Sleep Number Corporation (NASDAQ:SNBR) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 05:00 pm ET

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Sleep Number Corporation (NASDAQ:SNBR) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Welcome to Sleep Number's Q4 2018 Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. 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. You may begin.

Executive
Dave Schwantes

Good afternoon, and welcome to the Sleep Number Corporation fourth quarter 2018 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 President and CEO; and David Callen, our Senior Vice President and CFO. 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 this call.

The primary purpose of this call is to discuss the results of the fiscal period just ended. However, our commentary and responses to your questions may include certain forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties outlined in our earnings news release and discussed in some detail in our Annual Report on Form 10-K and other periodic filings with the SEC. The Company's actual future results may vary materially. Please also note that we have posted an updated investor presentation on our website at sleepnumber.com.

I will now turn the call over to Shelly for her comments.

Executive
Shelly R. Ibach

Thank you, Dave. Thank you for joining our 2018 earnings call. My average SleepIQ score is 82. Consumers are highly engaged with our purpose driven brand and responding strongly to our revolutionary 360 smart beds. The execution of our consumer innovation strategy has broadened our relevance as individuals increasingly understand the importance of quality sleep to their overall well being. Results for the fourth quarter included net sales growing 13% to $412 million, including 10% comp growth. Net operating profit increasing to $38 million and earnings per share increasing 108% to $0.81.

For the full year, net sales increased 6% to over $1.5 billion, including positive comp sales for the fifth consecutive year. Net operating profit increased to $92 million while absorbing approximately $16 million of transition impacts. And earnings per share increased 24% to $1.92 compared with $1.55 for 2017. Our record sales and EPS performance reflects the acceleration from our 360 smart beds.

In the second half of 2018, our adjusted net sales grew by 12% and adjusted earnings per share grew by 48%. The momentum in our business continues and we expect to generate full year earnings per diluted share of between $2.25 and $2.75 in 2019. Our strategic consistency, investments and fortitude over the past six years have focused on strengthening our competitive advantages, proprietary sleep innovations, exclusive distributions, and life long customer relationships, which work together