Tempur Sealy International, Inc.

Good day and thank you for standing by. Welcome to the Tempur-Sealy second quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Aubrey Moore, Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for participating in today's call. Joining me today are Scott Thompson, Chairman, President, and CEO, and Bhaskar Rao, Executive Vice President and Chief Financial Officer. After prepared remarks, we will open the call for Q&A. This call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve uncertainties and actual results may differ materially due to a variety of factors that could adversely affect the company's business. These factors are discussed in the company's SEC filings, including its annual reports on Form 10-K and quarterly reports on Form 10Q under the headings Special Note Regarding Forward-Looking Statements and Risk Factors. Any forward-looking statement speaks only as of the date on which it is made. The company undertakes no obligation to update any forward-looking statements. This morning's commentary will include non-GAAP financial information. Reconciliations of this non-GAAP financial information can be found in the accompanying press release, which is posted on the company's investor website at investor.tempersealy.com, and filed with the SEC. Our comments will supplement the detailed information provided in the press release. And now, with that introduction, it's my pleasure to turn the call over to Scott.

Thank you, Aubrey. Good morning, everyone, and thank you for joining us on our 2021 second quarter earnings call. I'll begin with a few highlights of our record second quarter financial performance. Oscar will then review our financial performance in more detail. Finally, I'll conclude with some comments on the health of the industry and our current robust order trend. With this quarter's report, the team has now grown sales and adjusted EPS by double digits for eight of the last nine quarters. Specifically, for the second quarter of 2021, sales grew 76% year over year, More notable, sales grew very robust, a very robust 62% as compared to the second quarter of 2019, a period not impacted by the pandemic. We delivered strong performance across North America and international segments with growth across all brands, channels, and price points. Our strong sales performance was driven by successful company initiatives, record demand for Tempur-Pedic in the U.S., and a solid industry backdrop. As a result, we generated record second quarter adjusted EBITDA of $270 million, an increase of 147% versus the same period last year. Adjusted EPS was 79 cents, an increase of 295% versus the same period last year. Second quarter GAAP EPS increased was up 527 percent. We achieved these results despite significant supply chain issues that are constraining the entire betting industry. These issues limited our ability to fully meet strong demand for our products and are expected to continue to impact our sales potential through the third quarter of 2021. Oscar will discuss this point in more detail in a moment. I'd like to highlight a few items from the quarter. First, our focus on a comprehensive omnichannel strategy continues to drive growth and profitability. Our direct channel, both company-owned stores and e-commerce, had a standout performance compared to both 2020 and 2019. We saw strong foot traffic at our retail locations as more customers returned to shopping and store. We also saw an uptick in conversion and strong ASP growth. Our web sales generated strong double-digit growth, a remarkable performance considering the difficult comp from the second quarter of 2020, where our online business was up over 125% from 2019. Like our third-party retailers, our direct channel and company-owned stores also had to navigate the current quarter's supply issues, which are equally impacting all channels of distribution. Second, I want to highlight the numerous investments we're making to expand our North American manufacturing capacity to service the long-term demand outlook we see for our brands and products. As previously announced, we have selected a location in central Indiana as a site for what we expect will be the largest temporary manufacturing facility. The first phase is planned for approximately 700,000 square feet with the ability to expand over time to approximately a million square feet. We plan to begin construction on this site later this quarter and expect the plant will be operational in 2023. Additionally, we're opening two new facilities this quarter. Our fifth Sherwood facility in the northeast United States will support OEM initiatives and a new mixed-use assembly facility on the West Coast, which will support West Coast retailers and expected to shorten order-to-delivery times. As you can see, we are positioning the company for long-term organic growth. Turning to the final item I want to highlight, as previously announced, we recently executed an agreement to acquire Dreams, the UK's leading bedding retailer. They operate through a successful multi-channel retail strategy comprised of over 200 brick-and-mortar locations and industry-leading digital capabilities across the UK. In addition to their retail presence, they are vertically integrated with manufacturing and distribution assets. We're very pleased to report that we received all regulatory approvals, and the transaction is scheduled to close in early August. We expect this transaction to be immediately accretive to earnings. Mike Logue, the CEO of Dreams, will be joining the TPX executive team, and we are thrilled to have all of the Dreams management employees join our organization. We believe the acquisition establishes Tempur-Sealy as a market share leader in the UK. Dreams will operate on a standalone basis. They'll be reported within our direct channel, which over the last five years has grown at a compound annual growth rate of 40%. After the Dreams acquisition, our direct-to-consumer business will represent 25% of our global sales on a trailing 12-month basis, up from only 4% five years ago. Before I hand the call off to Bhaskar, let me step back for a moment and reflect on our journey over the last two years. Clearly, our sales have been and continue to be strong. We're expecting 2021 sales growth of about 60% over 2019, a period not impacted by the pandemic. I want to provide you some perspective on the key drivers of this growth. While market strength has been a tailwind for us during this period, our sales and earnings growth have been significantly higher than the overall industry and can be linked to our company initiatives. we estimate our new distribution drove approximately 50% of our two-year growth. To be clear, this is not change in balance of share on the retail floor. These are new customers. Another approximately 35% of our growth is from M&A and share gains from previously untapped addressable markets. This includes projects like expanding our direct-to-consumer and OEM businesses. That leaves approximately 15% of our two-year growth that can be attributed to the growth in industry overall. We have clear, long-term initiatives, robust free cash flow, and a solid balance sheet, which we believe position us well to deliver double-digit earnings growth in 2022 and beyond. With that, I'll turn it over to Bhaskar to walk you through the financial statements in more detail.