Aubrey Moore - Tempur Sealy International, Inc. Scott L. Thompson - Tempur Sealy International, Inc. Bhaskar Rao - Tempur Sealy International, Inc..

William Michael Reuter - Bank of America Merrill Lynch Robert Drbul - Guggenheim Securities LLC Robert A. Friedner - Piper Jaffray & Co. Atul Maheswari - UBS Securities LLC John Allen Baugh - Stifel, Nicolaus & Co., Inc. Keith Hughes - SunTrust Robinson Humphrey, Inc. Bradley B. Thomas - KeyBanc Capital Markets, Inc.

Curtis Nagle - Bank of America Merrill Lynch.

Good day, ladies and gentlemen, and welcome to the Tempur Sealy Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. I would now like to hand the floor over to Aubrey Moore, Investor Relations.

Please go ahead..

Thank you, operator. Good morning, everyone, and thank you for participating in today's call. Joining me in Lexington headquarters 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.

Forward-looking statements that we make during this call are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that these forward-looking statements, including the company's expectations regarding sales, earnings, net income, and adjusted EBITDA, and anticipated performance for 2017 and subsequent periods, involve uncertainties. Actual results may differ due to the variety of factors that could adversely affect the company's business.

The factors that could cause actual results to differ materially from those identified include economic, regulatory, competitive, operating, and other factors discussed in the press release issued today.

These factors are also discussed in the company's SEC filings including, but not limited to, annual reports on Form 10-K and the company's quarterly reports on 10-Q under the headings Special Note Regarding Forward-Looking Statements and/or 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 measures.

The press release contains reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures, except as otherwise discussed in the press release as well as information regarding the methodology used in our constant currency presentations.

We have posted the press release on the company's investor website at investor.tempursealy.com and have filed it 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..

Tempur-Pedic, Sealy and Stearns & Foster, retailers are eager to seize the opportunity. In addition, we'll open some of our own Tempur-Pedic retail stores. While our preference in North America is to partner with our third-party retailers, in certain underserved markets, it makes sense for us to establish some stores in these locations.

We expect our company-owned stores will complement our existing third-party retail partners. Our exclusive high-end showrooms and knowledgeable sleep consultants will educate consumers on our product, provide further awareness, and generate future sales opportunities throughout the local market.

In each of the eight markets where we have opened our own Tempur-Pedic stores, not only have our stores been successful, but they have also created a brand halo in those markets. Our own stores have a payback period of about six months, and while we expect the overall revenue contributions to be minimal, they have a high return on invested capital.

In fact, based on our historic experience, one company-owned Tempur-Pedic store generates the same contribution profit for us as approximately 20 Mattress Firm stores. I should note our North American Tempur-Pedic same-store sale increase for the quarter was a healthy 30%.

To sum up our recapture strategy, by providing existing retailers with tools they need to win, by working with retailers to open new Tempur-Sealy dominant stores, by opening some limited number of company-owned stores, and by capturing our fair share of the online bedding business, we feel good about our competitive position in the market and future sales growth in North America.

Turning to our International business, sales increased a solid 8% as compared to the third quarter last year. This was driven by growth across all geographic areas, with Europe market having the largest positive trend since the second quarter as new products have completed their rollout. Our performance in Asia continues to be outstanding.

As planned, incremental product launch cost for the quarter were a headwind to international margins, but we expect these (12:13) launches to provide a nice sales boost in the coming years.

While I'm pleased with the recent progress our team has made internationally, they are continuing to explore opportunities to drive our brands worldwide and deal with the ever-changing international markets. In summary, we overcame some difficult external challenges this quarter and delivered a solid performance both financially and operationally.

Lastly, before turning the call over to Bhaskar, I'd like to highlight the team's tremendous response to the unprecedented conditions we experienced in the quarter. First, our top priority during these storms was to ensure the safety of our employees, and I believe the team did an outstanding job on that front.

Fortunately, all of our employees across all of the impacted areas were safe and accounted for immediately. And luckily, our facilities in Texas, Florida and Puerto Rico sustained very little damage. Second, we understood that rebuilding these communities will take a long time, and we wanted to do our part to help in this recovery process.

So we stepped up our normal charitable contributions and, in partnership with our retailers, significantly increased charitable contributions to support recovery efforts in the affected areas. As people begin to rebuild their lives, we hope these and other generous donations have provided some comfort during the tough recovery process.

With that, I'll turn the call over to Bhaskar to walk us through the third quarter financial results..

Thank you, Scott. Before going into the details, a few key highlights from the third quarter. Worldwide net sales for the third quarter were $725 million, a decline of $108 million, or 13%, versus the prior year quarter. Adjusted gross margin declined 30 basis points to 43.2%.

Adjusted operating margin was 13.8% of net sales and adjusted EBITDA was $129 million. Adjusted earnings per share for the quarter was $1. We generated $110 million of free cash flow in the quarter, making this one of the strongest cash flow quarters in the company's history.

Our leverage ratio, as calculated based on the senior credit facility, was 3.7 times, which is slightly above our long-term target of 3.5 times. As Scott mentioned, we will continue to use excess cash to pay down debt, and we anticipate that we may resume our share repurchase program sometime in 2018.

My comments going forward on net sales will be excluding Mattress Firm from the prior period. On a segment basis, sales in North America increased 10%, driven by growth across all of our brands. Tempur led the way with sales in North America growing a robust 26% compared to the third quarter last year.

Sealy sales increased low single-digits, but excluding the impact of their previously mentioned department store, Sealy sales in North America increased high single-digits. Sales in Canada were up a solid 10%, and on a constant currency basis, were up 6%.

Our North American wholesale channel increased 7%, and the direct channel increased 149% in the quarter, including an increase in web sales of over 200%. On a dollar basis, our wholesale channel was still the largest contributor of sales growth.

The vast majority of this growth is with existing retailers leaning into our brands to capitalize on the competitive advantage of our premium products provide. A couple of selected callouts on our North America sales trends. One, we continue to see strong performance in select metropolitan areas where bed-in-the-box focuses its efforts.

Sales for Tempur-Pedic in New York, Philadelphia, Phoenix were up over 50% once again this quarter. Two, additionally, a good portion of the growth in our direct business came from customers in Mattress Firm-dominated markets, where our third-party retail footprint is currently underpenetrated.

North America gross margin decreased 30 basis points to 41.2% as compared to the prior year. This was driven by fixed cost deleverage on lower unit volume, significant commodity cost inflation, and unfavorable brand mix due to the loss of revenues that skewed toward higher-margin Tempur products.

Those negative factors were mostly offset by operational improvements, favorable channel mix, and positive merchandising mix. Tempur gross margins were up significantly versus the third quarter last year. Deleverage on lower unit volume was more than offset by positive mix and productivity improvements.

We continue to see Sealy four-wall margins improve and was up almost 200 basis points this quarter. North America adjusted operating margins decreased 100 basis points to 17.4% as compared to the prior year.

This was driven by the change in gross margin and unfavorable operating expense deleverage, including the impact of investments in marketing as we continue to drive sales recapture. Turning to our International segment. On a reported basis, net sales increased 8%.

On a constant currency basis, sales were up 7% with the wholesale channel up 8% and the direct channel up 4%. International gross margin decreased 260 basis points to 51.2% compared to the third quarter of 2016. The gross margin decline was due to product launch cost, an unfavorable channel and brand mix.

The unfavorable brand mix was expected as Sealy is growing faster than Tempur on a relative basis. International adjusted operating margin decreased 160 basis points to 17.5%. This was primarily due to the decline in gross margin offset by operating expense leverage.

Before turning to our global performance, I would like to discuss the matter in one of our Latin American subsidiaries. During the quarter, we recorded an unexpected $12 million of charges, primarily interest, related to deferred payment programs on non-income tax obligations and local market financing arrangements.

These were very inefficient and we are in the process of unwinding them by recapitalizing the Latin American subsidiary. We do not expect these kinds of charges in the future. Leadership of the subsidiary has been terminated. Now turning back to the company's global performance. Adjusted operating income was $100 million.

Adjusted EBITDA was $129 million, down $26 million from last year. Adjusted EBITDA excludes three one-time items. One, $2.5 million of non-income tax obligations in the Latin American subsidiary as previously discussed. Two, $1.9 million of bad debt expense associated with a long-time European customer's bankruptcy.

For further context, this customer represented 1% of international sales in 2016, and we believe this will not have a material impact to sales going forward. Three, $1.1 million of hurricane-related manufacturing and logistical costs as well as a portion of our relief effort donations that we recognized in the quarter.

We had three Sealy assembly plants and multiple distribution centers impacted. I would also like to note that adjusted EBITDA does not include any add backs for lost sales related to the hurricanes.

To provide some perspective, the hurricanes impacted our operations in two of our largest markets, Texas and Florida, which represented about 12% of our North American sales last quarter and is where hundreds of store locations for our retail partners are located as well.

While it's difficult to calculate a precise figure for these impacts, we estimate that the hurricanes impacted our sales in the quarter by approximately $10 million to $15 million, and the flow through of these sales to EBITDA would be in the range of $3 million to $5 million.

Interest expense was $32 million, an increase of $12 million from the third quarter last year, primarily due to the onetime $9 million of interest expense located in Latin America. Excluding the one-time item related to Latin America, interest expense in the quarter was $23 million.

Adjusted EPS for the quarter was $1 and excludes the items previously mentioned. Today, we revised our adjusted EBITDA guidance range of $435 million to $450 million, tightening up the range by raising the low end by $10 million. Commodity cost inflation continues to be a headwind to EBITDA, and was about $12 million in the third quarter.

We expect commodities to negatively impact us in the fourth quarter by approximately $10 million, and we continue headwinds to occur through the first half of next year. We have seen inflation across all categories including chemical, steel, lumber and foam.

Based on what we know today, and although things are always changing, we'd expect commodities to be a headwind of approximately $30 million in 2018. We will look at pricing opportunities for 2018 and will report back at our next earnings call. Now moving to the balance sheet and cash flow items.

We generated operating cash flow of $203 million in the first nine months of 2017 versus $110 million in the same period last year. As a reminder, we put on deposit $92 million for the Danish tax matter in the third quarter of last year.

In the third quarter, we generated a robust $110 million of free cash flow, and our year-to-date free cash flow is essentially flat versus the prior year after excluding last year's Danish tax payment. We consider this noteworthy given the significant events the team has faced this year.

Cash cycle improved six days compared to the third quarter of 2016. We expect continued improvement in our cash cycle as we transition away from Mattress Firm, which negatively impacted our working capital. In addition, as our direct business grows, this will also benefit our cash cycle because it is working capital light.

We also expect our ROIC to continue to improve over time as a result of lower working capital required in our North American distribution model. At the end of the third quarter, our net debt was $1.8 billion. Before turning the call back over to Scott, I wanted to flag a few items for modeling purposes.

For the full-year 2017, we expect adjusted D&A to be $105 million; CapEx of $60 million to $70 million; adjusted interest expense of $90 million; adjusted tax rate of 32% and the share count to be 55 million. As a reminder, we are a full U.S.

taxpayer, so to the extent that corporate tax reform is passed later this year, we would expect our tax rate to come down. And, now, I'll turn the call back over to Scott..

Thank you, Bhaskar. Great job. Turning to our long-term corporate initiatives. First initiative, develop the most innovative bedding products in all the markets we serve. As we are approaching the end of 2017, the team is aggressively working towards 2018.

We've not yet announced the details about the products that we'll be launching, but I can tell you that 2018 will be an exciting year for both Sealy and for Tempur-Pedic in North America.

Within Sealy, we'll be completing the master brand line by launching a new hybrid line, which will bring together the best of both innerspring and foam materials with a striking look and feel. The big news of the year will be the replacement of the entire North American Tempur-Pedic line starting in 2018.

We're following the same winning strategy we implemented in our prior launches for Stearns & Foster 2016 and Sealy in 2017, investing heavily in the products with consumer-desired innovation and support with new products with great service and compelling marketing.

We'll be providing our Tempur-Pedic retailers with a significant competitive product advantage, both in features and customer value. This will be the first new formulation of Tempur-Pedic material since 2010 and only the fourth in the history of the company.

Feedback from some of our key retail partners who have experienced the product has been overwhelmingly positive. We're very excited to once again lead the way in offering life-changing sleep to consumers. Our retail partners understand that providing customers with real value at a higher ASP is essential to growing their profitability.

As one of the world's leading premier bedding manufacturers, we are uniquely positioned to help our retail partners achieve success. The second long-term initiative is to invest significant marketing dollars to promote our worldwide brands.

Direct advertising spend in North America was up again as a percentage of sales compared to the third quarter last year. In addition, to a higher level of spend, we've also increased our allocation to digital media to more effectively engage with our consumer, and we have helped our retail partners improve their own digital marketing.

We want to be where every consumer is digesting media. While our increase in advertising investment has been a headwind to our operating margin, we believe this is the fuel to elevate our brands around the world and support our North American retailers through this critical time period.

The third long term initiative is to expand North American margins, while executing our sales growth strategy. Our long-term focus on expense management is highlighted in the quarterly result as North American margins were stable as compared to this time last year even as we worked through this transformational period.

At the same time, as the premier brand leader, we are committed to energizing and growing market share with wholesale partners and through our direct channels. You should expect we will maintain our focus on margin while we simultaneously drive our sales recapture efforts.

The last initiative is to optimize worldwide distribution to make sure our products are properly represented in all channels. We continue to expect physical retail to be the dominant way customers will want to purchase our products, and our core distribution methodology will continue to be our partnerships with quality third-party retailers.

At the same time, we need to be where the customer wants to shop. So we must continue to drive our balanced omni-channel strategy adapting to consumers' evolving shopping preferences. In closing, despite somewhat muted sales environment, we feel good about the quarter and our long-term trajectory of the business.

On quality, on time with winning product is the winning formula.

Operator, will you please open the call up for questions?.

Certainly. And our first questioner for today is from the line of William Reuter with Bank of America. Please go ahead, sir..

Hey, guys. I just wanted to start talking a little bit about how you're thinking about the additional input costs with regard to next year. You mentioned that you may have some conversations with retailers regarding price increases.

Can you talk a little bit about what you're expecting to do there and how you'll deal with those costs?.

Sure. Thank you for your question. Clearly, in the prepared remarks, we called out commodities as the headwind in the third quarter, an expected headwind in the fourth quarter, and it's quite frankly an expected headwind into 2018. As you know, historically we've passed on the majority of those kind of cost to the customer.

We're continuing to look at that and we'll look at the market conditions and look at what we think the future commodity prices are going to be and make some decision in the fourth quarter, and work with our retail partners during that period or maybe early first quarter..

Okay. And then just as a follow-up, you mentioned that you will consider returning to more shareholder-friendly activities next year.

Can you talk about how you guys will view that in light of your leverage target? I guess what we should be thinking about in terms of what we need to see before you guys will return to some of those activities?.

Sure. First of all, we always like to be shareholder friendly. So we think we had some shareholder-friendly activities this year also. But I understand what you're talking about. Look, we've been very clear from the beginning that our target was 3.5 times from a EBITDA standpoint for debt. We got a little bit over that and we're working it down.

And I think we're at 3.7 times as we've reported. We'll get back in line. They will continue to do the strategy that we talked about originally, which is the business gets the first call on the capital. And if the business can't use the capital, then we will distribute it back to the shareholders. Thank you for your questions..

Thank you..

Thank you. And our next question comes from the line of Bob Drbul with Guggenheim Securities..

Hi and good morning..

Good morning..

I was just wondering on the Internet business and the online business, where do you see that shaking out this year? I think for the industry, and I guess as you look at your business, can you talk around what that is doing to pricing in both brands of your business?.

Sure. There's quite a bit in that question. Let me kind of unpack it just a little bit. First of all, we obviously got a pretty robust business at tempur.com. We see that business continuing to grow. I should point out that on our online business, this quarter, our margins grew again this quarter.

And I make that point because we're not overspending on customer acquisition cost. We're simply taking our fair share of the marketplace. But I would expect, over time, and I'm not going to say the whole direct business and count the stores, we might grow on Tempur to 25% of the Tempur business in North America.

When you look across the board in the web business, you have to kind of break it and talk to the whole web business. Some people get confused and just talk about bed-in-the-box, and bed-in-the-box is really just a subcategory of web business. So, when I talk about it, I'm really talking about the entire web business.

We see quite a few of our retail customers having great success in their web business, and we're participating in that success. We also see the bed-in-the-box companies continuing to be in the marketplace. Their growth looks like it has slowed, but we can't confirm that because none of them are public.

But we expect overall web business in bedding certainly is going to probably increase faster than store fronts..

Thank you. And our next question comes from the line of Robert Friedner with Piper Jaffray..

Hi, guys. Thanks for taking my question. Just wanted to talk a little more about the sales and recapture trends. Looking at the quarter minus the hurricanes, it seems like non-Mattress Firm sales were up around mid-high-teens. It seems like a little slowdown from the implied growth coming out of June.

So, I'm wondering, what was the tone in business like during the quarter? Do you feel like you're gaining doors and slots either on the Tempur Sealy side? And then, finally, if you could just discuss some of those same business and recapture trends running in Q4 that would be great. Thank you..

Okay. Let me see if I can do some of that off the top of my head, and I probably might have a couple of numbers a tad off and, Bhaskar, correct me if I'm wrong. But, look, we exited the second quarter with expectations, I remember somewhere around 17%. We delivered 10% today.

I think if you adjust it for the hurricane, give us a couple of points for the hurricane, give us about 4 points for one department store that had a significant decline in sales, although our balance of share did not decrease.

I think that we've kind of reconciled what I'll call a 16% growth rate today in the third quarter when we're expecting something in excess of 17%. So, we're probably 2% or 3% below where we exited the second quarter. Now, the obvious point is why, and we don't know yet whether that was market conditions.

Overall, it takes us, I don't know, 45 days after we report to get all the industry data we need. On early indications, what we've been able to look at so far, it would look like the industry was not that robust in the third quarter, and then our performance will ultimately look very strong relative to others in the sector.

When you look at post quarter end and going into the fourth quarter, I got to break it up a little bit. Let's do North America first. Overall, North America trends going into the fourth quarter, I would say, were similar to the third quarter from a wholesale standpoint.

When you look at the direct business, primarily the web business, which grew at 200% in the third quarter, we are going to start comping against some tougher comps starting in the fourth quarter. So I would expect the web business, although very robust, to be less than the 200% that we reported in the third quarter. Turning to International.

International has generally been in the fourth quarter similar to the third quarter, with a little bit of headwind from the UK – I'll call that Brexit. And then Germany has been a tad bit more competitive..

Thank you. And our next question comes from the line of Michael Lasser with UBS..

Good morning. This is Atul Maheswari filling in for Mike Lasser. Thanks a lot for taking our questions.

So of the department store, of that one department store where you saw some headwinds this quarter, is that going to be a headwind that will persist going forward, or do you think that was just a one-quarter event?.

Yeah. First of all, I always hate to talk about a customer, but in this case, the decline was so large, and they were a large customer. It's impossible to understand the overall trend of our business without calling out the one customer that has some well-publicized issues.

You never know what the future is, but my expectation is that that will continue to be a headwind going forward from that customer. I think one of the key points is is that our balance of share has not changed in that customer; it's the customer's overall sales trends have changed significantly..

Okay. Thank you. And just the second one on the web business.

Can you quantify how much of the growth is due to Cocoon and how much of it is due to the Tempur-Pedic branded products?.

No. We usually don't – we don't split that out. What I would tell you is that we're very happy with both brands, Tempur at the high-end and then Cocoon, which is a true bed-in-the-box, at the lower end or mid-price range. And both brands are doing what we expected them to do and consistent with our strategy..

Okay. Thank you..

Thank you. Our next question comes from the line of John Baugh with Stifel..

Good morning. Thanks for taking my question. I was curious, and I know you don't want to give 2018 guidance, but a significant re-launch of Tempur.

Will it be the normal cadence where in Q1 you sell off some floor models or whatever at discounts, or your retailers do, and then are there sample sales that muck up the margin a little in Q2? Any color around a significant new launch. Thank you..

Sure. Sure. Appreciate your question and, look, we called out what we're doing in 2018 a little early. Obviously, you're experienced in this because you know these major launches kind of whipsaw the numbers quite a bit. Look, this is a major launch. This is every SKU in Tempur. This is significant. This is expensive.

And we believe it sets us up for the future in a great way. I mean, this is not a minor launch. It's probably 30,000 plus beds.

If you go back to Oslo and use Oslo (38:34) as kind of your thinking, it's going to take us four or five quarters to roll through the launch, some of that timing will be dependent on our retail partners and what's best for them.

So, I can't give you very much from a granular standpoint, but I would say, starting late first quarter, certainly in the second quarter you should expect four or five quarters worth of significant Tempur launch..

The one thing I would want to highlight is when one thinks about 2018, got to keep 2017 in perspective in that from a Tempur side, we did not have any significant launches..

Good point..

Thank you. Our next question comes from the line of Keith Hughes with SunTrust..

Thank you.

I guess building on that last question, will you be discontinuing the large portion of the current Tempur line or is this going to be a large launch in addition to the current line?.

No. You should think of this as a replacement and an enhancement to the current line..

So, most....

So, there will be quite a few floor models that will need to be sold off..

Thank you. And our next question comes from the line of Brad Thomas with KeyBanc..

Yes. Thanks. Good morning. Scott, I was hoping to ask about just channels of distribution, your customer base more broadly.

In light of your references in one department store this quarter, and I guess the way the media is kind of dubbing the world being in a retail apocalypse, could you just give us an update on what your distribution base looks like today, the health of those customers, and how you see that evolving going forward?.

Sure. Great question. I think the media has missed some points when it comes to the retail footprint. There's no question retail has some headwinds, but we have a lot of retailers who are really winning. And the formula of every retailer that I see in bedding that's winning is really focused on a few things.

One is, they're leaning into high ASP products and that usually means Tempur. They're very focused on the customer experience and the ease of shopping. They're driving higher closing rates to the customers that come in because the customers that come in are more educated and qualified and ready to purchase.

They're grabbing their fair share of online, and in fact, we're helping them do that with a program we call Digital Edge. We think that that's critical for their success. And they have a balanced advertising budget that includes not just traditional advertising but digital.

So, although I think there will be winners and losers in retail and you're going to continue to see some change in the distribution, we have quite a few retailers who have leaned in to our products that are doing very well..

And if I could follow up, Scott. I know you referenced being in the early innings of recapturing the Tempur opportunity with Mattress Firm – from the exit of Mattress Firm.

Can you help think about how many of the doors you've actually really been able to address to the full extent? Or said in another way, how many contracts really haven't had a chance to roll over yet to give you more opportunity to gain floor space?.

Yeah. I'm going to do it kind of in general form. If you really look at what we've done so far, there really haven't been large door gains. I mean the Tempur-Pedic growth of 26% ex-Matt Firm, that's really on the velocity increases in slots.

We've talked about there are some entrepreneurs opening some new stores, that's taking a little bit longer than we thought. And I think, in 2018, we'll have some new doors open. Additionally, as you mentioned and we talked about in the prepared remarks, there are some contracts that slow down the pace of change.

And I think over the next six months, we'll be able to give you some more color on our success on those particular relationships..

Thank you. And our next question comes from the line of Curtis Nagle with Bank of America Merrill Lynch..

Great. Thanks very much for taking the question. So just, I guess, a quick clarification on where North America is running.

Scott, did you say around 16% going into 4Q, so adjusting out for that one big retailer and hurricane, or is it something else?.

Yeah. I think the 16% I was reconciling to was really reconciling the third quarter, and then I did say that we were running the same trends going into the fourth quarter. So, I guess you could make that intellectual jump, which would be fine.

I think the only thing else I should point out is, in the fourth quarter, October is the less robust month of the quarter, and the lion's share of the sales in the fourth quarter really come through the November-December timeframe. So, we started out well in the fourth quarter, but again, it's the smallest part of the quarter..

Thank you. And we have a follow-up question from the line of Keith Hughes with SunTrust..

Thank you. Just in terms of Tempur-Pedic sales, you've given us the growth rates non-Mattress Firm.

Can you give us just the total brand growth in the quarter?.

The total brand growth? No, we don't have that in front of us right now. So, I'm going to say no. What else can I give you? Guess we lost it. Okay.

Do we have another question, operator?.

That concludes our question-and-answer session. I'd like to hand things back for closing comments..

Thank you. To the 7,000-plus employees worldwide, thank you for what you do every day to make the company successful. To our retail partners, thank you for your outstanding representation of our brands. To our shareholders, lenders, thank you for your confidence in Tempur Sealy management. Operator, that ends the call. Thank you..

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a good day..