Sleep number announces record first quarter 2021 results
Minneapolis--(business wire)--sleep number corporation (nasdaq: snbr) today reported results for the quarter ended april 3, 2021. “guided by our purpose to improve the health and wellbeing of society through higher quality sleep, sleep number is broadening our brand relevance and driving significant performance acceleration,” said shelly ibach, president and ceo. “our first-quarter demand growth of greater than 30% demonstrates consumers’ enthusiastic response to our sleep science-based innovations, digital solutions and authentic mission-driven culture. sleep number is improving millions of lives through better quality sleep, while delivering exceptional value for all stakeholders.” first quarter overview net sales increased 20% to $568 million with a 20% comparable store sales gain; more than $50 million of deliveries (two weeks) shifted out of the quarter due to temporary foam supply constraints gross profit increased 18% to a record $356 million or 62.6% of net sales operating income increased 45% to $76 million, or 13.4% of net sales, up 220 bp versus the prior-year’s first quarter earnings per diluted share increased 85% to a record $2.51 cash flows and liquidity review generated $112 million in net cash from operating activities in the first quarter, up 31% versus the prior year; invested $12 million in capital expenditures and $167 million in sleep number stock leverage ratio of 2.3x ebitdar at the end of the first quarter, compared with 2.6x a year ago increased return on invested capital (roic) to 27.6% for the trailing twelve-month period, up 850 bp versus the prior-year comparable period amended revolving credit facility to expand the aggregate availability from $450 million to $600 million share repurchase authorization the company also replenished its outstanding share repurchase authorization to $600 million, effective at the beginning of the fiscal second quarter. the company remains committed to its capital deployment priorities focused on performance drivers. financial outlook the company raised its 2021 earnings per diluted share outlook to at least $6.50, which is more than 40% greater than 2020 full-year results excluding the impact of the 53rd week. the outlook assumes an estimated effective income tax rate of 25% for the balance of the year. the company expects to generate approximately $300 million of operating cash flows in 2021 with capital expenditures of approximately $75 million. conference call information management will host its regularly scheduled conference call to discuss the company’s results at 5 p.m. edt (4 p.m. cdt; 2 p.m. pdt) today. to access the webcast, please visit the investor relations area of the sleep number website at https://ir.sleepnumber.com. the webcast replay will remain available for approximately 60 days. about sleep number corporation individuality is our foundation at sleep number. our purpose driven company is comprised of over 5,000 passionate team members who are dedicated to our mission of improving lives by individualizing sleep experiences. our 360® smart beds provide each sleeper with adjustable, personalized comfort for proven quality sleep. we have improved over 13 million lives as we strive to improve society’s wellbeing through higher quality sleep. sleep science and data are the core of our innovations. our award-winning 360 smart beds benefit from our proprietary sleepiq® technology - learning from over 9 billion hours of highly accurate sleep data - to provide effortless comfort and individualized sleep health insights, including your daily sleepiq® score. for life-changing sleep, visit sleepnumber.com or one of our more than 600 sleep number® stores. more information is available on our newsroom and investor relations sites. 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; risks inherent in outbreaks of pandemics or contagious disease, including the covid-19 pandemic and related consequences such as supply shortages, labor disruptions, and recommendations and/or mandates from federal, state and local authorities to close certain businesses or limit occupancy or operating hours; the effectiveness of our marketing messages; the efficiency of our advertising and promotional efforts; our ability to execute our total retail 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, and 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; claims that our products, processes, advertising, or trademarks infringe the intellectual property rights of others or do not comply with laws or regulations; availability of attractive and cost-effective consumer credit options; our lean manufacturing processes with minimal levels of inventory, which may leave us vulnerable to shortages in supply; our dependence on significant suppliers and third parties and our ability to maintain relationships with key suppliers or third parties, including several sole-source suppliers or providers of services; rising commodity costs and other inflationary pressures; risks inherent in global-sourcing activities, including tariffs, outbreaks of pandemics or contagious diseases, such as the covid-19 pandemic, strikes and the potential for shortages in supply; risks of disruption in the operation of any of our main manufacturing facilities or assembly and distribution facilities; increasing government regulation; pending or unforeseen litigation and the potential for adverse publicity associated with litigation; 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 cybersecurity; the costs and potential disruptions to our business related to enhancing, patching, upgrading our information systems; the vulnerability of our and third-party information systems to attacks by hackers or other cyber threats that could compromise the security or accessibility 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 team members, 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. three months ended april 3, % of march 28, % of 2021 net sales 2020 net sales $ 568,256 100.0 % $ 472,566 100.0 % 212,338 37.4 % 170,435 36.1 % 355,918 62.6 % 302,131 63.9 % 223,617 39.4 % 207,744 44.0 % 42,592 7.5 % 31,072 6.6 % 13,286 2.3 % 10,501 2.2 % 279,495 49.2 % 249,317 52.8 % 76,423 13.4 % 52,814 11.2 % 977 0.2 % 2,344 0.5 % 75,446 13.3 % 50,470 10.7 % 8,812 1.6 % 11,330 2.4 % $ 66,634 11.7 % $ 39,140 8.3 % $ 2.63 $ 1.40 $ 2.51 $ 1.36 25,377 27,858 1,167 914 26,544 28,772 2021 2021 $ 2,238 $ 4,243 25,923 31,871 82,308 81,362 27,189 20,839 33,844 43,489 171,502 181,804 182,113 175,223 329,714 314,226 72,270 72,871 66,610 56,012 $ 822,209 $ 800,136 $ 314,900 $ 244,200 122,098 91,904 92,569 72,017 24,610 24,765 42,185 76,786 39,098 23,339 64,076 62,077 57,833 60,856 757,369 655,944 1,757 242 298,475 283,084 97,258 84,844 397,490 368,170 1,154,859 1,024,114 - - 245 254 - - (332,895 ) (224,232 ) (332,650 ) (223,978 ) $ 822,209 $ 800,136 2021 2020 $ 66,634 $ 39,140 14,638 15,371 6,416 2,051 78 (22 ) 1,515 5,334 5,948 12,808 (946 ) 5,044 6,847 5,798 (3,113 ) 7,478 12,390 11,282 20,552 (8,432 ) (34,605 ) (13,157 ) 8,912 (479 ) 6,332 2,725 111,598 84,941 (11,546 ) (10,351 ) 12 25 (11,534 ) (10,326 ) 74,087 201,170 (178,613 ) (41,445 ) 2,460 3,283 (3 ) (3 ) (102,069 ) 163,005 (2,005 ) 237,620 4,243 1,593 $ 2,238 $ 239,213 2021 2020 86.1 % 92.1 % 13.9 % % 100.0 % 100.0 % 12 % 6 % 116 % 21 % 20 % 7 % 0 % 4 % 20 % 11 % 602 611 11 8 (6 ) (8 ) 607 611 $ 3,196 $ 2,932 $ 1,095 $ 1,040 71 % 71 % 33 % 32 % $ 5,030 $ 4,884 1 trailing twelve months total retail comparable sales per store open at least one year. 2 trailing twelve months for stores open at least one year (excludes online, phone and chat sales). 3 represents total retail (stores, online, phone and chat) net sales divided by total retail mattress units. 4 fiscal 2020 included 53 weeks, as compared to 52 weeks in fiscal 2021 and 2019. the additional week in 2020 was in the fiscal fourth quarter. total retail comparable sales have been adjusted to remove the estimated impact of the additional week on those metrics. sleep number corporation and subsidiaries earnings before interest, taxes, depreciation and amortization (adjusted ebitda) (in thousands) april 3, march 28, april 3, march 28, 2021 2020 2021 2020 $ 66,634 $ 39,140 $ 166,683 $ 95,567 8,812 11,330 34,265 25,313 978 2,357 7,642 11,338 14,519 15,253 60,049 61,026 6,417 2,051 26,179 15,070 89 3 388 49 $ 97,449 $ 70,134 $ 295,206 $ 208,363 april 3, march 28, april 3, march 28, 2021 2020 2021 2020 $ 111,598 $ 84,941 $ 306,318 $ 205,965 11,546 10,351 38,295 49,847 $ 100,052 $ 74,590 $ 268,023 $ 156,118 fifty-three fifty-two weeks ended weeks ended april 3, march 28, 2021 2020 $ 314,900 $ 446,003 3,997 3,997 622 730 $ 319,519 $ 450,730 555,903 535,425 - (199,213 ) $ 875,422 $ 786,942 $ 295,206 $ 208,363 92,650 89,237 $ 387,856 $ 297,600 2.3 to 1.0 2.6 to 1.0 note - our adjusted ebitda and ebitdar calculations, free cash flow data and calculation of net leverage ratio under revolving credit facility 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. april 3, march 28, 2021 2020 $ 208,506 $ 132,203 92,650 89,237 84 15 (24,258 ) (22,883 ) (66,118 ) (47,453 ) $ 210,864 $ 151,119 $ (332,650 ) $ (155,909 ) - (113,397 ) 315,522 446,733 741,200 713,896 $ 724,072 $ 891,323 $ 763,227 $ 790,420 27.6 % 19.1 % 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 life assumption is based on our long-term participation in given markets though specific retail location lease commitments are generally 5 to 10 years at inception. 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 23.9% and 23.9% for 2021 and 2020, 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 finance lease liabilities. 6 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. 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.
