S&P shifts Tempur Sealy view to positive

S&P said it revised the outlook for Tempur Sealy International Inc. to positive from stable, citing improved operating performance and lower leverage.

“The positive outlook reflects the potential for higher ratings given the company’s ability to restore profitability and deleverage after losing its top customer. For the 12 months ended Sept. 30, 2019, leverage declined to 3.4x as compared with 4.6x during the same period in 2018. Leverage peaked around 5x in mid-2018 as the company cycled off Mattress Firm and invested in its brands and new channels. Tempur successfully recouped the majority of units it lost when the Mattress Firm relationship terminated in January 2017,” said S&P in a press release.

The agency expects the company to keep leverage in the low-3x area and free operating cash flow generation of at least $200 million over the next 12 months.

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