SNBR - Sleep Number Announces Fourth Quarter and Full Year 2022 Results
- Fourth quarter net sales increased 1% versus the prior year
- Full year net sales decreased 3% to $2.11 billion, with full year diluted earnings per share (EPS) of $1.60
- Generated $36 million of operating cash flows for the year and an Adjusted ROIC of 17.6%
- Provides 2023 earnings outlook of $1.25 to $2.00 per diluted share
Sleep Number Corporation (Nasdaq: SNBR) today reported results for the year ended December 31, 2022.
“As we navigated a series of significant macro challenges in 2022, we achieved important strategic advancements that strengthen our sleep technology leadership. These advancements will position Sleep Number to capitalize on profitable growth opportunities when the consumer environment improves,” said Shelly Ibach, Chair, President and CEO. “Consumer response to our best innovation to date – the new Climate360 smart bed – has been strong, and we are excited to introduce our next-generation smart beds beginning in the second quarter. We are seeing improved demand trends early in the year, with the consistent flow of microchips supporting normalized delivery times for our smart beds and adjustable bases. I am grateful to our Sleep Number team for their resilience and commitment to our purpose of improving the health and wellbeing of society through higher quality sleep.”
Fourth Quarter Overview
- Net sales were $498 million, up 1% compared with $492 million last year
- Gross profit decreased 3% to $272 million, or 54.7% of net sales, compared with $280 million or 56.9% of net sales for the prior year
- Net loss per diluted share of $0.24, compared to net income per diluted share of $0.47 last year
Full Year Overview
- Net sales decreased 3% to $2.11 billion in 2022; full year demand declined 13% versus the prior year, partially offset by the delivery of excess backlog
- Gross profit decreased 9% to $1.2 billion, or 56.9% of net sales, including the impact of year-over-year input cost increases and inefficiencies from semiconductor chip constraints, partially offset by pricing actions
- Diluted EPS of $1.60, compared to $6.16 last year
Cash Flows and Liquidity Review
- Generated $36 million in net cash from operating activities
- Invested $69 million in capital expenditures; suspended share repurchases in the second quarter of 2022
- Leverage ratio of 4.4x EBITDAR at the end of the fourth quarter versus covenant maximum of 5.0x; $359 million of liquidity remains against current credit facility
- Adjusted return on invested capital (Adjusted ROIC) was 17.6% for the trailing twelve-month period
Financial Outlook
The company expects 2023 diluted EPS of $1.25 to $2.00. The 2023 outlook assumes net sales are flat to down mid-single digits versus the prior year. The outlook assumes gross margin rate improves by more than 150 basis points versus 2022. The company expects to generate over $100 million of operating cash flow for the year and positive free cash flows. The company anticipates 2023 capital expenditures of $50 million to $60 million and is planning no share repurchases during the year.
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 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
Sleep Number is a wellness technology company. Over 14 million people have had their lives improved by our award-winning sleep innovations and are experiencing the physical, mental and emotional benefits of life-changing sleep performance. Our proprietary smart beds combine the physical and digital worlds, integrating exceptional sleep with a highly advanced digital technology platform. This means only Sleep Number can provide a dynamic, adjustable and adaptive sleep experience that effortlessly responds to the needs of each sleeper. Our millions of Smart Sleepers benefit from their smart bed changing with them, over time; it is unique, like they are.
Our differentiated business model is guided by our purpose to improve the health and wellbeing of society through higher quality sleep. We partner with world-leading sleep and health institutions to bring the power of 18 billion hours of longitudinal sleep data to sleep science and research. Our retail experience meets our consumers whenever and wherever they choose – through online and in-store touchpoints. And our 5,000 mission-driven team members passionately deliver individualized sleep experiences for everyone.
For life-changing sleep, visit one of our 670 stores, 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 company’s outlook for full-year 2023 diluted EPS, are forward-looking statements subject to certain risks and uncertainties including, among others, such factors as current and future economic conditions and consumer sentiment; increases in interest rates, which have increased the cost of servicing the company’s indebtedness; availability of attractive and cost-effective consumer credit options; operating with minimal levels of inventory, which may leave the company vulnerable to supply shortages; Sleep Number’s dependence on, and ability to maintain strong working relationships with key suppliers and third parties; rising commodity costs or third-party logistics costs and other inflationary pressures; risks inherent in global-sourcing activities, including tariffs, geo-political turmoil, war, strikes, labor challenges, government-mandated work closures, outbreaks of pandemics or contagious diseases, and resulting supply shortages and production and delivery delays and disruptions; risks of disruption due to health epidemics or pandemics, such as the COVID-19 pandemic; regional risks related to having global operations and suppliers, including climate and other disasters; the effectiveness of the company’s marketing strategy and promotional efforts; the execution of Sleep Number’s Total Retail distribution strategy; ability to achieve and maintain high levels of product quality; ability to improve and expand Sleep Number’s product line and execute successful new product introductions; ability to prevent third parties from using the company’s technology or trademarks, and the adequacy of its intellectual property rights to protect its products and brand; ability to compete; risks of disruption in the operation of any of the company’s main manufacturing, distribution, logistics, home delivery, product development or customer service operations; the company’s ability to comply with existing and changing government regulation; pending or unforeseen litigation and the potential for associated adverse publicity; the adequacy of the company’s and third-party information systems and costs and disruptions related to upgrading or maintaining these systems; the company’s ability to withstand cyber threats that could compromise the security of its systems, result in a data breach or business disruption; Sleep Number’s ability, and the ability of its suppliers and vendors, to attract, retain and motivate qualified personnel; the volatility of Sleep Number stock; environmental, social and governance (ESG) risks, including increasing regulation and stakeholder expectations; and the company’s ability to adapt to climate change and readiness for legal or regulatory responses thereto.? 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 31, |
| % of |
| January 1, |
| % of |
| 2022 |
|
|
| Net Sales |
|
|
| 2022 |
|
|
| Net Sales |
| Net sales |
| $ |
| 497,528 |
|
|
| 100.0 |
| % |
| $ |
| 491,984 |
| 100.0 |
| % |
| Cost of sales |
|
|
| 225,562 |
|
|
| 45.3 |
| % |
|
|
| 212,260 |
| 43.1 |
| % |
| Gross profit |
|
|
| 271,966 |
|
|
| 54.7 |
| % |
|
|
| 279,724 |
| 56.9 |
| % |
| Operating expenses: |
| Sales and marketing |
|
|
| 219,224 |
|
|
| 44.1 |
| % |
|
|
| 220,236 |
| 44.8 |
| % |
| General and administrative |
|
|
| 37,217 |
|
|
| 7.5 |
| % |
|
|
| 29,924 |
| 6.1 |
| % |
| Research and development |
|
|
| 14,613 |
|
|
| 2.9 |
| % |
|
|
| 14,907 |
| 3.0 |
| % |
| Total operating expenses |
|
|
| 271,054 |
|
|
| 54.5 |
| % |
|
|
| 265,067 |
| 53.9 |
| % |
| Operating income |
|
|
| 912 |
|
|
| 0.2 |
| % |
|
|
| 14,657 |
| 3.0 |
| % |
| Interest expense, net |
|
|
| 7,633 |
|
|
| 1.5 |
| % |
|
|
| 1,845 |
| 0.4 |
| % |
| (Loss) income before income taxes |
|
|
| (6,721 |
| ) |
| (1.4 |
| %) |
|
|
| 12,812 |
| 2.6 |
| % |
| Income tax (benefit) expense |
|
|
| (1,291 |
| ) |
| (0.3 |
| %) |
|
|
| 1,671 |
| 0.3 |
| % |
| Net (loss) income |
| $ |
| (5,430 |
| ) |
| (1.1 |
| %) |
| $ |
| 11,141 |
| 2.3 |
| % |
| Net (loss) income per share – basic |
| $ |
| (0.24 |
| ) |
| $ |
| 0.49 |
| Net (loss) income per share – diluted |
| $ |
| (0.24 |
| ) |
| $ |
| 0.47 |
| Reconciliation of weighted-average |
| shares outstanding: |
| Basic weighted-average shares outstanding |
|
|
| 22,249 |
|
|
|
|
| 22,939 |
| Dilutive effect of stock-based awards 1 |
|
|
| - |
|
|
|
|
| 877 |
| Diluted weighted-average shares outstanding 1 |
|
|
| 22,249 |
|
|
|
|
| 23,816 |
| 1 For the three months ended December 31, 2022, 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) |
| Twelve Months Ended |
| December 31, |
| % of |
| January 1, |
| % of |
| 2022 |
|
|
| Net Sales |
|
|
| 2022 |
|
|
| Net Sales |
| Net sales |
| $ |
| 2,114,297 |
| 100.0 |
| % |
| $ |
| 2,184,949 |
| 100.0 |
| % |
| Cost of sales |
|
|
| 912,001 |
| 43.1 |
| % |
|
|
| 866,102 |
| 39.6 |
| % |
| Gross profit |
|
|
| 1,202,296 |
| 56.9 |
| % |
|
|
| 1,318,847 |
| 60.4 |
| % |
| Operating expenses: |
| Sales and marketing |
|
|
| 919,629 |
| 43.5 |
| % |
|
|
| 905,359 |
| 41.4 |
| % |
| General and administrative |
|
|
| 153,266 |
| 7.2 |
| % |
|
|
| 161,412 |
| 7.4 |
| % |
| Research and development |
|
|
| 61,521 |
| 2.9 |
| % |
|
|
| 58,540 |
| 2.7 |
| % |
| Total operating expenses |
|
|
| 1,134,416 |
| 53.7 |
| % |
|
|
| 1,125,311 |
| 51.5 |
| % |
| Operating income |
|
|
| 67,880 |
| 3.2 |
| % |
|
|
| 193,536 |
| 8.9 |
| % |
| Interest expense, net |
|
|
| 18,985 |
| 0.9 |
| % |
|
|
| 6,245 |
| 0.3 |
| % |
| Income before income taxes |
|
|
| 48,895 |
| 2.3 |
| % |
|
|
| 187,291 |
| 8.6 |
| % |
| Income tax expense |
|
|
| 12,285 |
| 0.6 |
| % |
|
|
| 33,545 |
| 1.5 |
| % |
| Net income |
| $ |
| 36,610 |
| 1.7 |
| % |
| $ |
| 153,746 |
| 7.0 |
| % |
| Net income per share – basic |
| $ |
| 1.63 |
| $ |
| 6.40 |
| Net income per share – diluted |
| $ |
| 1.60 |
| $ |
| 6.16 |
| Reconciliation of weighted-average |
| shares outstanding: |
| Basic weighted-average shares outstanding |
|
|
| 22,396 |
|
|
| 24,038 |
| Dilutive effect of stock-based awards |
|
|
| 456 |
|
|
| 909 |
| Diluted weighted-average shares outstanding |
|
|
| 22,852 |
|
|
| 24,947 |
| SLEEP NUMBER CORPORATION |
| AND SUBSIDIARIES |
| Consolidated Balance Sheets |
| (unaudited – in thousands, except per share amounts) |
| subject to reclassification |
| December 31, |
| January 1, |
| 2022 |
| 2022 |
| Assets |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 1,792 |
|
|
| $ |
| 2,389 |
|
|
| Accounts receivable, net of allowances |
| of $1,267 and $924, respectively |
|
|
| 26,005 |
|
|
|
|
| 25,718 |
|
|
| Inventories |
|
|
| 114,034 |
|
|
|
|
| 105,644 |
|
|
| Prepaid expenses |
|
|
| 16,006 |
|
|
|
|
| 18,953 |
|
|
| Other current assets |
|
|
| 39,921 |
|
|
|
|
| 54,917 |
|
|
| Total current assets |
|
|
| 197,758 |
|
|
|
|
| 207,621 |
|
|
| Non-current assets: |
| Property and equipment, net |
|
|
| 200,605 |
|
|
|
|
| 195,128 |
|
|
| Operating lease right-of-use assets |
|
|
| 397,755 |
|
|
|
|
| 371,133 |
|
|
| Goodwill and intangible assets, net |
|
|
| 68,065 |
|
|
|
|
| 70,468 |
|
|
| Deferred income taxes |
|
|
| 7,958 |
|
|
|
|
| - |
|
|
| Other non-current assets |
|
|
| 81,795 |
|
|
|
|
| 75,190 |
|
|
| Total assets |
| $ |
| 953,936 |
|
|
| $ |
| 919,540 |
|
|
| Liabilities and Shareholders’ Deficit |
| Current liabilities: |
| Borrowings under revolving credit facility |
| $ |
| 459,600 |
|
|
| $ |
| 382,500 |
|
|
| Accounts payable |
|
|
| 176,207 |
|
|
|
|
| 162,547 |
|
|
| Customer prepayments |
|
|
| 73,181 |
|
|
|
|
| 129,499 |
|
|
| Accrued sales returns |
|
|
| 25,594 |
|
|
|
|
| 22,368 |
|
|
| Compensation and benefits |
|
|
| 31,291 |
|
|
|
|
| 51,240 |
|
|
| Taxes and withholding |
|
|
| 23,622 |
|
|
|
|
| 22,087 |
|
|
| Operating lease liabilities |
|
|
| 79,533 |
|
|
|
|
| 72,360 |
|
|
| Other current liabilities |
|
|
| 60,785 |
|
|
|
|
| 64,177 |
|
|
| Total current liabilities |
|
|
| 929,813 |
|
|
|
|
| 906,778 |
|
|
| Non-current liabilities: |
| Deferred income taxes |
|
|
| - |
|
|
|
|
| 688 |
|
|
| Operating lease liabilities |
|
|
| 356,879 |
|
|
|
|
| 336,192 |
|
|
| Other non-current liabilities |
|
|
| 105,421 |
|
|
|
|
| 100,835 |
|
|
| Total non-current liabilities |
|
|
| 462,300 |
|
|
|
|
| 437,715 |
|
|
| Total liabilities |
|
|
| 1,392,113 |
|
|
|
|
| 1,344,493 |
|
|
| Shareholders’ deficit: |
| Undesignated preferred stock; 5,000 shares authorized, |
| no shares issued and outstanding |
|
|
| - |
|
|
|
|
| - |
|
|
| Common stock, $0.01 par value; 142,500 shares authorized, |
| 22,014 and 22,683 shares issued and outstanding, respectively |
|
|
| 220 |
|
|
|
|
| 227 |
|
|
| Additional paid-in capital |
|
|
| 5,182 |
|
|
|
|
| 3,971 |
|
|
| Accumulated deficit |
|
|
| (443,579 |
| ) |
|
|
| (429,151 |
| ) |
| Total shareholders’ deficit |
|
|
| (438,177 |
| ) |
|
|
| (424,953 |
| ) |
| Total liabilities and shareholders’ deficit |
| $ |
| 953,936 |
|
|
| $ |
| 919,540 |
|
|
| SLEEP NUMBER CORPORATION |
| AND SUBSIDIARIES |
| Consolidated Statements of Cash Flows |
| (unaudited - in thousands) |
| subject to reclassification |
| Twelve Months Ended |
| December 31, |
| January 1, |
| 2022 |
| 2022 |
| Cash flows from operating activities: |
| Net income |
| $ |
| 36,610 |
|
|
| $ |
| 153,746 |
|
|
| Adjustments to reconcile net income to net cash provided by |
| operating activities: |
| Depreciation and amortization |
|
|
| 67,401 |
|
|
|
|
| 60,394 |
|
|
| Stock-based compensation |
|
|
| 13,223 |
|
|
|
|
| 23,214 |
|
|
| Net loss on disposals and impairments of assets |
|
|
| 291 |
|
|
|
|
| 37 |
|
|
| Deferred income taxes |
|
|
| (8,646 |
| ) |
|
|
| 446 |
|
|
| Changes in operating assets and liabilities: |
| Accounts receivable |
|
|
| (287 |
| ) |
|
|
| 6,153 |
|
|
| Inventories |
|
|
| (11,560 |
| ) |
|
|
| (24,282 |
| ) |
| Income taxes |
|
|
| 1,356 |
|
|
|
|
| (3,066 |
| ) |
| Prepaid expenses and other assets |
|
|
| 19,379 |
|
|
|
|
| (13,836 |
| ) |
| Accounts payable |
|
|
| (4,743 |
| ) |
|
|
| 54,405 |
|
|
| Customer prepayments |
|
|
| (56,318 |
| ) |
|
|
| 57,482 |
|
|
| Accrued compensation and benefits |
|
|
| (19,821 |
| ) |
|
|
| (24,790 |
| ) |
| Other taxes and withholding |
|
|
| 179 |
|
|
|
|
| 1,814 |
|
|
| Other accruals and liabilities |
|
|
| (926 |
| ) |
|
|
| 8,293 |
|
|
| Net cash provided by operating activities |
|
|
| 36,138 |
|
|
|
|
| 300,010 |
|
|
| Cash flows from investing activities: |
| Purchases of property and equipment |
|
|
| (69,454 |
| ) |
|
|
| (66,900 |
| ) |
| Proceeds from sales of property and equipment |
|
|
| 49 |
|
|
|
|
| 257 |
|
|
| Investment in non-marketable equity securities |
|
|
| (1,202 |
| ) |
|
|
| - |
|
|
| Net cash used in investing activities |
|
|
| (70,607 |
| ) |
|
|
| (66,643 |
| ) |
| Cash flows from financing activities: |
| Net increase in short-term borrowings |
|
|
| 97,647 |
|
|
|
|
| 145,473 |
|
|
| Repurchases of common stock |
|
|
| (64,188 |
| ) |
|
|
| (382,376 |
| ) |
| Proceeds from issuance of common stock |
|
|
| 1,131 |
|
|
|
|
| 4,441 |
|
|
| Debt issuance costs |
|
|
| (718 |
| ) |
|
|
| (2,759 |
| ) |
| Net cash provided by (used in) financing activities |
|
|
| 33,872 |
|
|
|
|
| (235,221 |
| ) |
| Net decrease in cash and cash equivalents |
|
|
| (597 |
| ) |
|
|
| (1,854 |
| ) |
| Cash and cash equivalents, at beginning of period |
|
|
| 2,389 |
|
|
|
|
| 4,243 |
|
|
| Cash and cash equivalents, at end of period |
| $ |
| 1,792 |
|
|
| $ |
| 2,389 |
|
|
| SLEEP NUMBER CORPORATION |
| AND SUBSIDIARIES |
| Supplemental Financial Information |
| (unaudited) |
| Three Months Ended |
| Twelve Months Ended |
| December 31, |
| January 1, |
| December 31, |
| January 1, |
| 2022 |
|
|
| 2022 |
|
|
| 2022 |
|
|
| 2022 |
| Percent of sales: |
| Retail stores |
|
|
| 84.8 |
| % |
|
|
| 85.8 |
| % |
|
|
| 86.3 |
| % |
|
|
| 87.1 |
| % |
| Online, phone, chat and other |
|
|
| 15.2 |
| % |
|
|
| 14.2 |
| % |
|
|
| 13.7 |
| % |
|
|
| 12.9 |
| % |
| Total Company |
|
|
| 100.0 |
| % |
|
|
| 100.0 |
| % |
|
|
| 100.0 |
| % |
|
|
| 100.0 |
| % |
| Sales change rates: |
| Retail comparable-store sales |
|
|
| (3 |
| %) |
|
|
| (11 |
| %) |
|
|
| (8 |
| %) |
|
|
| 19 |
| % |
| Online, phone and chat |
|
|
| 10 |
| % |
|
|
| (11 |
| %) |
|
|
| 4 |
| % |
|
|
| 4 |
| % |
| Total Retail comparable sales change |
|
|
| (1 |
| %) |
|
|
| (11 |
| %) |
|
|
| (6 |
| %) |
|
|
| 17 |
| % |
| Net opened/closed stores and other |
|
|
| 2 |
| % |
|
|
| (2 |
| %) |
|
|
| 3 |
| % |
|
|
| 1 |
| % |
| Total Company |
|
|
| 1 |
| % |
|
|
| (13 |
| %) |
|
|
| (3 |
| %) |
|
|
| 18 |
| % |
| Stores open: |
| Beginning of period |
|
|
| 662 |
|
|
|
|
| 632 |
|
|
|
|
| 648 |
|
|
|
|
| 602 |
|
|
| Opened |
|
|
| 14 |
|
|
|
|
| 22 |
|
|
|
|
| 49 |
|
|
|
|
| 77 |
|
|
| Closed |
|
|
| (6 |
| ) |
|
|
| (6 |
| ) |
|
|
| (27 |
| ) |
|
|
| (31 |
| ) |
| End of period |
|
|
| 670 |
|
|
|
|
| 648 |
|
|
|
|
| 670 |
|
|
|
|
| 648 |
|
|
| Other metrics: |
| Average sales per store ($ in 000's) 1 |
| $ |
| 3,281 |
|
|
| $ |
| 3,600 |
|
|
| Average sales per square foot 1 |
| $ |
| 1,081 |
|
|
| $ |
| 1,212 |
|
|
| Stores > $2 million net sales 2 |
|
|
| 76 |
| % |
|
|
| 84 |
| % |
| Stores > $3 million net sales 2 |
|
|
| 36 |
| % |
|
|
| 48 |
| % |
| Average revenue per smart bed unit 3 |
| $ |
| 5,361 |
|
|
| $ |
| 5,309 |
|
|
| $ |
| 5,403 |
|
|
| $ |
| 5,102 |
| 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 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 31, |
| January 1, |
| December 31, |
| January 1, |
| 2022 |
|
|
| 2022 |
|
|
|
|
| 2022 |
|
|
| 2022 |
| Net (loss) income |
| $ |
| (5,430 |
| ) |
| $ |
| 11,141 |
|
|
| $ |
| 36,610 |
|
|
| $ |
| 153,746 |
| Income tax (benefit) expense |
|
|
| (1,291 |
| ) |
|
|
| 1,671 |
|
|
|
|
| 12,285 |
|
|
|
|
| 33,545 |
| Interest expense |
|
|
| 7,633 |
|
|
|
|
| 1,844 |
|
|
|
|
| 18,985 |
|
|
|
|
| 6,245 |
| Depreciation and amortization |
|
|
| 17,843 |
|
|
|
|
| 15,434 |
|
|
|
|
| 66,626 |
|
|
|
|
| 59,779 |
| Stock-based compensation |
|
|
| 4,638 |
|
|
|
|
| 3,512 |
|
|
|
|
| 13,223 |
|
|
|
|
| 23,214 |
| Asset impairments |
|
|
| 17 |
|
|
|
|
| 60 |
|
|
|
|
| 295 |
|
|
|
|
| 172 |
| Adjusted EBITDA |
| $ |
| 23,410 |
|
|
| $ |
| 33,662 |
|
|
| $ |
| 148,024 |
|
|
| $ |
| 276,701 |
| Free Cash Flow |
| (in thousands) |
| Three Months Ended |
| Trailing Twelve Months Ended |
| December 31, |
| January 1, |
| December 31, |
| January 1, |
| 2022 |
|
|
| 2022 |
|
|
|
|
| 2022 |
|
|
| 2022 |
| Net cash (used in) provided by operating activities |
| $ |
| (43,984 |
| ) |
| $ |
| 7,326 |
|
|
| $ |
| 36,138 |
|
|
| $ |
| 300,010 |
| Subtract: Purchases of property and equipment |
|
|
| 16,646 |
|
|
|
|
| 17,530 |
|
|
|
|
| 69,454 |
|
|
|
|
| 66,900 |
| Free cash flow |
| $ |
| (60,630 |
| ) |
| $ |
| (10,204 |
| ) |
| $ |
| (33,316 |
| ) |
| $ |
| 233,110 |
| Calculation of Net Leverage Ratio under Revolving Credit Facility |
| (in thousands) |
| Trailing Twelve Months Ended |
| December 31, |
| January 1, |
| 2022 |
| 2022 |
| Borrowings under revolving credit facility |
| $ |
| 459,600 |
|
|
| $ |
| 382,500 |
| Outstanding letters of credit |
|
|
| 5,947 |
|
|
|
|
| 3,997 |
| Finance lease obligations |
|
|
| 420 |
|
|
|
|
| 537 |
| Consolidated funded indebtedness |
| $ |
| 465,967 |
|
|
| $ |
| 387,034 |
| Capitalized operating lease obligations 1 |
|
|
| 663,939 |
|
|
|
|
| 610,072 |
| Total debt including capitalized operating lease obligations (a) |
| $ |
| 1,129,906 |
|
|
| $ |
| 997,106 |
| Adjusted EBITDA (see above) |
| $ |
| 148,024 |
|
|
| $ |
| 276,701 |
| Consolidated rent expense |
|
|
| 110,657 |
|
|
|
|
| 101,679 |
| Consolidated EBITDAR (b) |
| $ |
| 258,681 |
|
|
| $ |
| 378,380 |
| Net Leverage Ratio under revolving credit facility (a divided by b) |
| 4.4 to 1.0 |
| 2.6 to 1.0 |
| 1 A multiple of six times annual rent expense is used as an estimate for capitalizing our operating lease obligations in accordance with our credit facility. |
| 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. |
| 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 |
| December 31, 2022 |
| January 1, 2022 |
| Adjusted net operating profit after taxes (Adjusted NOPAT) |
| Operating income |
| $ |
| 67,880 |
|
|
| $ |
| 193,536 |
|
|
| Add: Operating lease interest 1 |
|
|
| 25,912 |
|
|
|
|
| 24,763 |
|
|
| Less: Income taxes 2 |
|
|
| (23,542 |
| ) |
|
|
| (52,807 |
| ) |
| Adjusted NOPAT |
| $ |
| 70,250 |
|
|
| $ |
| 165,492 |
|
|
| Average adjusted invested capital |
| Total deficit |
| $ |
| (438,177 |
| ) |
| $ |
| (424,953 |
| ) |
| Add: Long-term debt 3 |
|
|
| 460,020 |
|
|
|
|
| 383,037 |
|
|
| Add: Operating lease obligations 4 |
|
|
| 436,412 |
|
|
|
|
| 408,552 |
|
|
| Total adjusted invested capital at end of period |
| $ |
| 458,255 |
|
|
| $ |
| 366,636 |
|
|
| Average adjusted invested capital 5 |
| $ |
| 400,038 |
|
|
| $ |
| 350,597 |
|
|
| Adjusted ROIC 6 |
|
|
| 17.6 |
| % |
|
|
| 47.2 |
| % |
| 1 Represents the interest expense component of lease expense included in our financial statements under ASC 842. |
| 2 Reflects annual effective income tax rates, before discrete adjustments, of 25.1% and 24.2% for December 31, 2022 and January 1, 2022, 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 - Our 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. We updated our Adjusted ROIC calculation for the reporting period ended December 31, 2022, to reflect adjustments consistent with ASC 842, Leases. The prior period has been updated to reflect this calculation." |
| GAAP - generally accepted accounting principles in the U.S. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230222005059/en/
Investor Contact: Dave Schwantes; (763) 551-7498; investorrelations@sleepnumber.com
Media Contact: Julie Elepano; (414) 732-9840; julie.elepano@sleepnumber.com