MINNEAPOLIS--(BUSINESS WIRE)--Sleep Number Corporation (Nasdaq: SNBR) today reported results for the quarter ended September 28, 2024.
“Our actions throughout the business over the past year are driving sustainable operating model improvements and contributing to our increased financial flexibility and durability. Our initiatives drove broad cost efficiencies and a gross margin rate improvement to 60.8%, resulting in third quarter adjusted EBITDA of $28 million, which was in-line with expectations even with persistent consumer demand weakness,” said Shelly Ibach, Chair, President and CEO. “At the same time, we continue to leverage our innovation superiority to provide customers with life-changing sleep solutions, like our new ClimateCool™ smart bed.”
“Throughout my tenure, I have been inspired by our team’s commitment to our purpose, beloved brand, and pioneering smart beds that deliver proven quality sleep,” added Ibach. “As I transition to retirement, our talented team and strong competitive advantages, combined with our increased financial resilience, give me confidence in Sleep Number’s continued market leadership and its ability to accelerate profitable growth and value creation for all stakeholders when industry demand recovers.”
Third Quarter Overview
- Net sales of $427 million were down 10% versus the prior year, including approximately two percentage points of pressure from year-over-year order backlog changes and one-point of pressure from lower store count versus the prior year
- Gross margin of 60.8% was up 340 basis points versus the prior year, driven by year-over-year product cost reductions through value engineering and ongoing supplier negotiations, favorable product mix, and efficiency gains in our home delivery and logistics operations
- Operating expenses of $249 million (before restructuring charges) were down $17 million versus the prior year’s third quarter, with year-to-date operating expenses down $60 million (before restructuring charges)
- Adjusted EBITDA of $28 million was up 11% compared to the prior year, with an adjusted EBITDA margin of 6.5%, up 120 bp versus the prior year
Cash Flow Review
- Net cash provided by operating activities of $51 million for the first nine months of the year, up $19 million, or 60%, versus the same period last year
- Free cash flow of $34 million for the first nine months of the year, up $50 million versus the same period last year
- Leverage ratio of 4.2x EBITDAR at the end of the third quarter versus covenant maximum of 5.0x for the quarter
Financial Outlook
With ongoing weakness in the bedding industry, the company has updated its full-year 2024 adjusted EBITDA outlook to a revised range of $115 million to $125 million. The company expects 2024 full-year net sales to be down approximately 10%, consistent with year-to-date net sales performance. The company’s outlook includes at least 150 basis points of gross margin rate improvement for the year. The company expects to generate $10 million to $20 million of free cash flow for the year with capital expenditures of approximately $25 million.
CEO Retirement and Board and Governance Changes
In a separate release today, the company announced the following:
- Ibach to retire no later than the 2025 Annual Meeting of Shareholders (the “2025 Annual Meeting”), following a comprehensive search to identify her successor conducted by an independent executive search firm
- Ibach will not stand for reelection to the Board at the 2025 Annual Meeting, at which time, the Board intends to appoint Michael J. Harrison as independent Chair of the Board
- The Board intends to reduce its size, with two longer serving directors to retire at or before the 2026 Annual Meeting
- The Board intends to amend the company’s governing documents, requesting shareholder approval at the 2025 Annual Meeting to begin a process to declassify the Board and adopt a majority voting standard for approval of mergers and amendments to the company’s Articles of Incorporation
The full announcement is available here: https://www.businesswire.com/news/home/54144842/en
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. We have also posted an updated investor presentation to the investor relations area of the Sleep Number website.
About Sleep Number Corporation
Sleep Number is a wellness technology company. We are guided by our purpose to improve the health and wellbeing of society through higher quality sleep; to date, our innovations have improved nearly 16 million lives. Our wellness technology platform helps solve sleep problems, whether it’s providing individualized temperature control for each sleeper through our Climate360® smart bed or applying our more than 29 billion hours of longitudinal sleep data and expertise to research with global institutions.
Our smart bed ecosystem drives best-in-class engagement through dynamic, adjustable, and effortless sleep with personalized digital sleep and health insights; our millions of Smart Sleepers are loyal brand advocates. And our 3,700 mission-driven team members passionately innovate to drive value creation through our vertically integrated business model, including our exclusive direct-to-consumer selling in nearly 650 stores and online.
To learn more about life-changing, individualized sleep, visit a Sleep Number® store near you, our newsroom and investor relations sites, or SleepNumber.com
Forward-looking Statements
Statements used in this news release relating to future plans, events, financial results or performance, such as the statements that the company is driving sustainable operating model improvements and contributing to its increased financial flexibility and durability, continues to leverage its innovation superiority to provide customers with life-changing sleep solutions, and is positioned for continued market leadership and to accelerate profitable growth and value creation for all stakeholders when demand recovers; statements about the company’s financial outlook, including the company’s expected 2024 adjusted EBITDA and future net sales, demand, gross margin, and free cash flow expectations; and statements about its CEO and Board retirements and governance changes are forward-looking statements subject to certain risks and uncertainties which could cause the company’s results to differ materially. The most important risks and uncertainties are described in the company’s filings with the Securities and Exchange Commission, including in Item 1A of the company’s Annual Report on Form 10-K and other periodic reports. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update any forward-looking statement.
SLEEP NUMBER CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (unaudited – in thousands, except per share amounts) |
|||||||||||||
|
Three Months Ended |
||||||||||||
|
September 28,
|
|
% of Net Sales |
|
September 30,
|
|
% of Net Sales |
||||||
Net sales |
$ |
426,617 |
|
|
100.0 |
% |
|
$ |
472,648 |
|
|
100.0 |
% |
Cost of sales |
|
167,089 |
|
|
39.2 |
% |
|
|
201,537 |
|
|
42.6 |
% |
Gross profit |
|
259,528 |
|
|
60.8 |
% |
|
|
271,111 |
|
|
57.4 |
% |
Operating expenses: |
|
|
|
|
|
|
|
||||||
Sales and marketing |
|
205,480 |
|
|
48.2 |
% |
|
|
221,143 |
|
|
46.8 |
% |
General and administrative |
|
33,070 |
|
|
7.8 |
% |
|
|
31,948 |
|
|
6.8 |
% |
Research and development |
|
10,583 |
|
|
2.5 |
% |
|
|
12,633 |
|
|
2.7 |
% |
Restructuring costs |
|
1,963 |
|
|
0.5 |
% |
|
|
— |
|
|
0.0 |
% |
Total operating expenses |
|
251,096 |
|
|
58.9 |
% |
|
|
265,724 |
|
|
56.2 |
% |
Operating income |
|
8,432 |
|
|
2.0 |
% |
|
|
5,387 |
|
|
1.1 |
% |
Interest expense, net |
|
12,057 |
|
|
2.8 |
% |
|
|
10,958 |
|
|
2.3 |
% |
Loss before income taxes |
|
(3,625 |
) |
|
(0.8 |
%) |
|
|
(5,571 |
) |
|
(1.2 |
%) |
Income tax benefit |
|
(489 |
) |
|
(0.1 |
%) |
|
|
(3,253 |
) |
|
(0.7 |
%) |
Net loss |
$ |
(3,136 |
) |
|
(0.7 |
%) |
|
$ |
(2,318 |
) |
|
(0.5 |
%) |
|
|
|
|
|
|
|
|
||||||
Net loss per share – basic |
$ |
(0.14 |
) |
|
|
|
$ |
(0.10 |
) |
|
|
||
|
|
|
|
|
|
|
|
||||||
Net loss per share – diluted |
$ |
(0.14 |
) |
|
|
|
$ |
(0.10 |
) |
|
|
||
|
|
|
|
|
|
|
|
||||||
Reconciliation of weighted-average shares outstanding: |
|||||||||||||
Basic weighted-average shares outstanding |
|
22,643 |
|
|
|
|
|
22,479 |
|
|
|
||
Dilutive effect of stock-based awards |
|
— |
|
|
|
|
|
— |
|
|
|
||
Diluted weighted-average shares outstanding |
|
22,643 |
|
|
|
|
|
22,479 |
|
|
|
||
For the three months ended September 28, 2024 and September 30,2023, 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. |
|||||||||||||
SLEEP NUMBER CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (unaudited – in thousands, except per share amounts) |
||||||||||||
|
Nine Months Ended |
|||||||||||
|
September 28,
|
|
% of Net Sales |
|
September 30,
|
|
% of Net Sales |
|||||
Net sales |
$ |
1,305,479 |
|
|
100.0 |
% |
|
$ |
1,457,964 |
|
100.0 |
% |
Cost of sales |
|
528,287 |
|
|
40.5 |
% |
|
|
612,343 |
|
42.0 |
% |
Gross profit |
|
777,192 |
|
|
59.5 |
% |
|
|
845,621 |
|
58.0 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|||||
Sales and marketing |
|
596,392 |
|
|
45.7 |
% |
|
|
649,410 |
|
44.5 |
% |
General and administrative |
|
111,722 |
|
|
8.6 |
% |
|
|
111,144 |
|
7.6 |
% |
Research and development |
|
34,602 |
|
|
2.7 |
% |
|
|
42,521 |
|
2.9 |
% |
Restructuring costs |
|
14,382 |
|
|
1.1 |
% |
|
|
— |
|
0.0 |
% |
Total operating expenses |
|
757,098 |
|
|
58.0 |
% |
|
|
803,075 |
|
55.1 |
% |
Operating income |
|
20,094 |
|
|
1.5 |
% |
|
|
42,546 |
|
2.9 |
% |
Interest expense, net |
|
36,626 |
|
|
2.8 |
% |
|
|
30,008 |
|
2.1 |
% |
(Loss) income before income taxes |
|
(16,532 |
) |
|
(1.3 |
%) |
|
|
12,538 |
|
0.9 |
% |
Income tax (benefit) expense |
|
(863 |
) |
|
(0.1 |
%) |
|
|
2,637 |
|
0.2 |
% |
Net (loss) income |
$ |
(15,669 |
) |
|
(1.2 |
%) |
|
$ |
9,901 |
|
0.7 |
% |
|
|
|
|
|
|
|
|
|||||
Net (loss) income per share – basic |
$ |
(0.69 |
) |
|
|
|
$ |
0.44 |
|
|
||
|
|
|
|
|
|
|
|
|||||
Net (loss) income per share – diluted |
$ |
(0.69 |
) |
|
|
|
$ |
0.44 |
|
|
||
|
|
|
|
|
|
|
|
|||||
Reconciliation of weighted-average shares outstanding: |
||||||||||||
Basic weighted-average shares outstanding |
|
22,588 |
|
|
|
|
|
22,412 |
|
|
||
Dilutive effect of stock-based awards |
|
— |
|
|
|
|
|
146 |
|
|
||
Diluted weighted-average shares outstanding |
|
22,588 |
|
|
|
|
|
22,558 |
|
|
||
For the nine months ended September 28, 2024, 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. |
||||||||||||
SLEEP NUMBER CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (unaudited – in thousands, except per share amounts) subject to reclassification |
|||||||
|
September 28,
|
|
December 30,
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
1,592 |
|
|
$ |
2,539 |
|
Accounts receivable, net of allowances of $1,134 and $1,437, respectively |
|
17,026 |
|
|
|
26,859 |
|
Inventories |
|
93,039 |
|
|
|
115,433 |
|
Prepaid expenses |
|
17,827 |
|
|
|
16,660 |
|
Other current assets |
|
40,784 |
|
|
|
44,637 |
|
Total current assets |
|
170,268 |
|
|
|
206,128 |
|
Non-current assets: |
|
|
|
||||
Property and equipment, net |
|
140,406 |
|
|
|
179,503 |
|
Operating lease right-of-use assets |
|
367,133 |
|
|
|
395,411 |
|
Goodwill and intangible assets, net |
|
66,468 |
|
|
|
66,634 |
|
Deferred income taxes |
|
27,267 |
|
|
|
20,253 |
|
Other non-current assets |
|
93,109 |
|
|
|
82,951 |
|
Total assets |
$ |
864,651 |
|
|
$ |
950,880 |
|
Liabilities and Shareholders’ Deficit |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Borrowings under revolving credit facility |
$ |
516,500 |
|
|
$ |
539,500 |
|
Accounts payable |
|
127,990 |
|
|
|
135,901 |
|
Customer prepayments |
|
43,514 |
|
|
|
49,143 |
|
Accrued sales returns |
|
19,688 |
|
|
|
22,402 |
|
Compensation and benefits |
|
28,909 |
|
|
|
28,273 |
|
Taxes and withholding |
|
17,685 |
|
|
|
17,134 |
|
Operating lease liabilities |
|
82,488 |
|
|
|
81,760 |
|
Other current liabilities |
|
57,268 |
|
|
|
61,958 |
|
Total current liabilities |
|
894,042 |
|
|
|
936,071 |
|
Non-current liabilities: |
|
|
|
||||
Operating lease liabilities |
|
318,665 |
|
|
|
351,394 |
|
Other non-current liabilities |
|
100,728 |
|
|
|
105,343 |
|
Total non-current liabilities |
|
419,393 |
|
|
|
456,737 |
|
Total liabilities |
|
1,313,435 |
|
|
|
1,392,808 |
|
Shareholders’ deficit: |
|
|
|
||||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding |
|
— |
|
|
|
— |
|
Common stock, $0.01 par value; 142,500 shares authorized, 22,371 and 22,235 shares issued and outstanding, respectively |
|
224 |
|
|
|
222 |
|
Additional paid-in capital |
|
25,527 |
|
|
|
16,716 |
|
Accumulated deficit |
|
(474,535 |
) |
|
|
(458,866 |
) |
Total shareholders’ deficit |
|
(448,784 |
) |
|
|
(441,928 |
) |
Total liabilities and shareholders’ deficit |
$ |
864,651 |
|
|
$ |
950,880 |
|
SLEEP NUMBER CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (unaudited – in thousands) subject to reclassification |
|||||||
|
Nine Months Ended |
||||||
|
September 28,
|
|
September 30,
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net (loss) income |
$ |
(15,669 |
) |
|
$ |
9,901 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
50,379 |
|
|
|
55,196 |
|
Stock-based compensation |
|
9,541 |
|
|
|
10,872 |
|
Net loss on disposals and impairments of assets |
|
2,457 |
|
|
|
464 |
|
Deferred income taxes |
|
(7,014 |
) |
|
|
(13,433 |
) |
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable |
|
9,833 |
|
|
|
7,374 |
|
Inventories |
|
22,394 |
|
|
|
(2,190 |
) |
Income taxes |
|
1,708 |
|
|
|
3,571 |
|
Prepaid expenses and other assets |
|
(8,012 |
) |
|
|
(5,903 |
) |
Accounts payable |
|
4,980 |
|
|
|
5,199 |
|
Customer prepayments |
|
(5,629 |
) |
|
|
(27,279 |
) |
Accrued compensation and benefits |
|
788 |
|
|
|
(6,923 |
) |
Other taxes and withholding |
|
(1,157 |
) |
|
|
5 |
|
Other accruals and liabilities |
|
(13,775 |
) |
|
|
(5,038 |
) |
Net cash provided by operating activities |
|
50,824 |
|
|
|
31,816 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(17,218 |
) |
|
|
(48,022 |
) |
Proceeds from sales of property and equipment |
|
156 |
|
|
|
10 |
|
Issuance of notes receivable |
|
(2,942 |
) |
|
|
(1,317 |
) |
Net cash used in investing activities |
|
(20,004 |
) |
|
|
(49,329 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Net (decrease) increase in short-term borrowings |
|
(31,039 |
) |
|
|
20,334 |
|
Repurchases of common stock |
|
(728 |
) |
|
|
(3,711 |
) |
Proceeds from issuance of common stock |
|
— |
|
|
|
428 |
|
Net cash (used in) provided by financing activities |
|
(31,767 |
) |
|
|
16,627 |
|
|
|
|
|
||||
Net decrease in cash and cash equivalents |
|
(947 |
) |
|
|
(886 |
) |
Cash and cash equivalents, at beginning of period |
|
2,539 |
|
|
|
1,792 |
|
Cash and cash equivalents, at end of period |
$ |
1,592 |
|
|
$ |
906 |
|
SLEEP NUMBER CORPORATION AND SUBSIDIARIES Supplemental Financial Information (unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 28,
|
|
September 30,
|
|
September 28,
|
|
September 30,
|
||||||||
Percent of sales: |
|
|
|
|
|
|
|
||||||||
Retail stores |
|
87.8 |
% |
|
|
86.6 |
% |
|
|
87.9 |
% |
|
|
87.1 |
% |
Online, phone, chat and other |
|
12.2 |
% |
|
|
13.4 |
% |
|
|
12.1 |
% |
|
|
12.9 |
% |
Total Company |
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
||||||||
Sales change rates: |
|
|
|
|
|
|
|
||||||||
Retail comparable-store sales |
|
(7 |
%) |
|
|
(14 |
%) |
|
|
(9 |
%) |
|
|
(11 |
%) |
Online, phone and chat |
|
(18 |
%) |
|
|
(14 |
%) |
|
|
(17 |
%) |
|
|
(13 |
%) |
Total Retail comparable sales change |
|
(9 |
%) |
|
|
(14 |
%) |
|
|
(10 |
%) |
|
|
(11 |
%) |
Net opened/closed stores and other |
|
(1 |
%) |
|
|
1 |
% |
|
|
0 |
% |
|
|
1 |
% |
Total Company |
|
(10 |
%) |
|
|
(13 |
%) |
|
|
(10 |
%) |
|
|
(10 |
%) |
|
|
|
|
|
|
|
|
||||||||
Stores open: |
|
|
|
|
|
|
|
||||||||
Beginning of period |
|
646 |
|
|
|
672 |
|
|
|
672 |
|
|
|
670 |
|
Opened |
|
1 |
|
|
|
8 |
|
|
|
11 |
|
|
|
27 |
|
Closed |
|
(4 |
) |
|
|
(2 |
) |
|
|
(40 |
) |
|
|
(19 |
) |
End of period |
|
643 |
|
|
|
678 |
|
|
|
643 |
|
|
|
678 |
|
|
|
|
|
|
|
|
|
||||||||
Other metrics: |
|
|
|
|
|
|
|
||||||||
Average sales per store ($ in 000's) 1 |
$ |
2,670 |
|
|
$ |
2,952 |
|
|
|
|
|
||||
Average sales per square foot 1 |
$ |
863 |
|
|
$ |
963 |
|
|
|
|
|
||||
Stores > $2 million net sales 2 |
|
60 |
% |
|
|
67 |
% |
|
|
|
|
||||
Stores > $3 million net sales 2 |
|
20 |
% |
|
|
27 |
% |
|
|
|
|
||||
Average revenue per smart bed unit 3 |
$ |
5,771 |
|
|
$ |
5,640 |
|
|
$ |
5,778 |
|
|
$ |
5,822 |
|
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 smart bed 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, restructuring costs 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 |
|||||||||||
|
September 28,
|
|
September 30,
|
|
September 28,
|
|
September 30,
|
|||||||
Net (loss) income |
$ |
(3,136 |
) |
|
$ |
(2,318 |
) |
|
$ |
(40,857 |
) |
|
$ |
4,471 |
Income tax (benefit) expense |
|
(489 |
) |
|
|
(3,253 |
) |
|
|
(7,966 |
) |
|
|
1,346 |
Interest expense |
|
12,057 |
|
|
|
10,958 |
|
|
|
49,313 |
|
|
|
37,641 |
Depreciation and amortization |
|
15,859 |
|
|
|
18,200 |
|
|
|
67,335 |
|
|
|
72,338 |
Stock-based compensation |
|
1,432 |
|
|
|
982 |
|
|
|
13,523 |
|
|
|
15,511 |
Restructuring costs 1 |
|
1,963 |
|
|
|
— |
|
|
|
30,110 |
|
|
|
— |
Asset impairments |
|
— |
|
|
|
292 |
|
|
|
198 |
|
|
|
491 |
Adjusted EBITDA |
$ |
27,686 |
|
|
$ |
24,861 |
|
|
$ |
111,656 |
|
|
$ |
131,798 |
1 |
Represents costs related to business restructuring actions initiated in the fourth quarter of fiscal 2023. |
Free Cash Flow (in thousands) |
||||||||||||||
|
Nine Months Ended |
|
Trailing Twelve Months Ended |
|||||||||||
|
September 28,
|
|
September 30,
|
|
September 28,
|
|
September 30,
|
|||||||
Net cash provided by (used in) operating activities |
$ |
50,824 |
|
$ |
31,816 |
|
|
$ |
9,980 |
|
|
$ |
(12,168 |
) |
Subtract: Purchases of property and equipment |
|
17,218 |
|
|
48,022 |
|
|
|
26,252 |
|
|
|
64,668 |
|
Free cash flow |
$ |
33,606 |
|
$ |
(16,206 |
) |
|
$ |
(16,272 |
) |
|
$ |
(76,836 |
) |
Note - Our Adjusted EBITDA calculations and 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 Net Leverage Ratio under Revolving Credit Facility (in thousands) |
|||||
Our calculation of Net Leverage Ratio under Revolving Credit Facility was changed effective with the amendment of our credit facility on November 2, 2023. Prior to the amendment, the calculation included capitalized operating lease obligations based on a multiple of six times annual rent expense. The amendment replaced this line item with operating lease liabilities included in our financial statements under ASC 842. The calculations in accordance with the November 2, 2023 amendment are presented below. The prior year is presented in conformity with the November 2, 2023 amendment. |
|||||
|
Trailing Twelve Months Ended |
||||
|
September 28,
|
|
September 30,
|
||
Borrowings under revolving credit facility |
$ |
516,500 |
|
$ |
488,000 |
Outstanding letters of credit |
|
7,147 |
|
|
7,147 |
Finance lease obligations |
|
261 |
|
|
338 |
Consolidated funded indebtedness |
$ |
523,908 |
|
$ |
495,485 |
Operating lease liabilities 1 |
|
401,153 |
|
|
439,722 |
Total debt including operating lease liabilities (a) |
$ |
925,061 |
|
$ |
935,207 |
|
|
|
|
||
Adjusted EBITDA (see above) |
$ |
111,656 |
|
$ |
131,798 |
Consolidated rent expense |
|
108,863 |
|
|
113,204 |
Consolidated EBITDAR (b) |
$ |
220,519 |
|
$ |
245,002 |
Net Leverage Ratio under revolving credit facility (a divided by b) |
4.2 to 1.0 |
|
3.8 to 1.0 |
||
| 1 | Reflects operating lease liabilities included in our financial statements under ASC 842. The prior period has been updated to reflect this calculation. |
|
|
||
| Note - Our Net Leverage Ratio under Revolving Credit Facility, Adjusted EBITDA and EBITDAR calculations 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 (Adjusted ROIC) (in thousands) |
|||||||
Adjusted ROIC is a financial measure we use to determine how efficiently we deploy our capital. It quantifies the return we earn on our adjusted invested capital. Management believes Adjusted ROIC is also a useful metric for investors and financial analysts. We compute Adjusted ROIC as outlined below. Our definition and calculation of Adjusted ROIC may not be comparable to similarly titled definitions and calculations used by other companies. The tables below reconcile adjusted net operating profit after taxes (Adjusted NOPAT) and total adjusted invested capital, which are non-GAAP financial measures, to the comparable GAAP financial measures: |
|||||||
|
Trailing Twelve Months Ended |
||||||
|
September 28,
|
|
September 30,
|
||||
Adjusted net operating profit after taxes (Adjusted NOPAT) |
|
|
|
||||
Operating income |
$ |
490 |
|
|
$ |
43,458 |
|
Add: Operating lease interest 1 |
|
27,371 |
|
|
|
27,497 |
|
Less: Income taxes 2 |
|
(5,474 |
) |
|
|
(1,168 |
) |
Adjusted NOPAT |
$ |
22,387 |
|
|
$ |
69,787 |
|
|
|
|
|
||||
Average adjusted invested capital |
|
|
|
||||
Total deficit |
$ |
(448,784 |
) |
|
$ |
(420,687 |
) |
Add: Long-term debt 3 |
|
516,761 |
|
|
|
488,338 |
|
Add: Operating lease liabilities 4 |
|
401,153 |
|
|
|
439,722 |
|
Total adjusted invested capital at end of period |
$ |
469,130 |
|
|
$ |
507,373 |
|
|
|
|
|
||||
Average adjusted invested capital 5 |
$ |
502,494 |
|
|
$ |
469,782 |
|
|
|
|
|
||||
Adjusted ROIC 6 |
|
4.5 |
% |
|
|
14.9 |
% |
1 |
Represents the interest expense component of lease expense included in our financial statements under ASC 842, Leases. |
|
2 |
Reflects annual effective income tax rates, before discrete adjustments, of 19.6% and 1.6% for September 28, 2024 and September 30, 2023, respectively. |
|
3 |
Long-term debt includes existing finance lease liabilities. |
|
4 |
Reflects operating lease liabilities included in our financial statements under ASC 842. |
|
5 |
Average adjusted invested capital represents the average of the last five fiscal quarters' ending adjusted invested capital balances. |
|
6 |
Adjusted ROIC equals Adjusted NOPAT divided by average adjusted invested capital. |
|
|
|
|
Note - The Company's Adjusted 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. The Company updated its Adjusted ROIC calculation effective beginning with the reporting period ended December 31, 2022, to reflect adjustments consistent with ASC 842. |
||
GAAP - generally accepted accounting principles in the U.S. |
||
SLEEP NUMBER CORPORATION AND SUBSIDIARIES Reported to Adjusted Statements of Operations Data Reconciliation (in thousands, except per share amounts) |
||||||||||||||
|
Three Months Ended |
|||||||||||||
|
September 28, 2024 |
|
September 30, 2023 |
|||||||||||
|
As Reported |
|
Restructuring
|
|
As Adjusted |
|
As Reported |
|||||||
Operating income |
$ |
8,432 |
|
|
$ |
1,963 |
|
$ |
10,395 |
|
|
$ |
5,387 |
|
Interest expense, net |
|
12,057 |
|
|
|
— |
|
|
12,057 |
|
|
|
10,958 |
|
Loss before income taxes |
|
(3,625 |
) |
|
|
1,963 |
|
|
(1,662 |
) |
|
|
(5,571 |
) |
Income tax (benefit) expense |
|
(489 |
) |
|
|
465 |
|
|
(24 |
) |
|
|
(3,253 |
) |
Net loss |
$ |
(3,136 |
) |
|
$ |
1,498 |
|
$ |
(1,638 |
) |
|
$ |
(2,318 |
) |
|
|
|
|
|
|
|
|
|||||||
Net (loss) income per share: |
|
|
|
|
|
|
|
|||||||
Basic |
$ |
(0.14 |
) |
|
$ |
0.07 |
|
$ |
(0.07 |
) |
|
$ |
(0.10 |
) |
Diluted |
$ |
(0.14 |
) |
|
$ |
0.07 |
|
$ |
(0.07 |
) |
|
$ |
(0.10 |
) |
|
|
|
|
|
|
|
|
|||||||
Basic Shares |
|
22,643 |
|
|
|
22,643 |
|
|
22,643 |
|
|
|
22,479 |
|
Diluted Shares |
|
22,643 |
|
|
|
22,643 |
|
|
22,643 |
|
|
|
22,479 |
|
|
Nine Months Ended |
||||||||||||
|
September 28, 2024 |
|
September 30, 2023 |
||||||||||
|
As Reported |
|
Restructuring Costs 1,2 |
|
As Adjusted |
|
As Reported |
||||||
Operating income |
$ |
20,094 |
|
|
$ |
14,382 |
|
$ |
34,476 |
|
|
$ |
42,546 |
Interest expense, net |
|
36,626 |
|
|
|
— |
|
|
36,626 |
|
|
|
30,008 |
(Loss) income before income taxes |
|
(16,532 |
) |
|
|
14,382 |
|
|
(2,150 |
) |
|
|
12,538 |
Income tax (benefit) expense |
|
(863 |
) |
|
|
3,409 |
|
|
2,546 |
|
|
|
2,637 |
Net (loss) income |
$ |
(15,669 |
) |
|
$ |
10,973 |
|
$ |
(4,696 |
) |
|
$ |
9,901 |
|
|
|
|
|
|
|
|
||||||
Net (loss) income per share: |
|
|
|
|
|
|
|
||||||
Basic |
$ |
(0.69 |
) |
|
$ |
0.49 |
|
$ |
(0.20 |
) |
|
$ |
0.44 |
Diluted |
$ |
(0.69 |
) |
|
$ |
0.49 |
|
$ |
(0.20 |
) |
|
$ |
0.44 |
|
|
|
|
|
|
|
|
||||||
Basic Shares |
|
22,588 |
|
|
|
22,588 |
|
|
22,588 |
|
|
|
22,412 |
Diluted Shares |
|
22,588 |
|
|
|
22,588 |
|
|
22,588 |
|
|
|
22,558 |
1 |
Represents costs related to business restructuring actions initiated in the fourth quarter of fiscal 2023. |
|
2 |
The income tax expense is calculated using the estimated U.S. federal and state statutory tax rate of 23.7%. |
Note - Our "as adjusted" data is considered a non-GAAP financial measure and is not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates year-over-year comparisons for investors and financial analysts. |
|
GAAP - generally accepted accounting principles in the U.S. |
