Q2 2024 Sleep Number Corp Earnings Call Transcript
Key Points
- Sleep Number Corp (SNBR) achieved better-than-expected adjusted EBITDA for the first half of 2024, driven by sustainable improvements in their cost base.
- The company reduced operating expenses by $44 million year-over-year and generated $9 million of free cash flow, a $21 million improvement from last year.
- Gross margin rate expanded by 60 basis points year-over-year, with a target to approach 60% for the back half of the year.
- The introduction of the new Climate Cool Smart Bed is expected to contribute 20 to 30 basis points of accretion to the fourth quarter gross margin rate.
- Sleep Number Corp (SNBR) is on track with its 2024 financial targets, including adjusted EBITDA of $125 to $145 million and additional operating cost reductions of $40 to $45 million.
- Net sales for the second quarter were down 11% year-over-year, and the company faced a tougher sales environment than anticipated.
- The mattress industry demand environment remains challenging, with a notable decline in home sales and pressures on consumer purchasing power.
- The company expects demand in the back half of the year to be flat to down low single digits, a revision from their prior estimate of low single-digit growth.
- Operating expenses for the back half of the year are expected to be in line with the prior year's second half, indicating limited room for further cost reductions.
- Debt to EBITDA ratio was 4.4 times at the end of the second quarter, with a covenant maximum of 5.5 times, indicating high leverage.
Welcome to Sleep Number's Q2 2024 earnings conference call. (Operator Instructions) Today's call is being recorded. If anyone has any objections, you may disconnect at this time.
I would like to introduce Dave Schwantes, Vice President of Finance and Investor Relations. Thank you, Dave. You may begin.
Good afternoon and welcome to Sleep Number Corporation Second Quarter 2024 earnings conference call. Thank you for joining us. I am Dave Schwantes, Vice President of Finance and Investor Relations. With me today are Shelly Ibach, our Chair, President and CEO; and Francis Lee, our Chief Financial Officer. This telephone conference is being recorded and will be available on our website at sleepnumber.com.
Please refer to the details in our news release to access the replay, please also refer to our news release for a reconciliation of certain non-GAAP financial measures and supplemental financial information included in the news release or that may be discussed on
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