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Sleep Number Announces Fourth Quarter and Full Year 2023 Results

  • Fourth quarter net sales declined 14% versus the prior year with demand down low-single digits
  • Full year diluted loss per share of $0.68; full year “as adjusted” loss per share of $0.14, excluding $16 million of restructuring costs recorded in the fourth quarter
  • Reduced operating expenses by $85 million in 2023; expect a further expense reduction of $40 million to $45 million in 2024 for a two-year total reduction of approximately $130 million (before restructuring costs)
  • Expect 2024 adjusted EBITDA of $125 million to $145 million

Sleep Number Corporation (Nasdaq: SNBR) today reported results for the year ended December 30, 2023.

“While the consumer environment remains challenging for the mattress industry, our swift actions to improve demand and reduce costs allowed us to make better progress in the fourth quarter than we expected,” said Shelly Ibach, Chair, President and CEO. “Through broad-based restructuring actions to streamline our cost structure, restore margins and strengthen our balance sheet, we are transforming our operating model to improve our financial resilience and position our business for accelerating growth as the mattress industry demand environment improves. Importantly, our long-term opportunity remains intact as we lead through this transformation.”

Fourth Quarter Overview

  • Net sales decreased 14% to $430 million, with demand down low-single digits year-over-year
  • Gross margin of 56.6% was up 190 bp versus the prior year, primarily benefiting from pricing actions, easing commodity prices and operating cost reductions, partially offset by increased promotions
  • Operating expenses were reduced by $24 million to $247 million (before restructuring charges) compared with $271 million last year
  • Loss per diluted share of $1.12; “as adjusted” diluted loss per share of $0.58, excluding $16 million of restructuring costs recorded in the fourth quarter

Full Year Overview

  • Net sales decreased 11% to $1.89 billion in 2023
  • Gross margin increased to 57.7% of net sales, compared with 56.9% for the prior year, including the benefit of pricing actions, easing commodity prices and other cost reduction initiatives
  • Loss per diluted share of $0.68; “as adjusted” diluted loss per share of $0.14, excluding $16 million of restructuring costs recorded in the fourth quarter

Cash Flows and Liquidity Review

  • Net cash used in operating activities of $9 million, compared with $36 million of cash provided by operating activities last year
  • Leverage ratio of 4.1x EBITDAR at the end of the fourth quarter versus covenant maximum of 5.0x
  • Adjusted ROIC of 7.8% for the trailing twelve months

Business Restructuring Update

  • The company’s broad-based cost management initiatives are progressing as planned. Operating expenses were reduced by $85 million in 2023, with $40 million to $45 million of additional operating expense reductions planned for 2024
  • Reduced workforce to approximately 4,100 team members at end of 2023, 7% lower than 2019
  • Expect specific ongoing workstreams including product value engineering, service simplification, streamlining suppliers and reprioritizing spend to accelerate near-term growth and efficiency

Financial Outlook

The company expects mattress industry demand to remain pressured in 2024. Against this backdrop, the company expects adjusted EBITDA of $125 million to $145 million in 2024, with net sales down mid-single digits versus prior year on a low-single digit demand decline. The company expects approximately 100 basis points of gross margin rate improvement and $12 million of restructuring charges for the year. The company expects to generate $60 million to $80 million of free cash flow with capital expenditures of $30 million.

Conference Call Information

Management will host its regularly scheduled conference call to discuss the company’s results at 5 p.m. EST (4 p.m. CST; 2 p.m. PST) today. To access the webcast, please visit the investor relations area of the Sleep Number website at https://ir.sleepnumber.com. The webcast replay will remain available for approximately 60 days.

About Sleep Number Corporation

Sleep Number is a wellness technology company. We are guided by our purpose to improve the health and wellbeing of society through higher quality sleep; to date, our innovations have improved over 15 million lives. Our wellness technology platform helps solve sleep problems, whether it’s providing individualized temperature control for each sleeper through our Climate360® smart bed or applying our 24 billion hours of longitudinal sleep data and expertise to research with global institutions.

Our smart bed ecosystem drives best-in-class engagement through dynamic, adjustable, and effortless sleep with personalized digital sleep and health insights; our millions of Smart Sleepers are loyal brand advocates. And our almost 4,100 mission-driven team members passionately innovate to drive value creation through our vertically integrated business model, including our exclusive direct-to-consumer selling in over 650 stores and online.

To learn more about life-changing, individualized sleep, visit a Sleep Number store near you, our newsroom. and investor relations sites, or SleepNumber.com

Forward-looking Statements

Statements used in this news release relating to future plans, events, financial results or performance, such as the statement that the company is positioned for accelerating growth as the bedding industry demand environment improves and the company’s financial outlook, including the company’s expected adjusted EBITDA, in 2024 and future capital expenditures and operating expenses, are forward-looking statements subject to certain risks and uncertainties including, among others, changes in economic conditions and consumer sentiment and related impacts on discretionary consumer spending; increases in interest rates, which have increased the cost of servicing our indebtedness; availability of attractive and cost-effective consumer credit options; ability to achieve savings and efficiencies from cost savings plans related to operating model transformation and to avoid unexpected adverse effects; dependence on, and ability to maintain working relationships with key suppliers and third parties; fluctuations in commodity costs or third-party delivery or logistics costs and other inflationary pressures; risks inherent in global-sourcing activities, including tariffs, foreign regulation, geo-political turmoil, war, pandemics, labor challenges, foreign currency fluctuations, inflation, and climate or other disasters, and resulting supply shortages and production and delivery delays and disruptions; operating with minimal levels of inventory, which may leave us vulnerable to supply shortages; the effectiveness of our marketing strategy and promotional efforts; the execution of our Total Retail distribution strategy; ability to achieve and maintain high levels of product quality and to improve and expand the product line; ability to protect our technology, trademarks, and brand and the adequacy of our intellectual property rights; ability to effectively compete; risks of disruption in the operation of our facilities and operations, including manufacturing, assembly, distribution, logistics, field services, home delivery, headquarters, product development, retail or customer service operations; ability to comply with existing and changing government regulations and laws; pending or unforeseen litigation and the potential for associated adverse publicity; the adequacy of the company’s and third-party information systems and costs and disruptions related to upgrading or maintaining these systems; our ability to identify and withstand cyber threats that could compromise the security of our systems, result in a data breach or business disruption; risks associated with advancements in or adoption of artificial intelligence technologies; our ability, and the ability of our suppliers and vendors, to attract, retain and motivate qualified and effective personnel; the volatility of Sleep Number stock, our removal from various stock indices, and the potential negative effects of shareholder activism or of changes in coverage by securities analysts; environmental, social and governance risks, including increasing regulation and stakeholder expectations; and our ability to adapt to climate change and readiness for legal or regulatory responses thereto.​ Additional information concerning these and other risks and uncertainties is contained in the company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K and other periodic reports. We have no obligation to publicly update or revise any of these forward-looking statements.

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited – in thousands, except per share amounts)

 

 

Three Months Ended

 

December 30,

2023

 

% of

Net Sales

 

December 31,

2022

 

% of

Net Sales

Net sales

$

429,518

 

 

100.0

%

 

$

497,528

 

 

100.0

%

Cost of sales

 

186,609

 

 

43.4

%

 

 

225,562

 

 

45.3

%

Gross profit

 

242,909

 

 

56.6

%

 

 

271,966

 

 

54.7

%

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

198,032

 

 

46.1

%

 

 

219,224

 

 

44.1

%

General and administrative

 

35,477

 

 

8.3

%

 

 

37,217

 

 

7.5

%

Research and development

 

13,276

 

 

3.1

%

 

 

14,613

 

 

2.9

%

Restructuring costs

 

15,728

 

 

3.7

%

 

 

 

 

%

Total operating expenses

 

262,513

 

 

61.1

%

 

 

271,054

 

 

54.5

%

Operating (loss) income

 

(19,604

)

 

(4.6

%)

 

 

912

 

 

0.2

%

Interest expense, net

 

12,687

 

 

3.0

%

 

 

7,633

 

 

1.5

%

Loss before income taxes

 

(32,291

)

 

(7.5

%)

 

 

(6,721

)

 

(1.4

%)

Income tax benefit

 

(7,103

)

 

(1.7

%)

 

 

(1,291

)

 

(0.3

%)

Net loss

$

(25,188

)

 

(5.9

%)

 

$

(5,430

)

 

(1.1

%)

 

 

 

 

 

 

 

 

Net loss per share – basic

$

(1.12

)

 

 

 

$

(0.24

)

 

 

 

 

 

 

 

 

 

 

Net loss per share – diluted

$

(1.12

)

 

 

 

$

(0.24

)

 

 

 

 

 

 

 

 

 

 

Reconciliation of weighted-average shares outstanding:

Basic weighted-average shares outstanding

 

22,483

 

 

 

 

 

22,249

 

 

 

Dilutive effect of stock-based awards

 

 

 

 

 

 

 

 

 

Diluted weighted-average shares outstanding

 

22,483

 

 

 

 

 

22,249

 

 

 

 

For the three months ended December 30, 2023 and December 31, 2022, potentially dilutive stock-based awards have been excluded from the calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on our net loss per diluted share.

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Operations

(unaudited – in thousands, except per share amounts)

 

 

Twelve Months Ended

 

December 30,

2023

 

% of

Net Sales

 

December 31,

2022

 

% of

Net Sales

Net sales

$

1,887,482

 

 

100.0

%

 

$

2,114,297

 

100.0

%

Cost of sales

 

798,952

 

 

42.3

%

 

 

912,001

 

43.1

%

Gross profit

 

1,088,530

 

 

57.7

%

 

 

1,202,296

 

56.9

%

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

847,442

 

 

44.9

%

 

 

919,629

 

43.5

%

General and administrative

 

146,621

 

 

7.8

%

 

 

153,266

 

7.2

%

Research and development

 

55,797

 

 

3.0

%

 

 

61,521

 

2.9

%

Restructuring costs

 

15,728

 

 

0.8

%

 

 

 

%

Total operating expenses

 

1,065,588

 

 

56.5

%

 

 

1,134,416

 

53.7

%

Operating income

 

22,942

 

 

1.2

%

 

 

67,880

 

3.2

%

Interest expense, net

 

42,695

 

 

2.3

%

 

 

18,985

 

0.9

%

(Loss) income before income taxes

 

(19,753

)

 

(1.0

%)

 

 

48,895

 

2.3

%

Income tax (benefit) expense

 

(4,466

)

 

(0.2

%)

 

 

12,285

 

0.6

%

Net (loss) income

$

(15,287

)

 

(0.8

%)

 

$

36,610

 

1.7

%

 

 

 

 

 

 

 

 

Net (loss) income per share – basic

$

(0.68

)

 

 

 

$

1.63

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share – diluted

$

(0.68

)

 

 

 

$

1.60

 

 

 

 

 

 

 

 

 

 

Reconciliation of weighted-average shares outstanding:

Basic weighted-average shares outstanding

 

22,429

 

 

 

 

 

22,396

 

 

Dilutive effect of stock-based awards

 

 

 

 

 

 

456

 

 

Diluted weighted-average shares outstanding

 

22,429

 

 

 

 

 

22,852

 

 

 

For the year ended December 30, 2023, potentially dilutive stock-based awards have been excluded from the calculation of diluted weighted-average shares outstanding, as their inclusion would have had an anti-dilutive effect on our net loss per diluted share.

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(unaudited – in thousands, except per share amounts)

subject to reclassification

 

 

December 30,

2023

 

December 31,

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,539

 

 

$

1,792

 

Accounts receivable, net of allowances of $1,437 and $1,267, respectively

 

26,859

 

 

 

26,005

 

Inventories

 

115,433

 

 

 

114,034

 

Prepaid expenses

 

16,660

 

 

 

16,006

 

Other current assets

 

44,637

 

 

 

39,921

 

Total current assets

 

206,128

 

 

 

197,758

 

Non-current assets:

 

 

 

Property and equipment, net

 

179,503

 

 

 

200,605

 

Operating lease right-of-use assets

 

395,411

 

 

 

397,755

 

Goodwill and intangible assets, net

 

66,634

 

 

 

68,065

 

Deferred income taxes

 

20,253

 

 

 

7,958

 

Other non-current assets

 

82,951

 

 

 

81,795

 

Total assets

$

950,880

 

 

$

953,936

 

 

Liabilities and Shareholders’ Deficit

 

 

 

Current liabilities:

 

 

 

Borrowings under revolving credit facility

$

539,500

 

 

$

459,600

 

Accounts payable

 

135,901

 

 

 

176,207

 

Customer prepayments

 

49,143

 

 

 

73,181

 

Accrued sales returns

 

22,402

 

 

 

25,594

 

Compensation and benefits

 

28,273

 

 

 

31,291

 

Taxes and withholding

 

17,134

 

 

 

23,622

 

Operating lease liabilities

 

81,760

 

 

 

79,533

 

Other current liabilities

 

61,958

 

 

 

60,785

 

Total current liabilities

 

936,071

 

 

 

929,813

 

Non-current liabilities:

 

 

 

Operating lease liabilities

 

351,394

 

 

 

356,879

 

Other non-current liabilities

 

105,343

 

 

 

105,421

 

Total non-current liabilities

 

456,737

 

 

 

462,300

 

Total liabilities

 

1,392,808

 

 

 

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, 22,235 and 22,014 shares issued and outstanding, respectively

 

222

 

 

 

220

 

Additional paid-in capital

 

16,716

 

 

 

5,182

 

Accumulated deficit

 

(458,866

)

 

 

(443,579

)

Total shareholders’ deficit

 

(441,928

)

 

 

(438,177

)

Total liabilities and shareholders’ deficit

$

950,880

 

 

$

953,936

 

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited – in thousands)

subject to reclassification

 

 

Twelve Months Ended

 

December 30,

2023

 

December 31,

2022

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(15,287

)

 

$

36,610

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

74,043

 

 

 

67,401

 

Stock-based compensation

 

14,855

 

 

 

13,223

 

Net loss on disposals and impairments of assets

 

2,898

 

 

 

291

 

Deferred income taxes

 

(12,295

)

 

 

(8,646

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(854

)

 

 

(287

)

Inventories

 

(1,399

)

 

 

(11,560

)

Income taxes

 

(5,969

)

 

 

1,356

 

Prepaid expenses and other assets

 

(5,220

)

 

 

19,379

 

Accounts payable

 

(28,934

)

 

 

(4,743

)

Customer prepayments

 

(24,038

)

 

 

(56,318

)

Accrued compensation and benefits

 

(2,943

)

 

 

(19,821

)

Other taxes and withholding

 

(519

)

 

 

179

 

Other accruals and liabilities

 

(3,366

)

 

 

(926

)

Net cash (used in) provided by operating activities

 

(9,028

)

 

 

36,138

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(57,056

)

 

 

(69,454

)

Proceeds from sales of property and equipment

 

21

 

 

 

49

 

Issuance of notes receivable

 

(1,317

)

 

 

 

Investment in non-marketable equity securities

 

 

 

 

(1,202

)

Net cash used in investing activities

 

(58,352

)

 

 

(70,607

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Net increase in short-term borrowings

 

73,463

 

 

 

97,647

 

Repurchases of common stock

 

(3,747

)

 

 

(64,188

)

Proceeds from issuance of common stock

 

428

 

 

 

1,131

 

Debt issuance costs

 

(2,017

)

 

 

(718

)

Net cash provided by financing activities

 

68,127

 

 

 

33,872

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

747

 

 

 

(597

)

Cash and cash equivalents, at beginning of period

 

1,792

 

 

 

2,389

 

Cash and cash equivalents, at end of period

$

2,539

 

 

$

1,792

 

SLEEP NUMBER CORPORATION

AND SUBSIDIARIES

Supplemental Financial Information

(unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 30,

2023

 

December 31,

2022

 

December 30,

2023

 

December 31,

2022

Percent of sales:

 

 

 

 

 

 

 

Retail stores

 

85.9

%

 

 

84.8

%

 

 

86.8

%

 

 

86.3

%

Online, phone, chat and other

 

14.1

%

 

 

15.2

%

 

 

13.2

%

 

 

13.7

%

Total Company

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

Sales change rates:

 

 

 

 

 

 

 

Retail comparable-store sales

 

(14

%)

 

 

(3

%)

 

 

(12

%)

 

 

(8

%)

Online, phone and chat

 

(20

%)

 

 

10

%

 

 

(15

%)

 

 

4

%

Total Retail comparable sales change

 

(15

%)

 

 

(1

%)

 

 

(12

%)

 

 

(6

%)

Net opened/closed stores and other

 

1

%

 

 

2

%

 

 

1

%

 

 

3

%

Total Company

 

(14

%)

 

 

1

%

 

 

(11

%)

 

 

(3

%)

 

 

 

 

 

 

 

 

Stores open:

 

 

 

 

 

 

 

Beginning of period

 

678

 

 

 

662

 

 

 

670

 

 

 

648

 

Opened

 

9

 

 

 

14

 

 

 

36

 

 

 

49

 

Closed

 

(15

)

 

 

(6

)

 

 

(34

)

 

 

(27

)

End of period

 

672

 

 

 

670

 

 

 

672

 

 

 

670

 

 

 

 

 

 

 

 

 

Other metrics:

 

 

 

 

 

 

 

Average sales per store ($ in 000's) 1

$

2,853

 

 

$

3,281

 

 

 

 

 

Average sales per square foot 1

$

926

 

 

$

1,081

 

 

 

 

 

Stores > $2 million net sales 2

 

65

%

 

 

76

%

 

 

 

 

Stores > $3 million net sales 2

 

24

%

 

 

36

%

 

 

 

 

Average revenue per smart bed unit 3

$

5,541

 

 

$

5,361

 

 

$

5,755

 

 

$

5,403

 

1

Trailing twelve months Total Retail comparable sales per store open at least one year.

2

Trailing twelve months for stores open at least one year (excludes online, phone and chat sales).

3

Represents Total Retail (stores, online, phone and chat) net sales divided by Total Retail smart bed units.

SLEEP NUMBER CORPORATION AND SUBSIDIARIES

Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

(in thousands)

We define earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) as net income plus: income tax expense, interest expense, depreciation and amortization, stock-based compensation, restructuring costs and asset impairments. Management believes Adjusted EBITDA is a useful indicator of our financial performance and our ability to generate cash from operating activities. Our definition of Adjusted EBITDA may not be comparable to similarly titled definitions used by other companies. The table below reconciles Adjusted EBITDA, which is a non-GAAP financial measure, to the comparable GAAP financial measure:

 
 

 

Three Months Ended

 

Trailing Twelve Months Ended

 

December 30,

2023

 

December 31,

2022

 

December 30,

2023

 

December 31,

2022

Net (loss) income

$

(25,188

)

 

$

(5,430

)

 

$

(15,287

)

 

$

36,610

Income tax (benefit) expense

 

(7,103

)

 

 

(1,291

)

 

 

(4,466

)

 

 

12,285

Interest expense

 

12,687

 

 

 

7,633

 

 

 

42,695

 

 

 

18,985

Depreciation and amortization

 

17,984

 

 

 

17,843

 

 

 

72,479

 

 

 

66,626

Stock-based compensation

 

3,982

 

 

 

4,638

 

 

 

14,855

 

 

 

13,223

Restructuring costs 1

 

15,728

 

 

 

 

 

 

15,728

 

 

 

Asset impairments

 

198

 

 

 

17

 

 

 

672

 

 

 

295

Adjusted EBITDA

$

18,288

 

 

$

23,410

 

 

$

126,676

 

 

$

148,024

1

Represents costs related to business restructuring actions initiated in the fourth quarter of fiscal 2023.

Free Cash Flow

(in thousands)

 

 

Three Months Ended

 

Trailing Twelve Months Ended

 

December 30,

2023

 

December 31,

2022

 

December 30,

2023

 

December 31,

2022

Net cash (used in) provided by operating activities

$

(40,844

)

 

$

(43,984

)

 

$

(9,028

)

 

$

36,138

 

Subtract: Purchases of property and equipment

 

9,034

 

 

 

16,646

 

 

 

57,056

 

 

 

69,454

 

Free cash flow

$

(49,878

)

 

$

(60,630

)

 

$

(66,084

)

 

$

(33,316

)

 

Note - Our Adjusted EBITDA calculations and Free Cash Flow data are considered non-GAAP financial measures and are not in accordance with, or preferable to, "as reported," or 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.

GAAP - generally accepted accounting principles in the U.S.

SLEEP NUMBER CORPORATION AND SUBSIDIARIES

Calculation of Net Leverage Ratio under Revolving Credit Facility

(in thousands)

Our calculation of Net Leverage Ratio under Revolving Credit Facility was changed effective with the amendment of our credit facility on November 2, 2023. Prior to the amendment, the calculation included capitalized operating lease obligations based on a multiple of six times annual rent expense. The amendment replaced this line item with operating lease liabilities included in our financial statements under ASC 842. The calculations in accordance with the November 2, 2023 amendment are presented below. The prior year is presented in conformity with the November 2, 2023 amendment.

 

Trailing Twelve Months Ended

 

December 30,

2023

 

December 31,

2022

Borrowings under revolving credit facility

$

539,500

 

$

459,600

Outstanding letters of credit

 

7,147

 

 

5,947

Finance lease obligations

 

319

 

 

420

Consolidated funded indebtedness

$

546,966

 

$

465,967

Operating lease liabilities 1

 

433,154

 

 

436,412

Total debt including operating lease liabilities (a)

$

980,120

 

$

902,379

 

 

 

 

Adjusted EBITDA (see above)

$

126,676

 

$

148,024

Consolidated rent expense

 

113,801

 

 

110,657

Consolidated EBITDAR (b)

$

240,477

 

$

258,681

Net Leverage Ratio under revolving credit facility (a divided by b)

4.1 to 1.0

 

3.5 to 1.0

1

Reflects operating lease liabilities included in our financial statements under ASC 842. The prior period has been updated to reflect this calculation.

 

Note - Our Net Leverage Ratio under Revolving Credit Facility, Adjusted EBITDA and EBITDAR calculations are considered non-GAAP financial measures and are not in accordance with, or preferable to, "as reported," or 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.

GAAP - generally accepted accounting principles in the U.S.

SLEEP NUMBER CORPORATION AND SUBSIDIARIES

Calculation of Return on Invested Capital (Adjusted ROIC)

(in thousands)

Adjusted ROIC is a financial measure we use to determine how efficiently we deploy our capital. It quantifies the return we earn on our adjusted invested capital. Management believes Adjusted ROIC is also a useful metric for investors and financial analysts. We compute Adjusted ROIC as outlined below. Our definition and calculation of Adjusted ROIC may not be comparable to similarly titled definitions and calculations used by other companies. The tables below reconcile adjusted net operating profit after taxes (Adjusted NOPAT) and total adjusted invested capital, which are non-GAAP financial measures, to the comparable GAAP financial measures:

 

Trailing Twelve Months Ended

 

December 30,

2023

 

December 31,

2022

Adjusted net operating profit after taxes (Adjusted NOPAT)

 

 

 

Operating income

$

22,942

 

 

$

67,880

 

Add: Operating lease interest 1

 

27,777

 

 

 

25,912

 

Less: Income taxes 2

 

(11,851

)

 

 

(23,542

)

Adjusted NOPAT

$

38,868

 

 

$

70,250

 

 

 

 

 

Average adjusted invested capital

 

 

 

Total deficit

$

(441,928

)

 

$

(438,177

)

Add: Long-term debt 3

 

539,819

 

 

 

460,020

 

Add: Operating lease liabilities 4

 

433,154

 

 

 

436,412

 

Total adjusted invested capital at end of period

$

531,045

 

 

$

458,255

 

 

 

 

 

Average adjusted invested capital 5

$

496,612

 

 

$

400,038

 

 

 

 

 

Adjusted ROIC 6

 

7.8

%

 

 

17.6

%

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 23.4% and 25.1% for December 30, 2023 and December 31, 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.

 

GAAP - generally accepted accounting principles in the U.S.

 

SLEEP NUMBER CORPORATION AND SUBSIDIARIES

Reported to Adjusted Statements of Operations Data Reconciliation

(in thousands, except per share amounts)

 

 

Three Months Ended

 

December 30, 2023

 

December 31, 2022

 

 

 

 

 

 

 

 

As

Reported

 

Restructuring

Costs 1

 

As

Adjusted

 

As

Reported

Operating (loss) income

$

(19,604

)

 

$

15,728

 

$

(3,876

)

 

$

912

 

Interest expense, net

 

12,687

 

 

 

 

 

12,687

 

 

 

7,633

 

(Loss) income before income taxes

 

(32,291

)

 

 

15,728

 

 

(16,563

)

 

 

(6,721

)

Income tax (benefit) expense 2

 

(7,103

)

 

 

3,680

 

 

(3,423

)

 

 

(1,291

)

Net (loss) income

$

(25,188

)

 

$

12,048

 

$

(13,140

)

 

$

(5,430

)

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

 

Basic

$

(1.12

)

 

$

0.54

 

$

(0.58

)

 

$

(0.24

)

Diluted

$

(1.12

)

 

$

0.54

 

$

(0.58

)

 

$

(0.24

)

 

 

 

 

 

 

 

Basic Shares

 

22,483

 

 

 

22,483

 

 

22,483

 

 

 

22,249

 

Diluted Shares

 

22,483

 

 

 

22,483

 

 

22,483

 

 

 

22,249

 

 

 

Twelve Months Ended

 

December 30, 2023

 

December 31, 2022

 

 

 

 

 

 

 

As

Reported

Restructuring

Costs 1

As

Adjusted

 

As

Reported

Operating income

$

22,942

 

$

15,728

$

38,670

 

 

$

67,880

 

Interest expense, net

42,695

 

 

 

42,695

 

 

 

18,985

 

(Loss) income before income taxes

 

(19,753

)

 

15,728

 

(4,025

)

 

 

48,895

 

Income tax (benefit) expense 2

 

(4,466

)

 

3,680

 

(786

)

 

 

12,285

 

Net (loss) income

$

(15,287

)

$

12,048

$

(3,239

)

 

$

36,610

 

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

Basic

$

(0.68

)

$

0.54

$

(0.14

)

 

$

1.63

 

Diluted

$

(0.68

)

$

0.54

$

(0.14

)

 

$

1.60

 

 

 

 

 

 

 

Basic Shares

 

22,429

 

 

22,429

 

22,429

 

 

 

22,396

 

Diluted Shares

 

22,429

 

 

22,429

 

22,429

 

 

 

22,852

 

1

Represents costs related to business restructuring actions initiated in the fourth quarter of fiscal 2023.

2

Reflects annual effective income tax rate, before discrete adjustments, of 23.4%.

 

Note - Our "as adjusted" data is considered a non-GAAP financial measure and is not in accordance with, or preferable to, "as reported," or GAAP financial data. However, we are providing this information as we believe it facilitates year-over-year comparisons for investors and financial analysts.

GAAP - generally accepted accounting principles

 

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