-
Enterprise Resource Planning (ERP) system implementation impacts
Q4 results by $0.43 per share
-
Reports fourth-quarter net loss of $0.42 per share and full-year
earnings of $0.97 per share
-
Repurchased $98 million of the company's common stock in 2015
versus $45 million in 2014
-
Provides 2016 outlook
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 11, 2016--
Select Comfort Corporation (NASDAQ: SCSS) today reported fourth- quarter
and full-year 2015 results for the period ended Jan. 2, 2016.
"The transition from our 20-year-old legacy systems to a fully
integrated ERP platform has been more challenging with far greater
customer and financial impacts than we anticipated. Many of our
customers endured delays and delivery reschedules as we ramped up the
new system. These results are not acceptable to us," said Shelly Ibach,
president and chief executive officer of Select Comfort. "We have made
major progress resolving technical and operational issues. Plants have
increased production levels ahead of current demand and operational and
customer service levels have significantly improved. We expect to
leverage this critical investment for improved profitability in the
back-half of 2016 as planned. Our competitive advantages and strategic
direction remain on track to achieve our commitment of earnings per
share of $2.75 by 2019.”
Please refer to the last table in this news release for supplemental
financial information that summarizes discrete items affecting 2015
fourth-quarter results and our 2016 outlook.
Fourth-quarter Results Overview
-
Net sales decreased 33% to $215 million, with comparable sales
down 30%, reflecting approximately $84 million in sales disruption
from the ERP system implementation. Note that the prior year’s fourth
quarter also included an extra week of sales
-
Net loss per diluted share of $0.42, including $0.43 per share
for lost sales and operational inefficiencies related to the ERP
system implementation, compared with earnings per share of $0.35 last
year
Full-year Results Overview
-
Net sales in 2015 were $1.21 billion, an increase of 5%, or 7%
when excluding the extra week from 2014
-
Earnings per diluted share of $0.97, compared to $1.25 in 2014.
Note that 2014 fourth-quarter earnings per share included 10 cents of
combined one-time benefits from the extra week and legal settlement
-
Generated $133 million of EBITDA, invested $86 million in
capital projects, $57 million to acquire BAM Labs and returned $98
million to shareholders through share repurchases, up from $45 million
in 2014
Financial Outlook
The company expects to generate full-year
2016 GAAP earnings per diluted share of between $1.25 and $1.45, a 29%
to 49% increase versus full-year 2015 earnings per diluted share of
$0.97. The outlook assumes low-teen sales growth for the full-year, with
low-single digit growth in the first half of the year, followed by
stronger growth in the back-half of the year. Our 2016 outlook includes
an estimated $0.25 to $0.30 EPS reduction related to the ERP transition
(largely in the first quarter), including $40 to $50 million of
estimated sales impact. The outlook assumes a 10% increase in store
count in 2016, compared with 5% store count growth in 2015. The company
anticipates 2016 capital expenditures will be approximately $70 million.
The outlook does not contemplate a worsening of the consumer spending
environment.
Conference Call Information
Management will host its
regularly scheduled conference call to discuss the company’s results at
5 p.m. EST (4 p.m. CST; 2 p.m. PST) today. To listen to the call, please
dial 800-593-9959 (international participants dial 517-308-9340) and
reference the passcode “Sleep.” To access the webcast, please visit the
investor relations area of the Sleep Number website at http://www.sleepnumber.com/eng/aboutus/InvestorRelations.cfm.
The webcast replay will remain available for approximately 60 days.
About Select Comfort Corporation
Nearly 30 years ago, Sleep
Number transformed the mattress industry with the idea that ‘one size
does not fit all’ when it comes to sleep.
Today, the company is the leader in sleep innovation and ranked “Highest
in Customer Satisfaction with Mattresses” in 2015 by J.D. Power. As the
pioneer in biometric sleep monitoring and adjustability, Sleep Number is
proving the connection between quality sleep and health and wellbeing.
Dedicated to individualizing sleep experiences, the company’s 3,300
employees are improving lives with innovative sleep solutions. To find
better quality sleep visit one of our more than 490 U.S. Sleep Number®
stores or SleepNumber.com.
Forward-looking Statements
Statements used in this news
release relating to future plans, events, financial results or
performance are forward-looking statements subject to certain risks and
uncertainties including, among others, such factors as current and
future general and industry economic trends and consumer confidence; the
effectiveness of our marketing messages; the efficiency of our
advertising and promotional efforts; our ability to execute our
company-controlled distribution strategy; our ability to achieve and
maintain acceptable levels of product and service quality, and
acceptable product return and warranty claims rates; our ability to
continue to improve and expand our product line; consumer acceptance of
our products, product quality, innovation and brand image; industry
competition, the emergence of additional competitive products, and the
adequacy of our intellectual property rights to protect our products and
brand from competitive or infringing activities; availability of
attractive and cost-effective consumer credit options; pending and
unforeseen litigation and the potential for adverse publicity associated
with litigation; our “just-in-time” manufacturing processes with minimal
levels of inventory, which may leave us vulnerable to shortages in
supply; our dependence on significant suppliers and our ability to
maintain relationships with key suppliers, including several sole-source
suppliers; the vulnerability of key suppliers to recessionary pressures,
labor negotiations, liquidity concerns or other factors; rising
commodity costs and other inflationary pressures; risks inherent in
global sourcing activities; risks of disruption in the operation of
either of our two primary manufacturing facilities; increasing
government regulations, which have added or will add cost pressures and
process changes to ensure compliance; the adequacy of our management
information systems to meet the evolving needs of our business and to
protect sensitive data from potential cyber threats; the costs,
distractions and potential disruptions to our business related to
upgrading our management information systems; our ability to attract,
retain and motivate qualified management, executive and other key
employees, including qualified retail sales professionals and managers;
and uncertainties arising from global events, such as terrorist attacks
or a pandemic outbreak, or the threat of such events. Additional
information concerning these and other risks and uncertainties is
contained in the company’s filings with the Securities and Exchange
Commission (SEC), including the Annual Report on Form 10-K, and other
periodic reports filed with the SEC. The company has no obligation to
publicly update or revise any of the forward-looking statements in this
news release.
SELECT COMFORT CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Statements of Operations
|
(unaudited – in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
January 2,
|
|
% of
|
|
January 3,
|
|
% of
|
|
|
|
|
2016
|
|
Net Sales
|
|
2015
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
214,682
|
|
|
100.0
|
%
|
|
$
|
322,216
|
|
100.0
|
%
|
Cost of sales
|
|
|
93,939
|
|
|
43.8
|
%
|
|
|
127,730
|
|
39.6
|
%
|
|
Gross profit
|
|
|
120,743
|
|
|
56.2
|
%
|
|
|
194,486
|
|
60.4
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
126,446
|
|
|
58.9
|
%
|
|
|
142,410
|
|
44.2
|
%
|
|
General and administrative
|
|
|
19,258
|
|
|
9.0
|
%
|
|
|
21,681
|
|
6.7
|
%
|
|
Research and development
|
|
|
5,696
|
|
|
2.7
|
%
|
|
|
2,508
|
|
0.8
|
%
|
|
|
Total operating expenses
|
|
|
151,400
|
|
|
70.5
|
%
|
|
|
166,599
|
|
51.7
|
%
|
Operating (loss) income
|
|
|
(30,657
|
)
|
|
(14.3
|
%)
|
|
|
27,887
|
|
8.7
|
%
|
Other (expense) income, net
|
|
|
(30
|
)
|
|
0.0
|
%
|
|
|
86
|
|
0.0
|
%
|
(Loss) income before income taxes
|
|
|
(30,687
|
)
|
|
(14.3
|
%)
|
|
|
27,973
|
|
8.7
|
%
|
Income tax (benefit) expense
|
|
|
(9,515
|
)
|
|
(4.4
|
%)
|
|
|
9,026
|
|
2.8
|
%
|
Net (loss) income
|
|
$
|
(21,172
|
)
|
|
(9.9
|
%)
|
|
$
|
18,947
|
|
5.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share – basic
|
|
$
|
(0.42
|
)
|
|
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share – diluted
|
|
$
|
(0.42
|
)
|
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding
|
|
|
50,045
|
|
|
|
|
|
52,825
|
|
|
|
Dilutive effect of stock-based awards 1
|
|
|
-
|
|
|
|
|
|
846
|
|
|
Diluted weighted-average shares outstanding 1 |
|
|
50,045
|
|
|
|
|
|
53,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
For the three months ended January 2, 2016, potentially dilutive
stock-based awards have been excluded from the calculation of
diluted weighted-average shares outstanding, as their inclusion
would have had an anti-dilutive effect on our net loss per diluted
share.
|
|
|
|
SELECT COMFORT CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Statements of Operations
|
(unaudited – in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
|
January 2,
|
|
% of
|
|
January 3,
|
|
% of
|
|
|
|
|
2016
|
|
Net Sales
|
|
2015
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,213,699
|
|
100.0
|
%
|
|
$
|
1,156,757
|
|
100.0
|
%
|
Cost of sales
|
|
|
472,948
|
|
39.0
|
%
|
|
|
449,907
|
|
38.9
|
%
|
|
Gross profit
|
|
|
740,751
|
|
61.0
|
%
|
|
|
706,850
|
|
61.1
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
550,475
|
|
45.4
|
%
|
|
|
512,007
|
|
44.3
|
%
|
|
General and administrative
|
|
|
99,209
|
|
8.2
|
%
|
|
|
84,864
|
|
7.3
|
%
|
|
Research and development
|
|
|
15,971
|
|
1.3
|
%
|
|
|
8,233
|
|
0.7
|
%
|
|
|
Total operating expenses
|
|
|
665,655
|
|
54.8
|
%
|
|
|
605,104
|
|
52.3
|
%
|
Operating income
|
|
|
75,096
|
|
6.2
|
%
|
|
|
101,746
|
|
8.8
|
%
|
Other income, net
|
|
|
334
|
|
0.0
|
%
|
|
|
362
|
|
0.0
|
%
|
Income before income taxes
|
|
|
75,430
|
|
6.2
|
%
|
|
|
102,108
|
|
8.8
|
%
|
Income tax expense
|
|
|
24,911
|
|
2.1
|
%
|
|
|
34,134
|
|
3.0
|
%
|
Net income
|
|
$
|
50,519
|
|
4.2
|
%
|
|
$
|
67,974
|
|
5.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – basic
|
|
$
|
0.99
|
|
|
|
$
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – diluted
|
|
$
|
0.97
|
|
|
|
$
|
1.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding
|
|
|
51,252
|
|
|
|
|
53,452
|
|
|
|
Dilutive effect of stock-based awards
|
|
|
849
|
|
|
|
|
741
|
|
|
Diluted weighted-average shares outstanding
|
|
|
52,101
|
|
|
|
|
54,193
|
|
|
|
|
|
|
|
|
|
|
|
SELECT COMFORT CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Balance Sheets
|
(unaudited – in thousands, except per share amounts)
|
subject to reclassification
|
|
|
|
|
|
|
|
|
|
|
|
January 2,
|
|
January 3,
|
|
|
|
|
2016
|
|
2015
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
20,994
|
|
|
$
|
51,995
|
|
|
Marketable debt securities – current
|
|
|
6,567
|
|
|
|
69,609
|
|
|
Accounts receivable, net of allowance for doubtful accounts of
$1,039 and $739, respectively
|
|
|
29,002
|
|
|
|
19,693
|
|
|
Inventories
|
|
|
86,600
|
|
|
|
53,535
|
|
|
Income taxes receivable
|
|
|
15,284
|
|
|
|
-
|
|
|
Prepaid expenses
|
|
|
10,207
|
|
|
|
17,792
|
|
|
Deferred income taxes
|
|
|
15,535
|
|
|
|
8,786
|
|
|
Other current assets
|
|
|
13,737
|
|
|
|
11,185
|
|
|
|
Total current assets
|
|
|
197,926
|
|
|
|
232,595
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
Marketable debt securities – non-current
|
|
|
8,553
|
|
|
|
44,441
|
|
|
Property and equipment, net
|
|
|
204,376
|
|
|
|
165,453
|
|
|
Goodwill and intangible assets, net
|
|
|
83,344
|
|
|
|
15,986
|
|
|
Deferred income taxes
|
|
|
-
|
|
|
|
3,433
|
|
|
Other assets
|
|
|
19,197
|
|
|
|
12,279
|
|
|
|
Total assets
|
|
$
|
513,396
|
|
|
$
|
474,187
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
103,941
|
|
|
$
|
84,197
|
|
|
Customer prepayments
|
|
|
51,473
|
|
|
|
28,726
|
|
|
Accrued sales returns
|
|
|
20,562
|
|
|
|
15,262
|
|
|
Compensation and benefits
|
|
|
15,670
|
|
|
|
33,066
|
|
|
Taxes and withholding
|
|
|
9,856
|
|
|
|
10,207
|
|
|
Other current liabilities
|
|
|
23,447
|
|
|
|
15,594
|
|
|
|
Total current liabilities
|
|
|
224,949
|
|
|
|
187,052
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
Warranty liabilities
|
|
|
4,942
|
|
|
|
2,722
|
|
|
Deferred income taxes
|
|
|
12,499
|
|
|
|
-
|
|
|
Other long-term liabilities
|
|
|
48,667
|
|
|
|
27,506
|
|
|
|
Total non-current liabilities
|
|
|
66,108
|
|
|
|
30,228
|
|
|
|
Total liabilities
|
|
|
291,057
|
|
|
|
217,280
|
|
|
|
|
|
|
|
|
Shareholders’ equity:
|
|
|
|
|
|
Undesignated preferred stock; 5,000 shares authorized, no shares
issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, $0.01 par value; 142,500 shares authorized, 49,402
and 52,798 shares issued and outstanding, respectively
|
|
|
494
|
|
|
|
528
|
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
-
|
|
|
Retained earnings
|
|
|
221,859
|
|
|
|
256,413
|
|
|
Accumulated other comprehensive loss
|
|
|
(14
|
)
|
|
|
(34
|
)
|
|
|
Total shareholders’ equity
|
|
|
222,339
|
|
|
|
256,907
|
|
|
|
Total liabilities and shareholders’ equity
|
|
$
|
513,396
|
|
|
$
|
474,187
|
|
|
|
|
|
|
|
|
SELECT COMFORT CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Statements of Cash Flows
|
(unaudited – in thousands)
|
subject to reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
|
|
|
January 2,
|
|
January 3,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
50,519
|
|
|
$
|
67,974
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
47,630
|
|
|
|
39,809
|
|
|
|
Stock-based compensation
|
|
|
10,290
|
|
|
|
6,798
|
|
|
|
Net loss on disposals and impairments of assets
|
|
|
190
|
|
|
|
492
|
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
(2,182
|
)
|
|
|
(1,163
|
)
|
|
|
Deferred income taxes
|
|
|
11,924
|
|
|
|
(311
|
)
|
|
|
Gain on sale of non-marketable equity securities
|
|
|
(6,891
|
)
|
|
|
-
|
|
|
|
Changes in operating assets and liabilities, net of effect of
acquisition:
|
|
|
|
|
|
Accounts receivable
|
|
|
(9,259
|
)
|
|
|
(4,717
|
)
|
|
|
|
Inventories
|
|
|
(33,065
|
)
|
|
|
(13,383
|
)
|
|
|
|
Income taxes
|
|
|
(13,943
|
)
|
|
|
(4,314
|
)
|
|
|
|
Prepaid expenses and other assets
|
|
|
8,680
|
|
|
|
(9,973
|
)
|
|
|
|
Accounts payable
|
|
|
19,130
|
|
|
|
14,340
|
|
|
|
|
Customer prepayments
|
|
|
22,735
|
|
|
|
13,334
|
|
|
|
|
Accrued compensation and benefits
|
|
|
(17,493
|
)
|
|
|
17,735
|
|
|
|
|
Other taxes and withholding
|
|
|
135
|
|
|
|
2,584
|
|
|
|
|
Warranty liabilities
|
|
|
4,204
|
|
|
|
1,671
|
|
|
|
|
Other accruals and liabilities
|
|
|
15,338
|
|
|
|
13,592
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
107,942
|
|
|
|
144,468
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(85,586
|
)
|
|
|
(76,594
|
)
|
|
Proceeds from sales of property and equipment
|
|
|
72
|
|
|
|
5
|
|
|
Investments in marketable debt securities
|
|
|
(29,299
|
)
|
|
|
(90,349
|
)
|
|
Proceeds from marketable debt securities
|
|
|
127,664
|
|
|
|
54,506
|
|
|
Acquisition of business
|
|
|
(70,018
|
)
|
|
|
-
|
|
|
Proceeds from (investment in) non-marketable equity securities
|
|
|
12,891
|
|
|
|
(1,500
|
)
|
|
Increase in restricted cash
|
|
|
-
|
|
|
|
(500
|
)
|
|
|
|
|
Net cash used in investing activities
|
|
|
(44,276
|
)
|
|
|
(114,432
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Net increase in short-term borrowings
|
|
|
1,097
|
|
|
|
6,192
|
|
|
Repurchases of common stock
|
|
|
(100,201
|
)
|
|
|
(46,492
|
)
|
|
Proceeds from issuance of common stock
|
|
|
2,976
|
|
|
|
2,873
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
2,182
|
|
|
|
1,163
|
|
|
Debt issuance costs
|
|
|
(721
|
)
|
|
|
-
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(94,667
|
)
|
|
|
(36,264
|
)
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(31,001
|
)
|
|
|
(6,228
|
)
|
Cash and cash equivalents, at beginning of period
|
|
|
51,995
|
|
|
|
58,223
|
|
Cash and cash equivalents, at end of period
|
|
$
|
20,994
|
|
|
$
|
51,995
|
|
|
|
|
|
|
SELECT COMFORT CORPORATION
|
AND SUBSIDIARIES
|
Supplemental Financial Information
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
|
|
January 2,
|
|
January 3,
|
|
January 2,
|
|
January 3,
|
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
Percent of sales:
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
92.8
|
%
|
|
|
91.1
|
%
|
|
|
91.8
|
%
|
|
|
90.8
|
%
|
|
Direct and E-Commerce
|
|
|
6.0
|
%
|
|
|
7.1
|
%
|
|
|
5.8
|
%
|
|
|
6.5
|
%
|
|
Wholesale/other
|
|
|
1.2
|
%
|
|
|
1.8
|
%
|
|
|
2.4
|
%
|
|
|
2.7
|
%
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Sales change rates:
|
|
|
|
|
|
|
|
|
|
Retail comparable-store sales 3 |
|
|
(29
|
%)
|
|
|
23
|
%
|
|
|
3
|
%
|
|
|
12
|
%
|
|
Direct and E-Commerce 3 |
|
|
(40
|
%)
|
|
|
19
|
%
|
|
|
(4
|
%)
|
|
|
9
|
%
|
|
|
Company-Controlled comparable sales change 3 |
|
|
(30
|
%)
|
|
|
22
|
%
|
|
|
3
|
%
|
|
|
12
|
%
|
|
Net opened/closed stores and 53rd week
|
|
|
(3
|
%)
|
|
|
19
|
%
|
|
|
2
|
%
|
|
|
10
|
%
|
|
|
Total Company-Controlled Channel
|
|
|
(33
|
%)
|
|
|
41
|
%
|
|
|
5
|
%
|
|
|
22
|
%
|
|
Wholesale/other
|
|
|
(55
|
%)
|
|
|
(7
|
%)
|
|
|
(9
|
%)
|
|
|
(13
|
%)
|
|
|
Total
|
|
|
(33
|
%)
|
|
|
40
|
%
|
|
|
5
|
%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stores open:
|
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
475
|
|
|
|
460
|
|
|
|
463
|
|
|
|
440
|
|
|
Opened
|
|
|
14
|
|
|
|
11
|
|
|
|
38
|
|
|
|
57
|
|
|
Closed
|
|
|
(1
|
)
|
|
|
(8
|
)
|
|
|
(13
|
)
|
|
|
(34
|
)
|
|
End of period
|
|
|
488
|
|
|
|
463
|
|
|
|
488
|
|
|
|
463
|
|
|
|
|
|
|
|
|
|
|
|
|
Other metrics:
|
|
|
|
|
|
|
|
|
|
Average sales per store ($ in 000's) 1, 3 |
|
$
|
2,377
|
|
|
$
|
2,327
|
|
|
|
|
|
|
Average sales per square foot 1, 3 |
|
$
|
980
|
|
|
$
|
1,025
|
|
|
|
|
|
|
Stores > $1 million net sales 1, 3 |
|
|
99
|
%
|
|
|
98
|
%
|
|
|
|
|
|
Stores > $2 million net sales 1, 3 |
|
|
62
|
%
|
|
|
59
|
%
|
|
|
|
|
|
Average revenue per mattress unit 2 |
|
$
|
4,204
|
|
|
$
|
3,866
|
|
|
$
|
4,028
|
|
|
$
|
3,671
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Trailing twelve months for stores open at least one year.
|
|
2
|
Represents Company-Controlled Channel total net sales divided by
Company-Controlled Channel mattress units.
|
|
3
|
Fiscal 2014 included 53 weeks, as compared to 52 weeks in fiscal
2015 and 2013. The additional week in 2014 was in the fiscal
fourth quarter. Company-Controlled comparable sales metrics have
been adjusted to remove the estimated impact of the additional
week on those metrics.
|
|
|
|
SELECT COMFORT CORPORATION AND SUBSIDIARIES
Earnings
before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
(in
thousands)
We define earnings before interest, taxes, depreciation and amortization
("Adjusted EBITDA") as net income plus: income tax expense, interest
expense, depreciation and amortization, stock-based compensation and
asset impairments. Management believes Adjusted EBITDA is a useful
indicator of our financial performance and our ability to generate cash
from operating activities. Our definition of Adjusted EBITDA may not be
comparable to similarly titled definitions used by other companies. The
table below reconciles Adjusted EBITDA, which is a non-GAAP financial
measure, to the comparable GAAP financial measure:
|
|
Three Months Ended
|
|
Trailing-Twelve Months Ended
|
|
|
January 2,
|
|
January 3,
|
|
January 2,
|
|
January 3,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(21,172
|
)
|
|
$
|
18,947
|
|
|
$
|
50,519
|
|
$
|
67,974
|
Income tax (benefit) expense
|
|
|
(9,515
|
)
|
|
|
9,026
|
|
|
|
24,911
|
|
|
34,134
|
Interest expense
|
|
|
96
|
|
|
|
23
|
|
|
|
160
|
|
|
53
|
Depreciation and amortization
|
|
|
13,808
|
|
|
|
9,992
|
|
|
|
46,916
|
|
|
38,767
|
Stock-based compensation
|
|
|
1,337
|
|
|
|
2,504
|
|
|
|
10,290
|
|
|
6,798
|
Asset impairments
|
|
|
20
|
|
|
|
378
|
|
|
|
261
|
|
|
497
|
Adjusted EBITDA
|
|
$
|
(15,426
|
)
|
|
$
|
40,870
|
|
|
$
|
133,057
|
|
$
|
148,223
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Trailing-Twelve Months Ended
|
|
|
January 2,
|
|
January 3,
|
|
January 2,
|
|
January 3,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
$
|
(23,645
|
)
|
|
$
|
8,633
|
|
|
$
|
107,942
|
|
$
|
144,468
|
Subtract: Purchases of property and equipment
|
|
|
24,151
|
|
|
|
18,217
|
|
|
|
85,586
|
|
|
76,594
|
Free cash flow
|
|
$
|
(47,796
|
)
|
|
$
|
(9,584
|
)
|
|
$
|
22,356
|
|
$
|
67,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note -
|
Our Adjusted EBITDA calculation and our "free cash flow" data are
considered non-GAAP financial measures and are not in accordance
with, or preferable to, "as reported," or GAAP financial data.
However, we are providing this information as we believe it
facilitates analysis of the Company's financial performance by
investors and financial analysts.
|
|
|
GAAP - generally accepted accounting principles in the U.S.
|
|
SELECT COMFORT CORPORATION AND SUBSIDIARIES
Calculation
of Return on Invested Capital (ROIC)
(in thousands)
ROIC is a financial measure we use to determine how efficiently we
deploy our capital. It quantifies the return we earn on our invested
capital. Management believes ROIC is also a useful metric for investors
and financial analysts. We compute ROIC as outlined below. Our
definition and calculation of ROIC may not be comparable to similarly
titled definitions and calculations used by other companies. The tables
below reconcile net operating profit after taxes (NOPAT) and total
invested capital, which are non-GAAP financial measures, to the
comparable GAAP financial measures:
|
|
Trailing-Twelve Months Ended
|
|
|
January 2,
|
|
January 3,
|
|
|
2016
|
|
2015
|
Net operating profit after taxes (NOPAT)
|
|
|
|
|
Operating income
|
|
$
|
75,096
|
|
|
$
|
101,746
|
|
Add: Rent expense 1 |
|
|
62,369
|
|
|
|
57,605
|
|
Add: Interest income
|
|
|
494
|
|
|
|
415
|
|
Less: Depreciation on capitalized operating leases 2 |
|
|
(16,203
|
)
|
|
|
(14,265
|
)
|
Less: Income taxes 3 |
|
|
(40,384
|
)
|
|
|
(48,900
|
)
|
NOPAT
|
|
$
|
81,372
|
|
|
$
|
96,601
|
|
|
|
|
|
|
Average invested capital
|
|
|
|
|
Total equity
|
|
$
|
222,339
|
|
|
$
|
256,907
|
|
Less: Cash greater than target 4 |
|
|
-
|
|
|
|
(37,319
|
)
|
Add: Long-term debt 5 |
|
|
-
|
|
|
|
-
|
|
Add: Capitalized operating lease obligations 6 |
|
|
498,952
|
|
|
|
460,840
|
|
Total invested capital at end of period
|
|
$
|
721,291
|
|
|
$
|
680,428
|
|
|
|
|
|
|
Average invested capital 7 |
|
$
|
726,756
|
|
|
$
|
639,118
|
|
|
|
|
|
|
Return on invested capital (ROIC) 8 |
|
|
11.2
|
%
|
|
|
15.1
|
%
|
|
|
|
|
|
|
|
|
|
1 |
|
Rent expense is added back to operating income to show the impact of
owning versus leasing the related assets.
|
|
|
|
2 |
|
Depreciation is based on the average of the last five fiscal
quarters' ending capitalized operating lease obligations (see note
6) for the respective reporting periods with an assumed thirty-year
useful life. This is subtracted from operating income to illustrate
the impact of owning versus leasing the related assets.
|
|
|
|
3 |
|
Reflects annual effective income tax rates, before discrete
adjustments, of 33.2% and 33.6% for 2015 and 2014, respectively.
|
|
|
|
4 |
|
Cash greater than target is defined as cash, cash equivalents and
marketable debt securities less customer prepayments in excess of
$100 million.
|
|
|
|
5 |
|
Long-term debt includes existing capital lease obligations.
|
|
|
|
6 |
|
A multiple of eight times annual rent expense is used as an estimate
of capitalizing our operating lease obligations. The methodology
utilized aligns with the methodology of a nationally recognized
credit rating agency.
|
|
|
|
7 |
|
Average invested capital represents the average of the last five
fiscal quarters' ending invested capital balances.
|
|
|
|
8 |
|
ROIC equals NOPAT divided by average invested capital.
|
|
|
|
Note -
|
Our ROIC calculation and data are considered non-GAAP financial
measures and are not in accordance with, or preferable to, GAAP
financial data. However, we are providing this information as we
believe it facilitates analysis of the Company's financial
performance by investors and financial analysts.
|
|
|
GAAP - generally accepted accounting principles in the U.S.
|
|
SELECT COMFORT CORPORATION AND SUBSIDIARIES
|
Fiscal 2015 Actuals and 2016 Outlook - Supplemental Information
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
Q4-2015
|
|
|
|
Full-Year 2016
|
|
|
|
Actual
|
|
|
|
Outlook
|
|
|
|
|
|
|
|
|
|
Select discrete items of note (not all
inclusive)
|
|
|
|
|
|
|
|
Estimated lost sales1 |
|
($0.16)
|
|
|
|
|
|
Elevated cancellations, appeasements and returns2 |
|
($0.14)
|
|
|
|
|
|
Higher than normal level of undelivered orders at end of fiscal 20153 |
|
($0.11)
|
|
|
|
|
|
Other, net
|
|
($0.02)
|
|
|
|
|
|
ERP implementation inefficiencies (sales & costs) from systems
cutover4 |
|
($0.43)
|
|
|
|
($0.25) to ($0.30)
|
|
ERP implementation data conversion and training costs5 |
|
($0.03)
|
|
|
|
-
|
|
Incremental information technology depreciation in G&A6 |
|
($0.03)
|
|
|
|
($0.12)
|
|
|
|
|
|
|
|
|
|
SleepIQ LABS (formerly known as BAM Labs, Inc.)7 |
|
($0.04)
|
|
|
|
($0.13)
|
|
Accelerated shipments into Q3 from Q4 ($10M sales estimate)8 |
|
($0.04)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
ERP related impacts
|
|
|
1
|
Net sales impact (traffic and conversion) tied to greater than
anticipated challenges early in the fiscal fourth quarter (estimated
$34 million net sales impact)
|
|
|
2 |
Incremental order cancellation rates, customer appeasements (product
discounts) and product returns related to delivery and fulfillment
challenges (estimated $26 million net sales impact)
|
|
|
3 |
Undelivered orders at year-end 2015 were higher than historical
levels (estimated $23 million net sales impact)
|
|
|
4 |
For 2016, estimated lost net sales and cost inefficiencies
(estimated $40 to $50 million net sales impact largely in the first
quarter)
|
|
|
5 |
Costs to convert data from our prior legacy systems to our new ERP
system, and enterprise-wide training expenses
|
|
|
6 |
Includes incremental depreciation related to our new ERP system and
other technology system enhancements
|
|
|
Other discrete items of note
|
|
|
7 |
Includes Q3-2015 reported gain on our minority equity investment in
BAM Labs, Inc. (~18% ownership of BAM Labs, Inc. prior to the
acquisition) based on the remeasured fair value less acquisition
related expenses; 2016 represents estimated operating income impact
of including SleepIQ LABS financial results in our consolidated
operating income and EPS, including amortization of acquired
definite-lived intangible assets. Note: acquisition expected to be
accretive to EPS in 2017
|
|
|
8 |
In advance of our ERP system implementation, an estimated $10
million of net sales were accelerated into Q3-2015 from Q4-2015
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160211006277/en/
Source: Select Comfort Corporation
Select Comfort Corporation
Investor Contact:
Dave
Schwantes, 763-551-7498
investorrelations@selectcomfort.com
or
Media
Contact:
Susan Eich, 763-551-6934
Susan.Eich@selectcomfort.com