(Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT |
ITEM 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
ITEM 2.03 | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT |
ITEM 2.05 | COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES |
ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
Exhibit No. | Description of Exhibit | ||||
99.1 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SLEEP NUMBER CORPORATION | ||||||||||||||
(Registrant) | ||||||||||||||
Dated: November 7, 2023 | By: | /s/ Samuel R. Hellfeld | ||||||||||||
Name: | Samuel R. Hellfeld | |||||||||||||
Title: | Executive Vice President, Chief Legal and Risk Officer |
Three Months Ended | |||||||||||||||||||||||
September 30, 2023 | % of Net Sales | October 1, 2022 | % of Net Sales | ||||||||||||||||||||
Net sales | $ | 472,648 | 100.0 | % | $ | 540,566 | 100.0 | % | |||||||||||||||
Cost of sales | 201,537 | 42.6 | % | 237,479 | 43.9 | % | |||||||||||||||||
Gross profit | 271,111 | 57.4 | % | 303,087 | 56.1 | % | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Sales and marketing | 221,143 | 46.8 | % | 239,656 | 44.3 | % | |||||||||||||||||
General and administrative | 31,948 | 6.8 | % | 36,003 | 6.7 | % | |||||||||||||||||
Research and development | 12,633 | 2.7 | % | 14,786 | 2.7 | % | |||||||||||||||||
Total operating expenses | 265,724 | 56.2 | % | 290,445 | 53.7 | % | |||||||||||||||||
Operating income | 5,387 | 1.1 | % | 12,642 | 2.3 | % | |||||||||||||||||
Interest expense, net | 10,958 | 2.3 | % | 5,606 | 1.0 | % | |||||||||||||||||
(Loss) Income before income taxes | (5,571) | (1.2 | %) | 7,036 | 1.3 | % | |||||||||||||||||
Income tax (benefit) expense | (3,253) | (0.7 | %) | 2,003 | 0.4 | % | |||||||||||||||||
Net (loss) income | $ | (2,318) | (0.5 | %) | $ | 5,033 | 0.9 | % | |||||||||||||||
Net (loss) income per share – basic | $ | (0.10) | $ | 0.23 | |||||||||||||||||||
Net (loss) income per share – diluted | $ | (0.10) | $ | 0.22 | |||||||||||||||||||
Reconciliation of weighted-average shares outstanding: | |||||||||||||||||||||||
Basic weighted-average shares outstanding | 22,479 | 22,218 | |||||||||||||||||||||
Dilutive effect of stock-based awards | — | 355 | |||||||||||||||||||||
Diluted weighted-average shares outstanding | 22,479 | 22,573 |
Nine Months Ended | |||||||||||||||||||||||
September 30, 2023 | % of Net Sales | October 1, 2022 | % of Net Sales | ||||||||||||||||||||
Net sales | $ | 1,457,964 | 100.0 | % | $ | 1,616,769 | 100.0 | % | |||||||||||||||
Cost of sales | 612,343 | 42.0 | % | 686,439 | 42.5 | % | |||||||||||||||||
Gross profit | 845,621 | 58.0 | % | 930,330 | 57.5 | % | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Sales and marketing | 649,410 | 44.5 | % | 700,405 | 43.3 | % | |||||||||||||||||
General and administrative | 111,144 | 7.6 | % | 116,049 | 7.2 | % | |||||||||||||||||
Research and development | 42,521 | 2.9 | % | 46,908 | 2.9 | % | |||||||||||||||||
Total operating expenses | 803,075 | 55.1 | % | 863,362 | 53.4 | % | |||||||||||||||||
Operating income | 42,546 | 2.9 | % | 66,968 | 4.1 | % | |||||||||||||||||
Interest expense, net | 30,008 | 2.1 | % | 11,352 | 0.7 | % | |||||||||||||||||
Income before income taxes | 12,538 | 0.9 | % | 55,616 | 3.4 | % | |||||||||||||||||
Income tax expense | 2,637 | 0.2 | % | 13,576 | 0.8 | % | |||||||||||||||||
Net income | $ | 9,901 | 0.7 | % | $ | 42,040 | 2.6 | % | |||||||||||||||
Net income per share – basic | $ | 0.44 | $ | 1.87 | |||||||||||||||||||
Net income per share – diluted | $ | 0.44 | $ | 1.83 | |||||||||||||||||||
Reconciliation of weighted-average shares outstanding: | |||||||||||||||||||||||
Basic weighted-average shares outstanding | 22,412 | 22,444 | |||||||||||||||||||||
Dilutive effect of stock-based awards | 146 | 515 | |||||||||||||||||||||
Diluted weighted-average shares outstanding | 22,558 | 22,959 |
September 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 906 | $ | 1,792 | |||||||
Accounts receivable, net of allowances of $1,408 and $1,267, respectively | 18,631 | 26,005 | |||||||||
Inventories | 116,224 | 114,034 | |||||||||
Prepaid expenses | 21,076 | 16,006 | |||||||||
Other current assets | 41,230 | 39,921 | |||||||||
Total current assets | 198,067 | 197,758 | |||||||||
Non-current assets: | |||||||||||
Property and equipment, net | 190,707 | 200,605 | |||||||||
Operating lease right-of-use assets | 401,564 | 397,755 | |||||||||
Goodwill and intangible assets, net | 66,690 | 68,065 | |||||||||
Deferred income taxes | 21,391 | 7,958 | |||||||||
Other non-current assets | 82,616 | 81,795 | |||||||||
Total assets | $ | 961,035 | $ | 953,936 | |||||||
Liabilities and Shareholders’ Deficit | |||||||||||
Current liabilities: | |||||||||||
Borrowings under revolving credit facility | $ | 488,000 | $ | 459,600 | |||||||
Accounts payable | 168,883 | 176,207 | |||||||||
Customer prepayments | 45,902 | 73,181 | |||||||||
Accrued sales returns | 23,012 | 25,594 | |||||||||
Compensation and benefits | 24,281 | 31,291 | |||||||||
Taxes and withholding | 27,198 | 23,622 | |||||||||
Operating lease liabilities | 83,143 | 79,533 | |||||||||
Other current liabilities | 58,907 | 60,785 | |||||||||
Total current liabilities | 919,326 | 929,813 | |||||||||
Non-current liabilities: | |||||||||||
Operating lease liabilities | 356,579 | 356,879 | |||||||||
Other non-current liabilities | 105,817 | 105,421 | |||||||||
Total non-current liabilities | 462,396 | 462,300 | |||||||||
Total liabilities | 1,381,722 | 1,392,113 | |||||||||
Shareholders’ deficit: | |||||||||||
Undesignated preferred stock; 5,000 shares authorized, no shares issued and outstanding | — | — | |||||||||
Common stock, $0.01 par value; 142,500 shares authorized, 22,228 and 22,014 shares issued and outstanding, respectively | 222 | 220 | |||||||||
Additional paid-in capital | 12,769 | 5,182 | |||||||||
Accumulated deficit | (433,678) | (443,579) | |||||||||
Total shareholders’ deficit | (420,687) | (438,177) | |||||||||
Total liabilities and shareholders’ deficit | $ | 961,035 | $ | 953,936 |
Nine Months Ended | |||||||||||
September 30, 2023 | October 1, 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 9,901 | $ | 42,040 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 55,196 | 49,342 | |||||||||
Stock-based compensation | 10,872 | 8,585 | |||||||||
Net loss on disposals and impairments of assets | 464 | 274 | |||||||||
Deferred income taxes | (13,433) | (6,955) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 7,374 | (1,029) | |||||||||
Inventories | (2,190) | (11,080) | |||||||||
Income taxes | 3,571 | 4,530 | |||||||||
Prepaid expenses and other assets | (5,903) | 20,082 | |||||||||
Accounts payable | 5,199 | 28,889 | |||||||||
Customer prepayments | (27,279) | (34,225) | |||||||||
Accrued compensation and benefits | (6,923) | (23,735) | |||||||||
Other taxes and withholding | 5 | 4,744 | |||||||||
Other accruals and liabilities | (5,038) | (1,340) | |||||||||
Net cash provided by operating activities | 31,816 | 80,122 | |||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | (48,022) | (52,808) | |||||||||
Proceeds from sales of property and equipment | 10 | 49 | |||||||||
Issuance of notes receivable | (1,317) | — | |||||||||
Net cash used in investing activities | (49,329) | (52,759) | |||||||||
Cash flows from financing activities: | |||||||||||
Net increase in short-term borrowings | 20,334 | 34,781 | |||||||||
Repurchases of common stock | (3,711) | (64,141) | |||||||||
Proceeds from issuance of common stock | 428 | 998 | |||||||||
Debt issuance costs | (424) | (42) | |||||||||
Net cash provided by (used in) financing activities | 16,627 | (28,404) | |||||||||
Net decrease in cash and cash equivalents | (886) | (1,041) | |||||||||
Cash and cash equivalents, at beginning of period | 1,792 | 2,389 | |||||||||
Cash and cash equivalents, at end of period | $ | 906 | $ | 1,348 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2023 | October 1, 2022 | September 30, 2023 | October 1, 2022 | ||||||||||||||||||||
Percent of sales: | |||||||||||||||||||||||
Retail stores | 86.6 | % | 86.3 | % | 87.1 | % | 86.7 | % | |||||||||||||||
Online, phone, chat and other | 13.4 | % | 13.7 | % | 12.9 | % | 13.3 | % | |||||||||||||||
Total Company | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
Sales change rates: | |||||||||||||||||||||||
Retail comparable-store sales | (14 | %) | (21 | %) | (11 | %) | (10 | %) | |||||||||||||||
Online, phone and chat | (14 | %) | 0 | % | (13 | %) | 3 | % | |||||||||||||||
Total Retail comparable sales change | (14 | %) | (18 | %) | (11 | %) | (8 | %) | |||||||||||||||
Net opened/closed stores and other | 1 | % | 2 | % | 1 | % | 3 | % | |||||||||||||||
Total Company | (13 | %) | (16 | %) | (10 | %) | (5 | %) | |||||||||||||||
Stores open: | |||||||||||||||||||||||
Beginning of period | 672 | 659 | 670 | 648 | |||||||||||||||||||
Opened | 8 | 12 | 27 | 35 | |||||||||||||||||||
Closed | (2) | (9) | (19) | (21) | |||||||||||||||||||
End of period | 678 | 662 | 678 | 662 | |||||||||||||||||||
Other metrics: | |||||||||||||||||||||||
Average sales per store ($ in 000's) 1 | $ | 2,952 | $ | 3,302 | |||||||||||||||||||
Average sales per square foot 1 | $ | 963 | $ | 1,093 | |||||||||||||||||||
Stores > $2 million net sales 2 | 67 | % | 77 | % | |||||||||||||||||||
Stores > $3 million net sales 2 | 27 | % | 38 | % | |||||||||||||||||||
Average revenue per smart bed unit 3 | $ | 5,640 | $ | 5,083 | $ | 5,822 | $ | 5,416 |
Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
September 30, 2023 | October 1, 2022 | September 30, 2023 | October 1, 2022 | ||||||||||||||||||||
Net (loss) income | $ | (2,318) | $ | 5,033 | $ | 4,471 | $ | 53,181 | |||||||||||||||
Income tax (benefit) expense | (3,253) | 2,003 | 1,346 | 15,247 | |||||||||||||||||||
Interest expense | 10,958 | 5,606 | 37,641 | 13,196 | |||||||||||||||||||
Depreciation and amortization | 18,200 | 17,180 | 72,338 | 64,217 | |||||||||||||||||||
Stock-based compensation | 982 | 542 | 15,511 | 12,097 | |||||||||||||||||||
Asset impairments | 292 | 95 | 491 | 338 | |||||||||||||||||||
Adjusted EBITDA | $ | 24,861 | $ | 30,459 | $ | 131,798 | $ | 158,276 |
Three Months Ended | Trailing Twelve Months Ended | ||||||||||||||||||||||
September 30, 2023 | October 1, 2022 | September 30, 2023 | October 1, 2022 | ||||||||||||||||||||
Net cash provided by (used in) by operating activities | $ | 13,096 | $ | 51,431 | $ | (12,168) | $ | 87,448 | |||||||||||||||
Subtract: Purchases of property and equipment | 18,123 | 16,249 | 64,668 | 70,338 | |||||||||||||||||||
Free cash flow | $ | (5,027) | $ | 35,182 | $ | (76,836) | $ | 17,110 |
Trailing Twelve Months Ended | |||||||||||
September 30, 2023 | October 1, 2022 | ||||||||||
Borrowings under revolving credit facility | $ | 488,000 | $ | 406,300 | |||||||
Outstanding letters of credit | 7,147 | 5,947 | |||||||||
Finance lease obligations | 338 | 450 | |||||||||
Consolidated funded indebtedness | $ | 495,485 | $ | 412,697 | |||||||
Capitalized operating lease obligations 1 | 679,224 | 650,742 | |||||||||
Total debt including capitalized operating lease obligations (a) | $ | 1,174,709 | $ | 1,063,439 | |||||||
Adjusted EBITDA (see above) | $ | 131,798 | $ | 158,276 | |||||||
Consolidated rent expense | 113,204 | 108,457 | |||||||||
Consolidated EBITDAR (b) | $ | 245,002 | $ | 266,733 | |||||||
Net Leverage Ratio under revolving credit facility (a divided by b) | 4.8 to 1.0 | 4.0 to 1.0 |
Trailing Twelve Months Ended | |||||||||||
September 30, 2023 | October 1, 2022 | ||||||||||
Borrowings under revolving credit facility | $ | 488,000 | $ | 406,300 | |||||||
Outstanding letters of credit | 7,147 | 5,947 | |||||||||
Finance lease obligations | 338 | 450 | |||||||||
Consolidated funded indebtedness | $ | 495,485 | $ | 412,697 | |||||||
Operating lease liabilities 1 | 439,722 | 427,613 | |||||||||
Total debt including operating lease liabilities (a) | $ | 935,207 | $ | 840,310 | |||||||
Adjusted EBITDA (see above) | $ | 131,798 | $ | 158,276 | |||||||
Consolidated rent expense | 113,204 | 108,457 | |||||||||
Consolidated EBITDAR (b) | $ | 245,002 | $ | 266,733 | |||||||
Net Leverage Ratio under revolving credit facility (a divided by b) | 3.8 to 1.0 | 3.2 to 1.0 |
Trailing Twelve Months Ended | |||||||||||
September 30, 2023 | October 1, 2022 | ||||||||||
Adjusted net operating profit after taxes (Adjusted NOPAT) | |||||||||||
Operating income | $ | 43,458 | $ | 81,625 | |||||||
Add: Operating lease interest 1 | 27,497 | 25,419 | |||||||||
Less: Income taxes 2 | (1,168) | (24,306) | |||||||||
Adjusted NOPAT | $ | 69,787 | $ | 82,738 | |||||||
Average adjusted invested capital | |||||||||||
Total deficit | $ | (420,687) | $ | (437,471) | |||||||
Add: Long-term debt 3 | 488,338 | 406,750 | |||||||||
Add: Operating lease liabilities 4 | 439,722 | 427,613 | |||||||||
Total adjusted invested capital at end of period | $ | 507,373 | $ | 396,892 | |||||||
Average adjusted invested capital 5 | $ | 469,782 | $ | 371,674 | |||||||
Adjusted ROIC 6 | 14.9 | % | 22.3 | % |
1 | Represents the interest expense component of lease expense included in our financial statements under ASC 842, Leases. | ||||
2 | Reflects annual effective income tax rates, before discrete adjustments, of 1.6% and 22.7% for September 30, 2023 and October 1, 2022, respectively. | ||||
3 | Long-term debt includes existing finance lease liabilities. | ||||
4 | Reflects operating lease liabilities included in our financial statements under ASC 842. | ||||
5 | Average adjusted invested capital represents the average of the last five fiscal quarters' ending adjusted invested capital balances. | ||||
6 | Adjusted ROIC equals Adjusted NOPAT divided by average adjusted invested capital. | ||||
Note - the Company's adjusted ROIC calculation and data are considered non-GAAP financial measures and are not in accordance with, or preferable to, GAAP financial data. However, we are providing this information as we believe it facilitates analysis of the Company's financial performance by investors and financial analysts. The Company updated its Adjusted ROIC calculation effective beginning with the reporting period ended December 31, 2022, to reflect adjustments consistent with ASC 842. The prior period has been updated to reflect this calculation. | |||||
GAAP - generally accepted accounting principles in the U.S. | |||||
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Document and Entity Information |
Nov. 02, 2023 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | Nov. 02, 2023 |
Entity Registrant Name | SLEEP NUMBER CORP |
Entity Central Index Key | 0000827187 |
Amendment Flag | false |
Entity Incorporation, State or Country Code | MN |
Entity File Number | 000-25121 |
Entity Tax Identification Number | 41-1597886 |
Entity Address, Address Line One | 1001 Third Avenue South |
Entity Address, City or Town | Minneapolis |
Entity Address, State or Province | MN |
Entity Address, Postal Zip Code | 55404 |
City Area Code | 763 |
Local Phone Number | 551-7000 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, par value $0.01 per share |
Trading Symbol | SNBR |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |
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