Sealy 4Q profits surge 36.1%
By Jay McIntosh -- Furniture Today, March 5, 2006
Archdale, N.C. — Sealy's sales in the fourth quarter ended Nov. 27 were up 13.2% from the comparable period a year earlier to $364.6 million, and net income jumped 36.1% to $16.6 million as the company weathered a disruption in its foam supply with little ill effect.
For the year, the mattress giant's sales rose 11.8%, to just shy of $1.5 billion.
Net income was $73.7 million, compared with a loss of $38.3 million in fiscal 2004, when the company had high recapitalization expenses from its sale to affiliates of Kohlberg, Kravis Roberts & Co.
"We are pleased with our 2005 results," said Chairman and CEO Dave McIlquham. "During the year, Sealy generated record sales levels as a result of continued strong consumer demand for our brands worldwide and new product introductions."
He added that with the higher revenue, and a focus on improving operating efficiencies and working capital use, the company was able to reduce its debt by $112.1 million during the year. Debt net of cash at year's end was $839.4 million.
Sealy said its domestic bedding sales were up 12% for the year to $1.16 billion, while international sales, mainly to Canada and Europe, grew by 11.4% to $306.5 million.
McIlquham said the domestic gains reflected about a 7.7% increase in average unit selling price. and 4% more units sold.
The company noted that in August and September, the Gulf Coast hurricanes caused a significant but temporary disruption of a raw material for polyurethane foam, which Sealy uses in most of its products.
By finding other sources of foam and adjusting production, Sealy was able to limit the effects and said the situation "did not have a material impact" on its 2005 results.
Sealy's 2004 loss was after a pretax charge of $133.1 million for the recapitalization expenses. The company said it had adjusted EBITDA — a measure of earnings before interest, taxes, depreciation and amortization — of $233.1 million in fiscal 2005, up 16.6% from the previous year.
Sealy's 2004 sales included $7 million from a former affiliate's stake in retailer Mattress Discounters. The company ceased to be an affiliate in April of that year.
McIlquham said Sealy is continuing to pursue a proposed initial public offering of stock, but he couldn't predict when an IPO might take place.
| Sealy Inc. | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Year ended 11/27 | 2005 | 2004 | Change |
| (a) Includes $7 million in sales of a former affiliate. (b) Includes pretax royalty income of $13.2 million in 2005 and $14.2 million in 2004. (c) Includes pretax recapitalization expense of $133.1 million and income tax benefit of $8.5 million. |
|||
| Sales | $1,469,574,000 | (a) $1,314,020,000 | 11.8% |
| Operating income | 195,409,000 | 143,030,000 | 36.6% |
| Net income (b) | 73,683,000 | (c) (38,283,000) | — |
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Sealy 4Q sales up 13.2%
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