-
Fourth-quarter net sales grew 13% to $412 million, with
full-year net sales up 6% to a record $1.53 billion
-
Fourth-quarter EPS grew 108% to $0.81, with full-year EPS up 24%
to $1.92
-
Revolving credit facility increased from $300 million to $450
million
-
Provides 2019 earnings outlook of $2.25 to $2.75 per diluted
share, an increase of 17% to 43% versus 2018
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 13, 2019--
Sleep Number Corporation (NASDAQ: SNBR) today reported record results
for the year ended December 29, 2018.
Fourth-quarter Statement of Operations Review
-
Net sales increased 13% (up 11% adjusted); net sales for the
second half of 2018 increased 8% (up 12% adjusted); see Reconciliation
of Non-GAAP Financial Measures tables on page 10
-
Operating income increased to $38 million, or 9.3% of net
sales, a 380 basis-point rate improvement versus the prior year’s
fourth quarter
-
Earnings per diluted share increased 108% to $0.81 (up 76%
adjusted); earnings per diluted share for the second half of 2018
increased 31% (up 48% adjusted); see Reconciliation of Non-GAAP
Financial Measures tables on page 10
“Our purpose-driven brand and our revolutionary new 360®
smart beds are driving enthusiastic consumer engagement and accelerated
performance, including 12% adjusted net sales growth and 48% adjusted
EPS growth for the second half of 2018,” stated Shelly Ibach, President
and CEO. “We expect this trajectory to continue in 2019 as we advance
our initiatives to drive demand, leverage our business model and deploy
capital efficiently.”
Full-year Statement of Operations Review
-
Net sales increased 6% to $1.53 billion in 2018, including a 3%
comparable sales gain and 3 percentage points of growth from new stores
-
Operating income increased to $92 million, or 6.0% of net
sales, while absorbing approximately $16 million of 360 smart bed
transition impacts
-
Earnings per diluted share increased 24% to $1.92, compared
with $1.55 for 2017
Cash Flows and Balance Sheet Review
-
Generated $132 million of operating cash flows in 2018
-
Invested $46 million in capital expenditures, with $481 million of
capital invested in the business over the past six years, in addition
to building essential infrastructure and growth driving capabilities
-
Increased share repurchases 86% to $279 million in 2018, bringing
total cash returned to shareholders to $738 million over the past six
years
-
As of December 29, 2018, the remaining authorization under our
Board-approved share repurchase program was $186 million which is
sufficient to support 2019 planned repurchases of $125 to $145 million
-
Return on invested capital (ROIC) was 16.0% for the year, which
compares favorably to our high single-digit weighted average cost of
capital
-
On February 11, 2019, we amended our revolving credit facility to
increase our aggregate availability from $300 million to $450 million.
The credit agreement matures in February 2024
Financial Outlook
The company expects to generate full-year
2019 earnings per diluted share of between $2.25 and $2.75, a 17% to 43%
increase versus full-year 2018 earnings per diluted share of $1.92. The
outlook assumes 6% to 10% net sales growth for 2019. The outlook assumes
an estimated effective income tax rate of 24.5%, compared to 19.6% for
2018. The company anticipates 2019 capital expenditures to be $50 to $60
million.
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 Sleep Number Corporation
The leader in sleep
innovation, Sleep Number delivers proven, quality sleep through
effortless, adjustable comfort and biometric sleep tracking. Sleep
Number’s revolutionary 360® smart bed and proprietary SleepIQ®
technology platforms are proving the connection between sleep and
well-being. With one of the most comprehensive databases of
biometric consumer sleep data and ranked #1 in J.D. Power’s 2018
Mattress Satisfaction Report*, Sleep Number is improving lives by
individualizing sleep experiences. And with a commitment to improving
the well-being of over one million youth by 2025, Sleep Number is
redefining the future of health and wellness – for everyone. To
experience better quality sleep, visit SleepNumber.com
or one of our over 580 Sleep Number® stores located in all 50 states.
For additional information, visit our newsroom
and investor
relations site.
*Sleep Number received the highest score in the J.D. Power 2015, 2017
and 2018 Mattress Satisfaction Reports of customers’ satisfaction with
their mattress. Visit jdpower.com/awards.
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; the potential for
claims that our products, processes, advertising, or trademarks infringe
the intellectual property rights of others; availability of attractive
and cost-effective consumer credit options; pending and unforeseen
litigation and the potential for adverse publicity associated with
litigation; our 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, including tariffs and the potential for
shortages in supply; risks of disruption in the operation of either of
our two primary manufacturing facilities; increasing government
regulations; the adequacy of our and third party information systems to
meet the evolving needs of our business and existing and evolving risks
and regulatory standards applicable to data privacy and security; the
costs, distractions and potential disruptions to our business related to
upgrading our management information systems; the vulnerability of our
and third-party information systems to attacks by hackers or other cyber
threats that could compromise the security of our systems, result in a
data breach or disrupt our business; and our ability to attract, retain
and motivate qualified management, executive and other key employees,
including qualified retail sales professionals and managers. 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.
|
|
SLEEP NUMBER CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Statements of Operations
|
(unaudited – in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
December 29,
|
|
% of
|
|
December 30,
|
|
% of
|
|
|
2018
|
|
Net Sales
|
|
2017
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
411,825
|
|
100.0%
|
|
$
|
363,279
|
|
100.0%
|
Cost of sales
|
|
|
160,746
|
|
39.0%
|
|
|
142,475
|
|
39.2%
|
Gross profit
|
|
|
251,079
|
|
61.0%
|
|
|
220,804
|
|
60.8%
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
175,899
|
|
42.7%
|
|
|
161,793
|
|
44.5%
|
General and administrative
|
|
|
29,431
|
|
7.1%
|
|
|
32,036
|
|
8.8%
|
Research and development
|
|
|
7,629
|
|
1.9%
|
|
|
6,856
|
|
1.9%
|
Total operating expenses
|
|
|
212,959
|
|
51.7%
|
|
|
200,685
|
|
55.2%
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
38,120
|
|
9.3%
|
|
|
20,119
|
|
5.5%
|
Other expense, net
|
|
|
2,093
|
|
0.5%
|
|
|
209
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
36,027
|
|
8.7%
|
|
|
19,910
|
|
5.5%
|
Income tax expense
|
|
|
9,037
|
|
2.2%
|
|
|
4,119
|
|
1.1%
|
Net income
|
|
$
|
26,990
|
|
6.6%
|
|
$
|
15,791
|
|
4.3%
|
|
|
|
|
|
|
|
|
|
Net income per share – basic
|
|
$
|
0.83
|
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – diluted
|
|
$
|
0.81
|
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding
|
|
|
32,411
|
|
|
|
|
39,627
|
|
|
Dilutive effect of stock-based awards
|
|
|
1,018
|
|
|
|
|
1,037
|
|
|
Diluted weighted-average shares outstanding
|
|
|
33,429
|
|
|
|
|
40,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SLEEP NUMBER CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Statements of Operations
|
(unaudited – in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
December 29,
|
|
% of
|
|
December 30,
|
|
% of
|
|
|
2018
|
|
Net Sales
|
|
2017
|
|
Net Sales
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,531,575
|
|
100.0%
|
|
$
|
1,444,497
|
|
100.0%
|
Cost of sales
|
|
|
603,614
|
|
39.4%
|
|
|
547,150
|
|
37.9%
|
Gross profit
|
|
|
927,961
|
|
60.6%
|
|
|
897,347
|
|
62.1%
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
687,380
|
|
44.9%
|
|
|
650,357
|
|
45.0%
|
General and administrative
|
|
|
119,378
|
|
7.8%
|
|
|
127,269
|
|
8.8%
|
Research and development
|
|
|
28,775
|
|
1.9%
|
|
|
27,806
|
|
1.9%
|
Total operating expenses
|
|
|
835,533
|
|
54.6%
|
|
|
805,432
|
|
55.8%
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
92,428
|
|
6.0%
|
|
|
91,915
|
|
6.4%
|
Other expense, net
|
|
|
5,907
|
|
0.4%
|
|
|
877
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
86,521
|
|
5.6%
|
|
|
91,038
|
|
6.3%
|
Income tax expense
|
|
|
16,982
|
|
1.1%
|
|
|
25,961
|
|
1.8%
|
Net income
|
|
$
|
69,539
|
|
4.5%
|
|
$
|
65,077
|
|
4.5%
|
|
|
|
|
|
|
|
|
|
Net income per share – basic
|
|
$
|
1.97
|
|
|
|
$
|
1.58
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share – diluted
|
|
$
|
1.92
|
|
|
|
$
|
1.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding
|
|
|
35,256
|
|
|
|
|
41,212
|
|
|
Dilutive effect of stock-based awards
|
|
|
909
|
|
|
|
|
873
|
|
|
Diluted weighted-average shares outstanding
|
|
|
36,165
|
|
|
|
|
42,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SLEEP NUMBER CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Balance Sheets
|
(unaudited – in thousands, except per share amounts)
|
subject to reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
December 30,
|
|
|
2018
|
|
2017
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,612
|
|
|
$
|
3,651
|
|
Accounts receivable, net of allowance for doubtful accounts of
$699 and $714, respectively
|
|
|
24,795
|
|
|
|
19,312
|
|
Inventories
|
|
|
84,882
|
|
|
|
84,298
|
|
Prepaid expenses
|
|
|
8,009
|
|
|
|
17,565
|
|
Other current assets
|
|
|
31,559
|
|
|
|
27,665
|
|
Total current assets
|
|
|
150,857
|
|
|
|
152,491
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
Property and equipment, net
|
|
|
205,631
|
|
|
|
208,646
|
|
Goodwill and intangible assets, net
|
|
|
75,407
|
|
|
|
77,588
|
|
Deferred income taxes
|
|
|
-
|
|
|
|
2,625
|
|
Other non-current assets
|
|
|
38,243
|
|
|
|
30,484
|
|
Total assets
|
|
$
|
470,138
|
|
|
$
|
471,834
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ (Deficit) Equity
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Borrowings under revolving credit facility
|
|
$
|
199,600
|
|
|
$
|
24,500
|
|
Accounts payable
|
|
|
144,781
|
|
|
|
129,194
|
|
Customer prepayments
|
|
|
27,066
|
|
|
|
27,767
|
|
Accrued sales returns
|
|
|
19,907
|
|
|
|
19,270
|
|
Compensation and benefits
|
|
|
27,700
|
|
|
|
34,602
|
|
Taxes and withholding
|
|
|
18,380
|
|
|
|
24,234
|
|
Other current liabilities
|
|
|
51,234
|
|
|
|
46,822
|
|
Total current liabilities
|
|
|
488,668
|
|
|
|
306,389
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
Deferred income taxes
|
|
|
4,822
|
|
|
|
-
|
|
Other non-current liabilities
|
|
|
86,198
|
|
|
|
76,289
|
|
Total non-current liabilities
|
|
|
91,020
|
|
|
|
76,289
|
|
Total liabilities
|
|
|
579,688
|
|
|
|
382,678
|
|
|
|
|
|
|
|
Shareholders’ (deficit) equity:
|
|
|
|
|
|
Undesignated preferred stock; 5,000 shares authorized, no shares
issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.01 par value; 142,500 shares authorized, 30,868
and 38,813 shares issued and outstanding, respectively
|
|
|
309
|
|
|
|
388
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
-
|
|
(Accumulated deficit) retained earnings
|
|
|
(109,859
|
)
|
|
|
88,768
|
|
Total shareholders’ (deficit) equity
|
|
|
(109,550
|
)
|
|
|
89,156
|
|
Total liabilities and shareholders’ (deficit) equity
|
|
$
|
470,138
|
|
|
$
|
471,834
|
|
|
|
|
|
|
|
|
|
|
|
SLEEP NUMBER CORPORATION
|
AND SUBSIDIARIES
|
Consolidated Statements of Cash Flows
|
(unaudited - in thousands)
|
subject to reclassification
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
December 29,
|
|
December 30,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
69,539
|
|
|
$
|
65,077
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
61,966
|
|
|
|
61,291
|
|
Stock-based compensation
|
|
|
11,412
|
|
|
|
15,763
|
|
Net (gain) loss on disposals and impairments of assets
|
|
|
(51
|
)
|
|
|
249
|
|
Deferred income taxes
|
|
|
7,447
|
|
|
|
2,042
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
|
(5,483
|
)
|
|
|
393
|
|
Inventories
|
|
|
(584
|
)
|
|
|
(9,272
|
)
|
Income taxes
|
|
|
(6,561
|
)
|
|
|
1,697
|
|
Prepaid expenses and other assets
|
|
|
5,551
|
|
|
|
(12,405
|
)
|
Accounts payable
|
|
|
(9,894
|
)
|
|
|
21,779
|
|
Customer prepayments
|
|
|
(701
|
)
|
|
|
1,560
|
|
Accrued compensation and benefits
|
|
|
(6,872
|
)
|
|
|
15,398
|
|
Other taxes and withholding
|
|
|
707
|
|
|
|
(893
|
)
|
Other accruals and liabilities
|
|
|
5,064
|
|
|
|
9,928
|
|
Net cash provided by operating activities
|
|
|
131,540
|
|
|
|
172,607
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property and equipment
|
|
|
(45,515
|
)
|
|
|
(59,829
|
)
|
Proceeds from sales of property and equipment
|
|
|
272
|
|
|
|
36
|
|
Net cash used in investing activities
|
|
|
(45,243
|
)
|
|
|
(59,793
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
Net increase in short-term borrowings
|
|
|
182,336
|
|
|
|
28,094
|
|
Repurchases of common stock
|
|
|
(272,446
|
)
|
|
|
(155,245
|
)
|
Proceeds from issuance of common stock
|
|
|
2,788
|
|
|
|
3,241
|
|
Debt issuance costs
|
|
|
(1,014
|
)
|
|
|
(12
|
)
|
Net cash used in financing activities
|
|
|
(88,336
|
)
|
|
|
(123,922
|
)
|
|
|
|
|
|
Net decrease in cash, cash equivalents and restricted cash
|
|
|
(2,039
|
)
|
|
|
(11,108
|
)
|
Cash, cash equivalents and restricted cash, at beginning of period
|
|
|
3,651
|
|
|
|
14,759
|
|
Cash, cash equivalents and restricted cash, at end of period
|
|
$
|
1,612
|
|
|
$
|
3,651
|
|
|
|
|
|
|
Note - Effective December 31, 2017, we adopted the provisions of
Accounting Standards Update No. 2016-18, Restricted Cash,
on a retrospective basis. Amounts for prior periods have
been retrospectively adjusted to conform to the current period
presentation.
|
|
|
|
SLEEP NUMBER CORPORATION
|
AND SUBSIDIARIES
|
Supplemental Financial Information
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
December 29,
|
|
December 30,
|
|
December 29,
|
|
December 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Percent of sales:
|
|
|
|
|
|
|
|
|
Retail
|
|
|
91.1%
|
|
|
91.7%
|
|
|
91.5%
|
|
|
91.7%
|
Online and phone
|
|
|
8.3%
|
|
|
7.7%
|
|
|
7.6%
|
|
|
7.0%
|
Wholesale/other
|
|
|
0.6%
|
|
|
0.6%
|
|
|
0.9%
|
|
|
1.3%
|
Total
|
|
|
100.0%
|
|
|
100.0%
|
|
|
100.0%
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
Sales change rates:
|
|
|
|
|
|
|
|
|
Retail comparable-store sales
|
|
|
9%
|
|
|
12%
|
|
|
3%
|
|
|
3%
|
Online and phone
|
|
|
23%
|
|
|
13%
|
|
|
15%
|
|
|
16%
|
Company-Controlled comparable sales change
|
|
|
10%
|
|
|
12%
|
|
|
3%
|
|
|
4%
|
Net opened/closed stores
|
|
|
3%
|
|
|
4%
|
|
|
3%
|
|
|
7%
|
Total Company-Controlled Channel
|
|
|
13%
|
|
|
16%
|
|
|
6%
|
|
|
11%
|
Wholesale/other
|
|
|
11%
|
|
|
(35%)
|
|
|
(26%)
|
|
|
(38%)
|
Total
|
|
|
13%
|
|
|
16%
|
|
|
6%
|
|
|
10%
|
|
|
|
|
|
|
|
|
|
Stores open:
|
|
|
|
|
|
|
|
|
Beginning of period
|
|
|
569
|
|
|
553
|
|
|
556
|
|
|
540
|
Opened
|
|
|
20
|
|
|
6
|
|
|
53
|
|
|
36
|
Closed
|
|
|
(10)
|
|
|
(3)
|
|
|
(30)
|
|
|
(20)
|
End of period
|
|
|
579
|
|
|
556
|
|
|
579
|
|
|
556
|
|
|
|
|
|
|
|
|
|
Other metrics:
|
|
|
|
|
|
|
|
|
Average sales per store ($ in 000's) 1 |
|
$
|
2,707
|
|
$
|
2,618
|
|
|
|
|
Average sales per square foot 1 |
|
$
|
998
|
|
$
|
995
|
|
|
|
|
Stores > $1 million net sales 2 |
|
|
98%
|
|
|
98%
|
|
|
|
|
Stores > $2 million net sales 2 |
|
|
65%
|
|
|
61%
|
|
|
|
|
Average revenue per mattress unit 3 |
|
$
|
4,623
|
|
$
|
4,421
|
|
$
|
4,482
|
|
$
|
4,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Trailing twelve months Company-Controlled comparable
sales per store open at least one year.
|
|
|
|
|
|
|
|
|
|
2 Trailing twelve months for stores open at least one
year.
|
|
|
|
|
|
|
|
|
|
3 Represents Company-Controlled Channel total net sales
divided by Company-Controlled Channel mattress units.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SLEEP NUMBER 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
|
|
|
December 29,
|
|
December 30,
|
|
|
December 29,
|
|
December 30,
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
26,990
|
|
|
$
|
15,791
|
|
|
|
$
|
69,539
|
|
|
$
|
65,077
|
|
Income tax expense
|
|
|
9,037
|
|
|
|
4,119
|
|
|
|
|
16,982
|
|
|
|
25,961
|
|
Interest expense
|
|
|
2,094
|
|
|
|
227
|
|
|
|
|
5,911
|
|
|
|
975
|
|
Depreciation and amortization
|
|
|
15,227
|
|
|
|
15,237
|
|
|
|
|
61,648
|
|
|
|
61,077
|
|
Stock-based compensation
|
|
|
1,314
|
|
|
|
3,954
|
|
|
|
|
11,412
|
|
|
|
15,763
|
|
Asset impairments
|
|
|
(19
|
)
|
|
|
20
|
|
|
|
|
96
|
|
|
|
244
|
|
Adjusted EBITDA
|
|
$
|
54,643
|
|
|
$
|
39,348
|
|
|
|
$
|
165,588
|
|
|
$
|
169,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Trailing-Twelve Months Ended
|
|
|
December 29,
|
|
December 30,
|
|
|
December 29,
|
|
December 30,
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
$
|
(2,910
|
)
|
|
$
|
(3,447
|
)
|
|
|
$
|
131,540
|
|
|
$
|
172,607
|
|
Subtract: Purchases of property and equipment
|
|
|
11,503
|
|
|
|
22,216
|
|
|
|
|
45,515
|
|
|
|
59,829
|
|
Free cash flow
|
|
$
|
(14,413
|
)
|
|
$
|
(25,663
|
)
|
|
|
$
|
86,025
|
|
|
$
|
112,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
SLEEP NUMBER 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
|
|
|
December 29, 2018
|
|
December 31, 2017
|
Net operating profit after taxes (NOPAT)
|
|
|
|
|
Operating income
|
|
$
|
92,428
|
|
|
$
|
91,915
|
|
Add: Rent expense 1 |
|
|
79,390
|
|
|
|
74,019
|
|
Add: Interest income
|
|
|
4
|
|
|
|
97
|
|
Less: Depreciation on capitalized operating leases 2 |
|
|
(20,392
|
)
|
|
|
(18,865
|
)
|
Less: Income taxes 3 |
|
|
(36,444
|
)
|
|
|
(48,970
|
)
|
NOPAT
|
|
$
|
114,986
|
|
|
$
|
98,196
|
|
|
|
|
|
|
Average invested capital
|
|
|
|
|
Total (deficit) equity
|
|
$
|
(109,550
|
)
|
|
$
|
89,156
|
|
Add: Long-term debt 4 |
|
|
200,458
|
|
|
|
-
|
|
Add: Capitalized operating lease obligations 5 |
|
|
635,120
|
|
|
|
592,152
|
|
Total invested capital at end of period
|
|
$
|
726,028
|
|
|
$
|
681,308
|
|
|
|
|
|
|
Average invested capital 6 |
|
$
|
719,055
|
|
|
$
|
686,436
|
|
|
|
|
|
|
Return on invested capital (ROIC) 7 |
|
|
16.0%
|
|
|
14.3%
|
|
|
|
|
|
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 24.1% and 33.3% for 2018 and 2017,
respectively.
|
|
|
|
|
|
4 Long-term debt includes existing capital lease
obligations, if applicable. In conjunction with increasing our
revolving credit facility to $300 million in the first quarter of
2018, we include borrowings under that agreement, including
borrowings classified as short term.
|
|
|
|
|
|
5 A multiple of eight times annual rent expense is used
as an estimate for capitalizing our operating lease obligations.
The methodology utilized aligns with the methodology of a
nationally recognized credit rating agency.
|
|
|
|
|
|
6 Average invested capital represents the average of
the last five fiscal quarters' ending invested capital balances.
|
|
|
|
|
|
7 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.
|
|
|
SLEEP NUMBER CORPORATION AND SUBSIDIARIES
|
Reconciliation of Non-GAAP Financial Measures
|
(unaudited – in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Full-Year
|
|
First Half
|
|
Second Half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
As Reported
|
|
$
|
389
|
|
|
$
|
316
|
|
|
$
|
415
|
|
|
$
|
412
|
|
|
$
|
1,532
|
|
|
$
|
705
|
|
|
$
|
827
|
|
|
|
Backlog shift1 |
|
|
-
|
|
|
|
-
|
|
|
|
24
|
|
|
|
(24
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
As-Adjusted
|
|
$
|
389
|
|
|
$
|
316
|
|
|
$
|
439
|
|
|
$
|
388
|
|
|
$
|
1,532
|
|
|
$
|
705
|
|
|
$
|
827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Full-Year
|
|
First Half
|
|
Second Half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
As Reported
|
|
$
|
394
|
|
|
$
|
285
|
|
|
$
|
403
|
|
|
$
|
363
|
|
|
$
|
1,444
|
|
|
$
|
679
|
|
|
$
|
766
|
|
|
|
Backlog shift2 |
|
|
-
|
|
|
|
25
|
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
25
|
|
|
|
(25
|
)
|
|
|
Hurricane impact3 |
|
|
-
|
|
|
|
-
|
|
|
|
13.5
|
|
|
|
(13.5
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
As-Adjusted
|
|
$
|
394
|
|
|
$
|
310
|
|
|
$
|
391
|
|
|
$
|
350
|
|
|
$
|
1,444
|
|
|
$
|
704
|
|
|
$
|
741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per diluted share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Full-Year
|
|
First Half
|
|
Second Half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
As Reported
|
|
$
|
0.52
|
|
|
$
|
0.10
|
|
|
$
|
0.52
|
|
|
$
|
0.81
|
|
|
$
|
1.92
|
|
|
$
|
0.64
|
|
|
$
|
1.32
|
|
|
|
Backlog shift1,4 |
|
|
-
|
|
|
|
-
|
|
|
|
0.23
|
|
|
|
(0.23
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
As-Adjusted
|
|
$
|
0.52
|
|
|
$
|
0.10
|
|
|
$
|
0.75
|
|
|
$
|
0.58
|
|
|
$
|
1.92
|
|
|
$
|
0.64
|
|
|
$
|
1.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter
|
|
2nd Quarter
|
|
3rd Quarter
|
|
4th Quarter
|
|
Full-Year
|
|
First Half
|
|
Second Half
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
As Reported
|
|
$
|
0.56
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.62
|
|
|
$
|
0.39
|
|
|
$
|
1.55
|
|
|
$
|
0.55
|
|
|
$
|
1.01
|
|
|
|
Backlog shift2,5 |
|
|
-
|
|
|
|
0.12
|
|
|
|
(0.12
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
0.12
|
|
|
|
(0.12
|
)
|
|
|
Hurricane impact3,5
|
|
|
-
|
|
|
|
-
|
|
|
|
0.06
|
|
|
|
(0.06
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
As-Adjusted
|
|
$
|
0.56
|
|
|
$
|
0.10
|
|
|
$
|
0.56
|
|
|
$
|
0.33
|
|
|
$
|
1.55
|
|
|
$
|
0.67
|
|
|
$
|
0.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Midpoint of estimated net sales and earnings per share impact (21
to 25 cents) related to strong demand late in the quarter which
shifted a week of deliveries from the third to fourth quarter of
2018; third-quarter 2018 ending order backlog was higher than
forecasted, reflecting the additional week of deliveries shifted
to the fourth quarter
|
2
|
|
Estimated net sales and earnings per share impact related to a
temporary vendor related inventory shortage which shifted a week
of deliveries from the second to third quarter of 2017
|
3
|
|
Midpoint of estimated net sales ($12 to $15 million) and earnings
per share impact (5 to 8 cents) of Hurricanes Harvey and
Irma, which negatively impacted third-quarter 2017 results and
positively impacted fourth-quarter 2017 results as lost sales were
recovered
|
4
|
|
Reflects annual effective income tax rate, before discrete
adjustments, of 24.1% for 2018
|
5
|
|
Reflects annual effective income tax rate, before discrete
adjustments, of 33.3% for 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The information above provides reconciliations of the
comparable financial measures in accordance with generally accepted
accounting principles (GAAP financial measures) to the presented
non-GAAP financial measures. The company believes that non-GAAP
financial measures, when reviewed in conjunction with GAAP financial
measures, can provide more information to assist investors and
management in evaluating current period performance and in assessing
future performance. The estimates above are based on historical
experience, current trends and other factors that management
believes to be relevant, and as such requires the use of judgment.
These non-GAAP financial measures should be considered in addition
to, and not preferable to or as a substitute for, the GAAP financial
measures presented in this earnings release and the company’s
financial statements and other publicly filed reports. Non-GAAP
measures as presented herein may not be comparable to similarly
titled measures used by other companies.
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190213005733/en/
Source: Sleep Number Corporation
Investor Contact:
Dave Schwantes; (763) 551-7498;
investorrelations@sleepnumber.com
Media
Contact:
Susan Oguche; (763) 551-7059;
susan.oguche@sleepnumber.com