
• Return on invested capital (ROIC) increased to 19.1% for the trailing twelve-month period, up 260 bp versus the prior year comparable period
• Cash at end of first quarter of $239 million, including drawing down the remaining availability under our revolving credit facility on March 17th; on April 3rd we added $75 million additional cash through an incremental term loan under the credit facility’s $150 million accordion

“As a purpose driven company, Sleep Number has been intently focused on keeping our team members safe, serving our customers and ensuring our business continuity during this time of uncertainty and disruption created by the COVID-19 pandemic,” stated Shelly Ibach, President and CEO. “Our record first quarter performance reflects the exceptional consumer demand for our life-changing 360® smart beds, our significant competitive advantages and strong business fundamentals. We are effectively managing the near-term challenges caused by the pandemic. The measures we have taken in recent weeks, combined with our team’s agility, resilience and innovation, give me great confidence in our ability to rebound with strength as this crisis abates and the economy recovers.”

Financial Outlook
The company remains focused on managing liquidity and balance sheet strength, and expects to meet its liquidity needs from operating cash flow and its existing credit facilities. On March 23, 2020, the company withdrew its fiscal 2020 financial guidance due to the COVID-19 pandemic. The company is not providing any further financial guidance at this time.

For earnings history and earnings-related data on Sleep Number Corporation (SNBR) click here.