Tempur Sealy lowers its leverage guidance to the 2.5x to 3.5x range

By Devika Patel

Knoxville, Tenn., March 3 – Tempur Sealy International Inc. management plans to keep leverage lower than previous guidance, having recently lowered the company’s leverage target to the 2.5x to 3.5x range from the 3x to 4x range.

“From a leverage standpoint, on our last earnings call, we took down our formal leverage guidance,” chairman, president and chief executive officer Scott Thompson said at the Raymond James 41st Annual Institutional Investors Conference in Orlando on Tuesday.

“We were at 3x to 4x with our leverage target.

“We were just under 3x when reported, and we brought down our leverage guidance going forward to 2.5x to 3.5x, so we brought it down a full turn, which is where kind of we’re comfortable.

“I don’t see us bringing it down any lower than that,” he said.

“When we come up with those leverage targets, we work with some banks, we stress test it.

“I think that’s probably the right leverage target for us.

“We might run at the lower end if it looked like there was a recession coming,” he said.

“For great opportunities, we might edge towards the top end of that range, but the flexibility of the operating expenses and the nature of the business, it’s a business that can support, quite frankly, more debt than I’m willing to put on it.

“We’ve probably been as high as four something, that felt a little high.

“I think we’re very comfortable with a 2.5x to 3.5x leverage ratio,” he said.

Tempur Sealy is a Lexington, Ky.-based bedding provider.

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