Select Comfort Corporation (NASDAQ: SCSS) today reported results for the third quarter ended Oct. 3, 2015.
"Our third quarter and year-to-date sales and profitability demonstrate the strength of our consumer innovation strategy and business model, even as we take on large transformational initiatives," said Shelly Ibach, president and chief executive officer of Select Comfort. "We have implemented our new ERP system on time and on budget. As anticipated, the implementation has caused customer service and delivery disruptions, which we expect to be isolated to the fourth quarter. We look forward to the agility and efficiencies this system will enable for our customers and team. Our strategy and results remain on track and we are reaffirming our 2015 outlook of $1.35 per share.”
Third Quarter Statement of Operations Overview
- Net sales increased 16% to $374 million, with comparable sales up 11%
- Gross profit increased 18% to $234 million; gross margin increased to 62.5% (+110 basis points versus prior year)
- Operating income increased 28% to $45 million, or 12.1% of net sales (+120 basis points versus prior year)
- Earnings per diluted share grew 41% to $0.62
Cash Flow Review
- Net cash provided by operating activities was $132 million for the first nine months of 2015
- Capital expenditures for the first nine months of 2015 were $61 million
- Share repurchases totaled $18.5 million (0.7 million shares) for the third quarter, compared with $10 million for the third quarter of last year
Financial Outlook
The company confirmed its guidance for
2015 earnings per diluted share of $1.35. The outlook remains as planned
and assumes sales growth for the second-half of the year consistent with
previous guidance of mid- to high-single-digit, adjusting for the extra
week in the prior year’s fourth quarter. It assumes approximately 490
stores at year end, a 6% increase versus the prior year end. We continue
to expect our full-year 2015 return on invested capital (ROIC) to be in
the mid-teens, above our 10% weighted average cost of capital.
For reference, earnings for fourth quarter 2014 included $0.10 per diluted share of one-time benefits ($0.06 for the extra week and $0.04 for a legal settlement). Please refer to the last schedule of this news release for supplemental financial information that summarizes discrete items impacting our outlook for the second-half of our fiscal 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 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 Select Comfort Corporation
SLEEP NUMBER, a sleep
innovation leader, delivers unparalleled sleep experiences by offering
high-quality, innovative sleep products and services. The company is the
exclusive designer, manufacturer, marketer, retailer and servicer of a
complete line of Sleep Number® beds including our newest
addition, the SleepIQ Kids™ bed. Only the Sleep Number bed offers SleepIQ®
technology – proprietary sensor technology that works directly with
the bed’s DualAir™ system to track and monitor each individual’s sleep.
SleepIQ technology communicates how you slept and what adjustments you
can make to optimize your sleep and improve your daily life. Sleep
Number also offers a full line of exclusive sleep products including
FlexFit™ adjustable bases and Sleep Number® pillows, sheets
and other bedding products. Consumers also benefit from a unique,
value-added retail experience at one of the more than 475 Sleep Number®
stores across the country, online at SleepNumber.com, or via phone at
(800) Sleep Number or (800) 753-3768.
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; availability of
attractive and cost-effective consumer credit options; pending and
unforeseen litigation and the potential for adverse publicity associated
with litigation; our “just-in-time” 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; risks of disruption in the operation of
either of our two primary manufacturing facilities; increasing
government regulations, which have added or will add cost pressures and
process changes to ensure compliance; the adequacy of our management
information systems to meet the evolving needs of our business and to
protect sensitive data from potential cyber threats; the costs,
distractions and potential disruptions to our business related to
upgrading our management information systems; our ability to attract,
retain and motivate qualified management, executive and other key
employees, including qualified retail sales professionals and managers;
and uncertainties arising from global events, such as terrorist attacks
or a pandemic outbreak, or the threat of such events. 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.
SELECT COMFORT CORPORATION | ||||||||||||||
AND SUBSIDIARIES | ||||||||||||||
Consolidated Statements of Operations | ||||||||||||||
(unaudited – in thousands, except per share amounts) | ||||||||||||||
Three Months Ended | ||||||||||||||
October 3, | % of | September 27, | % of | |||||||||||
2015 | Net Sales | 2014 | Net Sales | |||||||||||
Net sales | $ | 373,919 | 100.0 | % | $ | 323,366 | 100.0 | % | ||||||
Cost of sales | 140,283 | 37.5 | % | 124,782 | 38.6 | % | ||||||||
Gross profit | 233,636 | 62.5 | % | 198,584 | 61.4 | % | ||||||||
Operating expenses: | ||||||||||||||
Sales and marketing | 156,899 | 42.0 | % | 137,863 | 42.6 | % | ||||||||
General and administrative | 27,817 | 7.4 | % | 23,022 | 7.1 | % | ||||||||
Research and development | 3,521 | 0.9 | % | 2,353 | 0.7 | % | ||||||||
Total operating expenses | 188,237 | 50.3 | % | 163,238 | 50.5 | % | ||||||||
Operating income | 45,399 | 12.1 | % | 35,346 | 10.9 | % | ||||||||
Other income, net | 78 | 0.0 | % | 96 | 0.0 | % | ||||||||
Income before income taxes | 45,477 | 12.2 | % | 35,442 | 11.0 | % | ||||||||
Income tax expense | 13,623 | 3.6 | % | 11,888 | 3.7 | % | ||||||||
Net income | $ | 31,854 | 8.5 | % | $ | 23,554 | 7.3 | % | ||||||
Net income per share – basic | $ | 0.63 | $ | 0.44 | ||||||||||
Net income per share – diluted | $ | 0.62 | $ | 0.44 | ||||||||||
Reconciliation of weighted-average shares outstanding: | ||||||||||||||
Basic weighted-average shares outstanding | 50,945 | 53,271 | ||||||||||||
Dilutive effect of stock-based awards | 756 | 700 | ||||||||||||
Diluted weighted-average shares outstanding | 51,701 | 53,971 | ||||||||||||
SELECT COMFORT CORPORATION | ||||||||||||||
AND SUBSIDIARIES | ||||||||||||||
Consolidated Statements of Operations | ||||||||||||||
(unaudited – in thousands, except per share amounts) | ||||||||||||||
Nine Months Ended | ||||||||||||||
October 3, | % of | September 27, | % of | |||||||||||
2015 | Net Sales | 2014 | Net Sales | |||||||||||
Net sales | $ | 999,017 | 100.0 | % | $ | 834,541 | 100.0 | % | ||||||
Cost of sales | 379,009 | 37.9 | % | 322,177 | 38.6 | % | ||||||||
Gross profit | 620,008 | 62.1 | % | 512,364 | 61.4 | % | ||||||||
Operating expenses: | ||||||||||||||
Sales and marketing | 424,029 | 42.4 | % | 369,597 | 44.3 | % | ||||||||
General and administrative | 79,951 | 8.0 | % | 63,183 | 7.6 | % | ||||||||
Research and development | 10,275 | 1.0 | % | 5,725 | 0.7 | % | ||||||||
Total operating expenses | 514,255 | 51.5 | % | 438,505 | 52.5 | % | ||||||||
Operating income | 105,753 | 10.6 | % | 73,859 | 8.9 | % | ||||||||
Other income, net | 364 | 0.0 | % | 276 | 0.0 | % | ||||||||
Income before income taxes | 106,117 | 10.6 | % | 74,135 | 8.9 | % | ||||||||
Income tax expense | 34,426 | 3.4 | % | 25,108 | 3.0 | % | ||||||||
Net income | $ | 71,691 | 7.2 | % | $ | 49,027 | 5.9 | % | ||||||
Net income per share – basic | $ | 1.39 | $ | 0.91 | ||||||||||
Net income per share – diluted | $ | 1.36 | $ | 0.90 | ||||||||||
Reconciliation of weighted-average shares outstanding: | ||||||||||||||
Basic weighted-average shares outstanding | 51,654 | 53,677 | ||||||||||||
Dilutive effect of stock-based awards | 870 | 681 | ||||||||||||
Diluted weighted-average shares outstanding | 52,524 | 54,358 | ||||||||||||
SELECT COMFORT CORPORATION | |||||||||
AND SUBSIDIARIES | |||||||||
Consolidated Balance Sheets | |||||||||
(unaudited – in thousands, except per share amounts) | |||||||||
subject to reclassification | |||||||||
October 3, | January 3, | ||||||||
2015 | 2015 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 72,678 | $ | 51,995 | |||||
Marketable debt securities – current | 33,243 | 69,609 | |||||||
Accounts receivable, net of allowance for doubtful accounts of $750 and $739, respectively | 26,286 | 19,693 | |||||||
Inventories | 77,753 | 53,535 | |||||||
Prepaid expenses | 14,815 | 17,792 | |||||||
Deferred income taxes | 8,561 | 8,786 | |||||||
Other current assets | 12,865 | 11,185 | |||||||
Total current assets | 246,201 | 232,595 | |||||||
Non-current assets: | |||||||||
Marketable debt securities – non-current | 8,581 | 44,441 | |||||||
Property and equipment, net | 197,886 | 165,453 | |||||||
Goodwill and intangible assets, net | 85,093 | 15,986 | |||||||
Deferred income taxes | 10,219 | 3,433 | |||||||
Other assets | 17,913 | 12,279 | |||||||
Total assets | $ | 565,893 | $ | 474,187 | |||||
Liabilities and Shareholders’ Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 115,330 | $ | 84,197 | |||||
Customer prepayments | 25,387 | 28,726 | |||||||
Accrued sales returns | 19,313 | 15,262 | |||||||
Compensation and benefits | 32,960 | 33,066 | |||||||
Taxes and withholding | 25,236 | 10,207 | |||||||
Other current liabilities | 25,100 | 15,594 | |||||||
Total current liabilities | 243,326 | 187,052 | |||||||
Non-current liabilities: | |||||||||
Warranty liabilities | 5,143 | 2,722 | |||||||
Other long-term liabilities | 45,501 | 27,506 | |||||||
Total non-current liabilities | 50,644 | 30,228 | |||||||
Total liabilities | 293,970 | 217,280 | |||||||
Shareholders’ equity: | |||||||||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding | - | - | |||||||
Common stock, $0.01 par value; 142,500 shares authorized, 50,646 and 52,798 shares issued and outstanding, respectively | 506 | 528 | |||||||
Additional paid-in capital | - | - | |||||||
Retained earnings | 271,410 | 256,413 | |||||||
Accumulated other comprehensive income (loss) | 7 | (34 | ) | ||||||
Total shareholders’ equity | 271,923 | 256,907 | |||||||
Total liabilities and shareholders’ equity | $ | 565,893 | $ | 474,187 | |||||
SELECT COMFORT CORPORATION | ||||||||||||
AND SUBSIDIARIES | ||||||||||||
Consolidated Statements of Cash Flows | ||||||||||||
(unaudited - in thousands) | ||||||||||||
subject to reclassification | ||||||||||||
Nine Months Ended | ||||||||||||
October 3, | September 27, | |||||||||||
2015 | 2014 | |||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 71,691 | $ | 49,027 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 33,694 | 29,579 | ||||||||||
Stock-based compensation | 8,952 | 4,294 | ||||||||||
Net loss on disposals and impairments of assets | 202 | 115 | ||||||||||
Excess tax benefits from stock-based compensation | (1,991 | ) | (754 | ) | ||||||||
Deferred income taxes | (5,633 | ) | (4,306 | ) | ||||||||
Gain on sale of non-marketable equity securities | (6,891 | ) | - | |||||||||
Changes in operating assets and liabilities, net of effect of acquisition: | ||||||||||||
Accounts receivable | (6,543 | ) | (14,195 | ) | ||||||||
Inventories | (24,120 | ) | (8,552 | ) | ||||||||
Income taxes | 13,433 | 9,883 | ||||||||||
Prepaid expenses and other assets | 4,756 | (4,146 | ) | |||||||||
Accounts payable | 24,623 | 27,359 | ||||||||||
Customer prepayments | (3,351 | ) | 13,847 | |||||||||
Accrued compensation and benefits | (97 | ) | 17,318 | |||||||||
Other taxes and withholding | 3,569 | 4,484 | ||||||||||
Warranty liabilities | 3,945 | 953 | ||||||||||
Other accruals and liabilities | 15,348 | 10,929 | ||||||||||
Net cash provided by operating activities | 131,587 | 135,835 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (61,435 | ) | (58,377 | ) | ||||||||
Proceeds from sales of property and equipment | 41 | 5 | ||||||||||
Investments in marketable debt securities | (29,299 | ) | (58,403 | ) | ||||||||
Proceeds from marketable debt securities | 101,087 | 38,237 | ||||||||||
Acquisition of business | (70,018 | ) | - | |||||||||
Proceeds from sale of non-marketable equity securities | 12,891 | - | ||||||||||
Increase in restricted cash | - | (500 | ) | |||||||||
Net cash used in investing activities | (46,733 | ) | (79,038 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Net increase (decrease) in short-term borrowings | 2,119 | (7,499 | ) | |||||||||
Repurchases of common stock | (70,300 | ) | (31,480 | ) | ||||||||
Proceeds from issuance of common stock | 2,658 | 1,631 | ||||||||||
Excess tax benefits from stock-based compensation | 1,991 | 754 | ||||||||||
Debt issuance costs | (639 | ) | - | |||||||||
Net cash used in financing activities | (64,171 | ) | (36,594 | ) | ||||||||
Net increase in cash and cash equivalents | 20,683 | 20,203 | ||||||||||
Cash and cash equivalents, at beginning of period | 51,995 | 58,223 | ||||||||||
Cash and cash equivalents, at end of period | $ | 72,678 | $ | 78,426 | ||||||||
SELECT COMFORT CORPORATION | ||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||
Supplemental Financial Information | ||||||||||||||||||
(unaudited) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
October 3, | September 27, | October 3, | September 27, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||
Percent of sales: | ||||||||||||||||||
Retail | 92.2 | % | 92.2 | % | 91.7 | % | 90.8 | % | ||||||||||
Direct and E-Commerce | 5.2 | % | 5.8 | % | 5.7 | % | 6.1 | % | ||||||||||
Wholesale/other | 2.6 | % | 2.0 | % | 2.6 | % | 3.1 | % | ||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
Sales change rates: | ||||||||||||||||||
Retail comparable-store sales | 12 | % | 16 | % | 15 | % | 9 | % | ||||||||||
Direct and E-Commerce | 3 | % | 18 | % | 11 | % | 5 | % | ||||||||||
Company-Controlled comparable sales change | 11 | % | 16 | % | 15 | % | 9 | % | ||||||||||
Net opened/closed stores | 4 | % | 8 | % | 5 | % | 7 | % | ||||||||||
Total Company-Controlled Channel | 15 | % | 24 | % | 20 | % | 16 | % | ||||||||||
Wholesale/other | 51 | % | (23 | %) | 2 | % | (14 | %) | ||||||||||
Total | 16 | % | 23 | % | 20 | % | 14 | % | ||||||||||
Stores open: | ||||||||||||||||||
Beginning of period | 467 | 451 | 463 | 440 | ||||||||||||||
Opened | 11 | 13 | 24 | 46 | ||||||||||||||
Closed | (3 | ) | (4 | ) | (12 | ) | (26 | ) | ||||||||||
End of period | 475 | 460 | 475 | 460 | ||||||||||||||
Other metrics: | ||||||||||||||||||
Average sales per store ($ in 000's) 1, 3 | $ | 2,559 | $ | 2,216 | ||||||||||||||
Average sales per square foot 1, 3 | $ | 1,063 | $ | 1,007 | ||||||||||||||
Stores > $1 million net sales 1, 3 | 100 | % | 98 | % | ||||||||||||||
Stores > $2 million net sales 1, 3 | 69 | % | 50 | % | ||||||||||||||
Average revenue per mattress unit 2 | $ | 3,992 | $ | 3,733 | $ | 3,991 | $ | 3,600 | ||||||||||
1 | Trailing twelve months for stores open at least one year. | |
2 | Represents Company-Controlled Channel total net sales divided by Company-Controlled Channel mattress units. | |
3 | Fiscal 2014 included 53 weeks, as compared to 52 weeks in fiscal 2015 and 2013. The additional week in 2014 was in the fiscal fourth quarter. Company-Controlled comparable sales metrics have been adjusted to remove the estimated impact of the additional week on those metrics. | |
SELECT COMFORT 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 | |||||||||||
October 3, | September 27, | October 3, | September 27, | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Net income | $ | 31,854 | $ | 23,554 | $ | 90,638 | $ | 55,452 | ||||
Income tax expense | 13,623 | 11,888 | 43,452 | 28,418 | ||||||||
Interest expense | 44 | 10 | 87 | 40 | ||||||||
Depreciation and amortization | 11,643 | 10,125 | 43,100 | 37,095 | ||||||||
Stock-based compensation | 3,125 | 2,259 | 11,457 | 5,467 | ||||||||
Asset impairments | 17 | 28 | 619 | 153 | ||||||||
Adjusted EBITDA | $ | 60,306 | $ | 47,864 | $ | 189,353 | $ | 126,625 | ||||
Free Cash Flow | ||||||||||||
(in thousands) | ||||||||||||
Three Months Ended | Trailing-Twelve Months Ended | |||||||||||
October 3, | September 27, | October 3, | September 27, | |||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Net cash provided by operating activities | $ | 86,533 | $ | 86,257 | $ | 140,220 | $ | 133,858 | ||||
Subtract: Purchases of property and equipment | 22,497 | 18,611 | 79,652 | 77,368 | ||||||||
Free cash flow | $ | 64,036 | $ | 67,646 | $ | 60,568 | $ | 56,490 | ||||
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. | |
SELECT COMFORT 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 | ||||||||||
October 3, | September 27, | |||||||||
2015 | 2014 | |||||||||
Net operating profit after taxes (NOPAT) | ||||||||||
Operating income | $ | 133,640 | $ | 83,514 | ||||||
Add: Rent expense 1 | 63,078 | 54,983 | ||||||||
Add: Interest income | 537 | 398 | ||||||||
Less: Depreciation on capitalized operating leases 2 | (15,809 | ) | (13,830 | ) | ||||||
Less: Income taxes 3 | (58,896 | ) | (42,501 | ) | ||||||
NOPAT | $ | 122,550 | $ | 82,564 | ||||||
Average invested capital | ||||||||||
Total equity | $ | 271,923 | $ | 249,032 | ||||||
Less: Cash greater than target 4 | - | (47,881 | ) | |||||||
Add: Long-term debt 5 | - | - | ||||||||
Add: Capitalized operating lease obligations 6 | 504,624 | 439,864 | ||||||||
Total invested capital at end of period | $ | 776,547 | $ | 641,015 | ||||||
Average invested capital 7 | $ | 710,701 | $ | 617,599 | ||||||
Return on invested capital (ROIC) 8 | 17.2 | % | 13.4 | % | ||||||
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 32.5% and 34.0% for 2015 and 2014, 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 capital lease obligations. | |
6 | A multiple of eight times annual rent expense is used as an estimate of 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. |
GAAP - generally accepted accounting principles in the U.S. | |
SELECT COMFORT CORPORATION AND SUBSIDIARIES | ||||||||
Fiscal 2015 Outlook - Supplemental Information | ||||||||
Full-Year | Second-Half | Q3-2015 | Q4-2015 | |||||
2015 Outlook* | 2015 Outlook* | Actual | Outlook | |||||
$1.35 | $0.60 | $0.62 | ($0.02) | |||||
*As per outlook provided on July 22, 2015 and reiterated November 4, 2015 | ||||||||
Select discrete items of note (not all inclusive) | ||||||||
Net impact of BAM Labs acquisition1 | - | - | $0.04 | ($0.04) | ||||
Accelerated shipments into Q3 from Q4 ($10M sales estimate)2 | - | - | $0.04 | ($0.04) | ||||
Q4 inefficiencies (sales & costs) from systems cutover3 | ($0.09) | ($0.09) | - | ($0.09) | ||||
ERP implementation data conversion and training costs4 | ($0.16) | ($0.13) | ($0.09) | ($0.04) | ||||
Incremental information technology depreciation in G&A5 | ($0.04) | ($0.04) | - | ($0.04) | ||||
1 | Includes Q3 reported gain on our minority equity investment in BAM Labs (~18% ownership of BAM Labs prior to the acquisition) based on the remeasured fair value less acquisition related expenses; Q4 estimated operating income impact of including BAM Labs financial results in our consolidated operating income and EPS, including amortization of acquired definite-lived intangible assets. Note: BAM Labs acquisition expected to be accretive to EPS in 2017 | |
2 | In advance of our ERP implementation, an estimated $10 million of sales were accelerated into Q3 from Q4 | |
3 | Estimated negative sales impact of $10 million to $12 million in Q4-2015 along with cost inefficiencies as processes are migrated to the new ERP system | |
4 | Costs to convert data from our prior legacy systems to our new ERP system, and enterprise-wide training expenses related to the new ERP system | |
5 | Includes incremental depreciation related to our new ERP system and other technology system enhancements |
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104006641/en/
Contacts:
Investor Contact:
Dave
Schwantes, 763-551-7498
investorrelations@selectcomfort.com
or
Media
Contact:
Susan Eich, 763-551-6934
Susan.Eich@selectcomfort.com