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Sleep Number (SNBR)

Participants
David Schwantes VP of Finance, Investor Relations and Decision Support
Shelly Ibach President and CEO
David Callen EVP and CFO
Peter Keith Piper Sandler & Co.
Robert Griffin Raymond James & Associates, Inc.
Matthew McCartney Wedbush Securities Inc.
Atul Maheswari UBS
Bradley Thomas KeyBanc Capital Markets
Curtis Nagle Bank of America Merrill Lynch
Call transcript
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Operator

Welcome to Sleep Number's Q1 2022 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 objection, you may disconnect at this time. I would like to introduce Dave Schwantes, Vice President of Finance and Investor Relations. you. Thank

begin. may You

David Schwantes

Investor sleepnumber.com. welcome Please Callen, conference details also Sleep to to our financial will joining the just this fiscal at call. of Schwantes, a call. the or telephone financial and being Finance refer am and the our Shelly access to may is today quarter our conference Chief results Ibach, us. Corporation is release certain of call available Financial the news XXXX be supplemental of that for website Dave this President and of President earnings release The to Thank information and Vice and be With to news afternoon, primary on me our Number are in David the ended. the period CEO; on discuss first I included release replay. Relations. purpose non-GAAP our refer Good Please recorded you and This for reconciliation in measures news discussed Officer.

over in earnings forward-looking release and and commentary certain may uncertainties XX-K Shelly include detail of results The call filings are These Company's now for in in may a will and actual her forward-looking your statements outlined our vary questions our responses subject on our discussed risks to and to However, some to statements. number annual news with report the Form turn future periodic comments. other the SEC. materially. I

Shelly Ibach

the our having many XXXX I for devastating to war SleepIQ on was night. score to concern want that is Good My lives. Ukraine the afternoon, expressing XX by and first so quarter impact our call. earnings in welcome start last deep

the purpose society driven to wellbeing sleep. quality health are of We our and by higher through improve

complexity factors onset and and and while than business external safety innovating team, for pressures. actions years X As decisive dynamic this environment, relevance continuity. the ago, our near-term volatility. address focused Since ensuring of we on the our our broad primary focus relationships, have the serving to consumer of pandemic customers remain is and wellbeing elevated business always, In taking more deepening

highly engaged and are teams Our resilient.

advantages our the remain we our our and We cash steadfast to of commitment strong, long-term execution competitive have purpose generation and strategy. support to shareholder in liquidity creating Our are value. and fulfilling ample

consumer supply While the results pressures, in we was significantly expected by QX related be affected last constraints start cost to due below The year additionally and external to other performance and late war factors quarter. in pressures, inflationary combined with affected in beds. March, February including for demand broad-based in a of shopping Ukraine gas the in behavior smart prices sharp increase our

to financial are outlook This greater demand large to our advancements. keeping our service excess $X engaged as we single-digit highlight against the our from growth consumers benefit demand assumes earnings While backlog. X% share Reflecting risk backlog first and Number will flat bed mitigation we reduce million the range promptly were prioritize at declined benefits how stimulate under quarter. performance to X% low lower quarter will a macro for shortly. in of deliveries are Customer and leveraged to delivered was increase I David these preference of revising to that $X.XX. features a smart the for and of year of Demand important our year-over-year, XX% and led balance expected. down per net in the our results end elaborate guidance full EPS and performance and $X. sales for the line, the first plans Sleep was year the pressures, to XXXX on was quarter team backlog costs, our and strategic than for we $XXX high

inefficient this our our actions. advantage of effectively refine test, demand in are vertical and and planning, apply the we model levers We rapidly able our operational learn, are to consumers to marketplace. utilizing With model integrated engage

we and to outcomes. we even digital showing reallocating promotions and are result, are our adjusting media traffic As impactful a drive messaging, are website more media and investments digital Recent improved financing. changes

brand leadership the strength. our growth lifelong Our on remain and advocacy flywheel of sleepers smart based with relationships

to pursuit that highly We've passionate in I this Our and with shopping new and insiders in serve are reach our great their our as engaged environments. and pivoted and we behaviors. Sleep gain team brands. insights and continue have of our quickly adapted solutions confidence to tenacious consumer customers all respond Number changing

$XX media by In million addition and in reduce to immediately we planned quarter. other generating the spending demand tactics,

in to pursue demand to drive range broad a further We support additional of continue costs contingencies of scenarios. and adjust macro

fulfill to basis, continue [ph] to timely customers also on while our trust deploy creative and a selves demand loyalty. retaining We

shared constrain call, January impact we at year-end the during in in As delays that deliveries the of our high ship variant global earnings resulted end of line. Omicron our the

was fluid, time across global allocation remains expectations. line environment real to quarter These The challenged agility in inventories. first electronics require the with and business. For constant conditions with supply our and focus supply minimal our us overall, maintain

XX% control April, delay resulted a global a capacity, our in They supplier flagged which currently third in China's by For digital of system. chips in large tools example, affected firmness of tier bed are highly lockdown restrictive Shanghai. used in our a has from operating at smart COVID signal about

enable delivery While supply quickly entirely, us avoid align to with expected we discern our to vertically new adjust challenges. respond real integrated of timing bed us business business chip smart capabilities the immediately external this disturbance and to to our integrated digital times In not way, model able to customers and time receipt. visibility, enabled were our

demand, to competitive trust and significant generate retain love. As is This we a continue customer their brand can manage expectations a result, advantage. and

fundamental our efficiency our that experience. transition near-term to complexity and By inefficiencies. customer network. complete our have Our creating multiyear chain. responsive assembly to the expect XX% to to an we in This initiative completed nearly our outbound improving and migration manufacturing customers disruptions. challenges and customer year, speed to this overcoming We essential flexible are a build scalable, supply chain and is No of experience end of significant enterprise-wide of logistics agility prioritizes the external and is supply now

Our FlexFit wellness year. smart solutions innovative per benefits and restful with of increasing XXX are value. our to are XXX restful technology and more XX night, in consumers. bed relevance of sleep per gain to The benefiting continue using or sleep minutes up more hours Sleepers sleep almost sleep health from

findings We technology for polysomnography comparable also be of technology early is community with reputation. and and gold strengthens and our we platform and of are sleep that year, this significant to risk plan detection smart ClimateXXX our data beds. smart of bed milestone Last our smart most smart future share brand month to confirms the published XXX we that dynamic for exclusive monitoring. a the with validation long-term underscores could purposes implement recent This the the benefit greatest value bed this roadmap achieved newest Sleep in standard our used excited the study our line Later research introduction to subsequent and medical smart bed Number bed to to We Because XXX XXX consumers. Connected from our Health. tracking another on this reliability, measurement. new

our by elasticity network, disciplined we responsive managing needs health and we strengthening and more driven environment environment new challenging including Number's provide managing our While flexible price with capitalizing leadership to changing effectively sleep; promotional position; and science our innovations more certainly sleepers the and quality and an than that wellness the managing if introducing and with enterprise are advantages, while decisions. sleep metric in -- our is on sleep expected, the research long-term smart improve to rising completing highest sustaining digitization support experience; risk simultaneously and supply liquidity innovation, near-term external Sleep competitive intensity; and operating costs efficiency transition the and efforts value and proactively capital customer creating

to team's will in in our perseverance, unwavering commitment an lives improved. important building play and increasingly has wellbeing. health are resilience resulted smart a Our your where XX million bed your purpose And than future we role more overall and

our quarter Now, and first XXXX details the additional outlook performance for David provide year. remainder the will on of financial

David Callen

Shelly. Thanks, I'll on focus areas. Today, three

and First, we're our performance risks. offset factors and affecting pressures macro mitigating financial actions to results, taking

in and macro XXXX EPS importance taking the a to face flexibility. innovations maintain for $X our And and drivers maximum the environments. for supporting of revised while challenging actions third, given the adversity, $X, our underlying near-term dynamic long-term Second, guidance of assumptions review demand to and key of the consumer

confidence plastics. and year on Let's in and a to the the in macro flow the inflation $XX March. demand. has and adding the a with February XX, since QX been pressures that for food of -- in cost our inefficiencies led invasions caused input performance. in on like international commodities, of spikes risk approximately coupled in Ukraine, sanctions chips. petroleum, call of rapid additional and earnings fuel This, cost implications year-over-year January Russia's triggered derivative of and call, affected significant demand this Consumer resulted with impacted gas earnings demand commodities, has by day our changed start X% by after foam pressuring invasion our in million QX prices, uneven decline from of factors Omicron review This of

through supply confidence. and low events We inefficient geopolitical while behavior, in navigating input are the changes consumer of business higher managing and costs, challenges flow consumer

and our XXXX EPS have lowered we As guidance. demand a result, for our growth expectations

ever, and mission teams through However, to Sleep shareholder differentiated our is in creation improve value our highly than are long-term Number We to more relevant engaged lives. differentiated remain strategy. committed strategy highly our

first million sales X% prior down financial electronic supply $XXX review quarter quarter versus year let's were the net demand. Net lower-than-expected details. and and constrained first on Now of sales in the

of quarter, ARU largely which QX in increased demand, year. smart mix XX% in most as is these of more We metrics. the smart smart beds which delivered. This this Number profitable constraints prior $X,XXX, the delivered mix the XXX,XXX versus with in ARU of QX were financials supply seen ordered down Sleep down our in of dynamic the which demand, our meaningfully XX-point with prior versus call impacted backlog. ARU Contrast than was X%. in the our While measurements, a as is X% our the in which quarter, the of expected, beds nearly significantly That quarter undelivered we beds was the year swing

bringing supply chip by this the in operating since quarter versus most QX and points $X.XX environment. geopolitical cost-cutting prioritizing to the that our backlog, X% $XXX January deliveries challenges expenses demand Despite $XX $XXX from in EPS more of Pressures the the to adjustable of bases in fewer throughout net and expectations December. near During the a as to challenges the to fewer worsening million, million than XX% confidence events reflecting level QX in our spend actions, margin Still, in total by current curtailed by year backlog demand decline and approximately of basis prior growth due resulted we quarter the million equivalents pricing smart consumer macro fast-changing we low X%, $X.XX internal exceeded our quarter taken supply, causing was spend for loaded the face QX exceeded compared million. constraints. long-term leading point plans quarter, approximately for than gross XX% in delivered of while planned business prior date. the chip benefited March, of XXX to absorption were delivered sales added year negatively deliveries $X.XX. cost the driving efficiency with overhead of to annualized constrained impacted and XX.X% due in in increases, a of $XX the to about excess basis sales deliveries included year XXX and lower Constrained Omicron In absorption nearly the these QX operating on of drivers. increased profitable of beds quarter by March. actions increase

support initiatives. to responded conservative spending and macro by our plans changed and innovations, market the as have with we trimming environment continue expansion capital deployment our being We to support brand

this later the drive increase XX% teams is as and in to commitment R&D innovations our long-term to game-changing be evident create year in launched next. Our performance

new sleep future demand technology improve these expect supply using components. fewer by fuel chip solutions and and We to future newer

value efficiency Our digitization creation years shareholder superior ahead. differentiators, and lay network driving evolved in an logistic the the plus foundation for

is the operating current challenging. However, environment and dynamic

guidance we backlog pressures updated cost to of electronics lower continue demand, our supply. service Our additional and chase as reflects

low uneven inefficient commodity the a the to operating sales the level weekly supporting half of of our This of in flow The smart challenging backlog within inefficient to from $X for us our of low the offset particularly from a volume loading year range guidance. the and assumptions XXXX in profit key cost with flow constrict to of year. delayed be chip deliver quarter. and single-digit will based in service arising X lockdown will QX beds excess QX, supply double-digit to review delivery deliveries. EPS the the final pressures be due $X about In prevent the total, chips resulting flat net Let's Sufficient in weeks growth, profile, but the that to expected will portion in QX chips when to Shanghai of is growth fewer updated the by weeks the first supply demand on to we expect which partly much than balance deliveries. stronger X

to XX%. of with XX% result, to in As back XX% XX% half the a we gross to expect improvements QX now margin

in changes backlog year. Year-end than expected Xx $XXX to to generate debt is approximately be operations are XXXX leverage We working prior also and million less capital as from favorable of demand, cash in the expect EBITDA. approximately

in actively are risks our near-term the all opportunities value superior create control managing with financial We balance levers to long-term. to our

Our our and strategy approach to our quickly balance business maximum move to as flexibility strong. are fundamentals conditions is The change. of sheet preserve

drive as sleep through lines We please means to the quality improve Operator, proven questions. to value. create superior continue to for lives open shareholder the

Operator

Sandler. from with [Operator Instructions] line Peter Piper comes the Keith question Your first of

is line Your open.

Peter Keith

Hi. Good simplistic had Thank afternoon. I question QX on off, just the guess results. start a you. fairly To I

got supply offset. the worse it guidance out but an you supply sort fair you've I the EPS servicing Demand you figured as did been of sounded a March, as the expected. chain So, have amount, miss in played chain by like would but

was So, EPS what it reason was for the mid-February miss the -- I guess, provided. the when relative to

David Callen

war February demand that high in since increase end, things. December backlog Peter. we Thanks, beginning the the backlog -- couple March starting Ukraine. saw demand did the XX% what generate the and very with of in of XX the of change million less backlog ended really We we that to contributed One, associated That other skewed of -- our to in $XX the was at expected. factor was net quarter. than A the equivalent we the our excess the the sales up end and I highlighted, and that in was addition

Peter Keith

Okay.

next, just the guidance. maybe So on

with year. good implies and QX, single-digit you You for are were the March was calling for than X% a to flat remainder pretty demand February, it negative of worse the negative growth low of for But so I think X%.

for expecting would or So you balance where year why last you month the be demand to be of two? landed better the getting versus the

Shelly Ibach

Immediately Peter, for continue the improvements where experiencing were onset to inflation. took a to down progress to made year. as Yes. a of consumer weeks the evolving and around year this X% rapidly war. double And of were last challenged versus down you digits adjustments We’ve since thank the in changed the the response that prior consumer good questions trend demand. in advancements support March, following we marketplace. sales make of with marketplace prior included war, particular actions the had the result clarifying couple the of environment to consumers with we that to moved we And and

the the April So, taken to a based on balance year we’ve consumer guidance the response single-digit the seen size, we is and small sample feel actions of action. what but the low the is and growth of appropriate our for flat from we’ve to

Peter Keith

an follow-up positively consumers example could provide reacted Shelly, of taken here? you an to action you’ve where as a that, maybe explicit the

Shelly Ibach

well we extraordinary as a significant thing iterating yet premium but insiders of the And adjusting affected, did March. that from and of is our being testing see clearly month and as strength wanting less value. consumer one an Yes. amount the We throughout

a And productive there I’ve And good, the So, prior some given higher say activation consumer. for conversion, and strong the tactics, we that of strong is been the our media course, want play to I also this would some moving there in of And we’ve you the don't I the are share to color than been seeing tactics then, but adjustments. yet, conversion with in improvement best. reasons, value advancing the obviously, making marketplace. exactly in good adjustments premium specific of competitive better, we broadly then the media to that we’ve on the demand. year in course, more

Peter Keith

Okay. Very good. Thanks so much.

Shelly Ibach

bet. You

Operator

Your of next question James. comes from line the with Bobby Raymond Griffin

Your line is open.

Robert Griffin

Good afternoon, everybody. my for taking Thanks questions.

David Callen

Hey, Bobby.

Robert Griffin

top even first the to earnings guide with a line The pretty the I still other year. quickly service of earnings just the that wanted of over year the $XX going can excluding unchanged, of number know more big obviously, But I of there's plus in just to that stayed help little but buckets quarter backlog any we but me, the better. a to change excuse more understand million, demand. size of for out $X are commodities, change And bit the called for miss, cut driving us profitability? incremental you in big the you maybe for what's

David Callen

Bobby. sure, from and For was do perspective as you a softer QX Glad EPS to expected sales saw. it. we both net lower than

So that’s the contributing the year. to partly full in change

-- enough wouldn’t support actually the of benefit backlog net do low we year, lower will our whereas double-digit for demand previous but in use expect the P&L. over sales year, the that during growth to benefit to current were year also prior We help backlog the the expecting be high that the guidance, we we

There customers of million are that that cost arrive about. chips in when support of deliveries. to of expensive that to of we are You've terms the in that here it a inefficiencies and I the and the timing market That’s in. the expect we able kind is pressures business, of run the but in are bunch we prioritize highlighted $XX in way talked new that an second highlighted again the necessary are to appropriate the weekly delivery it's serving schedule quarter.

for of those the So all year. the thinking impacted in our balance

Robert Griffin

maybe understand back, double help difference in how profitability. versus digits sales mean, in us I I mean, still the guidance the net then And just prior up servicing I looking Okay. was drives the backlog report now. was the

getting the organic letting more You how just versus more end demand, the impacting up the flow backlog does than having are demand? backlog profitability but from --

David Callen

couple of double-digit first it's growth, points lower, lower, a a Well, few all. of points

down. the actual So, has come number

Robert Griffin

Okay.

David Callen

were talking than The we growth what Bobby. rate is about previously, lower

Robert Griffin

sense. makes Okay. That

two Okay. things I those was response, just looking can mean understand the okay. by at double-digit, different I plus but double-digit

David Callen

are They yes. range, the Yes. still

Robert Griffin

Yes.

[Indiscernible], in That range of follow-ups what then. lot two and Okay. margins XX-ish pressure that that. in the you But we a now we the mean what's the or pressure? range David. in few And to Shelly David, a in supply of will does Clearly, versus makes I view sense. the other kind going we does the XXXX? the launch big in your looking my -- temporary back? gross talking time XX%. as now, jump can I [indiscernible] sorry buckets, And XX% should is question this -- long-term are size can on then launch ClimateXXX But of then I on is about are to take this guess more that back essentially chain at numbers. gain delay what challenges second off. One, old maybe the about consider

David Callen

good. Very

Shelly Ibach

consumer. more This platform, XXX enables reduction in subsequent really to innovation on the us the important all response a getting of line. start the new move, and platform strategically for advanced semiconductor new move year new number for the remain late game-changing also as in is on strategically chips. moving and this fully Bobby, targeting with we for ClimateXXX then I expanded aspects, components an both ClimateXXX. will -- to this track a We of with It the to

innovations, a are are new innovations, So, with to of very there's stay moving point. we at track lot and on and working hard benefit to our we this to those

Robert Griffin

Shelly. Thank you,

David Callen

we identified adjustments the points. longer of this pressures headed about cost million million-ish question, about took that that great. annualized margin are of math, the and about alone the last about pressures, components to gross those then year. taken that we’ve on That We and cost are $XXX rate of date. this The where just and of thought -- XXX Bobby, fundamentally, how year $XXX by we pricing. And $XX pricing -- gross gross on the is to added million term. we seeing an But fundamental then pressures basis that incremental margin we -- And

think bucket, load our to timely. There inefficient. we to not delivery the the are it around way about buy market So level brokerage operations country And logistics temporary. XX% to permanent where our very the operations expediting costs components, very be to using something and and cost where That’s services can't can across business. would been find million, that’s and then country it -- within like manufacturing to the a and of home it things from is get of it of That’s getting components. expensive highly flow The structure. operations that $XXX as a you into that’s get a part uneven, customers that operations, you in of chips your is both our inefficient

We also and year. and time, getting initiatives as them take we quasi a ways an will to are this Things -- back call contributing into I is exit are find through permanent. those labor going believe well. our as so priority to quasi Over happen, to those gain rate us will even strategic the temporary like longer to elements. that the efficiencies XXs definitely major offset think, I And

Robert Griffin

appreciate Best I of luck. the details. David. you, Thank

David Callen

a Thanks Bobby. lot,

Operator

Seth Your question Wedbush Basham line of the next with Securities. from comes

open. is line Your

Matthew McCartney

-- couple Hi. This quick questions just Seth. Matt a is on McCartney for I’m of wondering just here.

personnel here that back suggest to this end slower much of and point. wondering year, then to room in expect have environment. you term? And should mind, as media buy at repurchases in With medium X.Xx seems at the this leverage also with to expense don’t stock advertising in we near last worsening the demand and managing on plan costs you how wondering are We a from

David Callen

advertising? want do handle the to Shelly, you

Shelly Ibach

media in of utilize to we first our differently environment. to And the testing We’ve course, around some to and have to be in. how demand more media pretty actions quarter decisively this here the aligning then, to ways, and rapidly good different Sure. in the for dollars productivity able are environment higher move solutions productive taken that found in actions

cutting combination also also to changing as but a shareholders. adjustments reallocating it's to So, we we our our then team back, and what the as well productive to And a continue members the where as both overall, doing of staffing our result -- more working are demand made ways. of to optimize for as

David Callen

toward six take just good. time and to not accelerate pandemic Very will able protect the a to business when we -- look Matt, I to back onset growth And we and -- XXXX. would to in with the at I been you the also on. And at actions acted have time go of rebound our to We the being add want did. in able how March not profitability remind back pace. to bias we done strategy at of subsequent was quarters the to have had we way that, and

the kind in game-changing the know approaching really that to smart similar way a situation that consumers beds. that are are Sleep and are our sense Number XXX current in we innovations We drawn of

to improve and we our And quality lot. have sleep mission want improved so, is a them to

to the invest near-term in to So, go our bias our there. growth future long-term to is and protect drivers and

layers year. progress as have the that as also we will contingency we actions through time, we same the of activate at needed So,

from whole we starts of demand part in demand is well. we as creation conversation well And all saw share an with cash As outcome comes repurchases business all leverage that tougher because that this -- of when March. cash a for as environment suspended The model. this it is

March In March, on digits. early -- in was double down fact, it

appropriate seeing And we We time. EBITDA $XXX leverage operations. Xx end we that an have that at million we the from metrics was are -- so response -- to the with year generate as to expecting cash about in we and said, were

on liquidity a amount of revolver. available have substantial We the

for that within guidance through room updated repurchases, is will there and as we so, share the we you And year. keep progress

Matthew McCartney

really That’s Thanks. helpful.

David Callen

bet. You

Operator

Atul comes from of UBS. Your next Maheswari question the line with

is line open. Your

Atul Maheswari

I here, the correct quarter. guys Good my had wrong but evening. I and taking demand for Thanks first lot think think mid-single-digit if you quarter-to-date questions. please a was around I’m reported up Dave, when me

you even would for really imply quarter down to worse. So March low was or down the end at X double-digit

So, was on where a, a basis? demand that estimate March right is a of

David Callen

Atul. Yes,

Let ended We with double-digit where me declines record March of that’s immediately had rate consumers. with set minus the invasion last pressure weeks, pretty quarter. the for Ukraine We of line and an and in straight. much following exit the finished couple X the the the just on of we

Atul Maheswari

Got it. tracking demand you a are basis? April on how And able far share in thus to you are

Shelly Ibach

balance well, Yes. period Atul, is we April an as is but for shift a guidance inclusive to the feel year really of the sample appropriate. small of with Easter our of flat low growth single-digit

Atul Maheswari

Okay.

is what's investment community for when question really key of in really to Number figure trying that follow-up is the Sleep then questions really peers one your the like a of floor or So, have for some folks my earnings. reasonable out

get macro but b, further do end and this slack right $X.XX, and assumed supply above backdrop then, expect this guidance, it to macro? for even in chain And built the now, what get So going the have how is with over cut lower uncertainty? we being you new assumed assumed the have not get an revised you stays suppliers few you some if the there in confidence slightly do have are you you that what seeing forward, basically, does your -- in Or your in flat up have So, improvement is? expectation quarters? to all the guidance question of of the next where the given demand

Shelly Ibach

the in of marketplace. necessary made Yes. We've a the to in on to growth the progress us progress single-digit in. year. We've And operate certainly, and rapidly balance have in even Well, environment challenges. overcome That the made gives our challenging for all we external finding this confidence demand. low been good recognize evolving that Atul, ways to is the working a flat

the war make less are environment. to period adjustments learn, onset we’ve forward to And QX a Memorial how have bigger events. And and of demand we it X And January. as a few the in viewed like late reach our we of Omicron that’s had able tactics activate the than months continue applying the we external new then, premium is and The looking Day really two test -- the this course, in the to weeks, of how we had much So are this had it. we And It move environment. forward. new and this to consumer to into in in be variant acute period February.

we So, delivered and down if you demand of first a in quarter. the X% --

So, the quarters, another we prolonged. acute But events quarter consider in year. we the of the as of balance thinking remainder environment start current to the do about two the expect don't within external

thus strong and based and and your overall timing loyal Clearly, our yet, brand delays this supply. the remain we’ve been returns part who about our of -- But vertical advantages we thinking have been have those continue and leadership The dealing in steady. strong, customers second we The business. pretty brand are to still outcomes very staying we are model. is drives navigate challenges steady the with although which, cancels sentiment of in how question the close with was and with been strong on outcome allocation, But some the the of for have far we different course, supply. are steady delays on year, inefficiencies been

So, for is allocation that the what the were year. this we in guidance given we contemplate

But are our recognize are fairly we in baking delays in wide guidance. not thus We than also and a that that. more there range

David Callen

well, a growth. add little is There's think combined our mid-single Atul, of stores expectations distribution, digits and type I add that bit. and as new on growth pricing another normally to new about way will would

thinking terms actually we're So, in having units, this last. about volumes negative lower this of unit than year

in results our for us helps helps And you something excess of million should mentioned the came significant the the the so net benefit -- And that's backlog with of our the we fact, be the the into stay equivalent of about coming with in with aware $XXX about in have then year. backlog. sales we us that past worth of. into that financial and steady, equivalent of year a year We've

long we the as well. supplies would able as that the need, performance -- have the through we get we are a that against for As as to backstop get year, year we as our

Atul Maheswari

all Got helpful. very it. That’s

on the round was amount one has of price pricing. can question When if increase, what increase please? taken, latest of share, the you and Just quick was the the

David Callen

Yes.

the -- we in QX year, took last was one it, last of very as The one. price sometime in middle But increases. worth we the of smaller one at annualized based taken a $XXX took we've million focused well October. about, call beginning So,

demand, call So, annualized new are it, it's being worth create course. of are as now about all actualized And in the total, million, of pricing, will those $XXX price we those those -- new increases. at

Atul Maheswari

much good very Thank rest Got it. the you luck year. and with of the

David Callen

Atul. Thanks,

Shelly Ibach

Thank you.

Operator

Your line next from question the Brad KeyBanc. comes of with Thomas

line open. is Your

Bradley Thomas

and David Shelly, [indiscernible] Hi Dave.

the seem stimulus think also big follow-up had to that's on all recent some how you the coincide much a you to more do at an chance payments. last months And weakness that you've with for does issue some for of been Just The you? where closely? a Have look trends. had year demand timing

David Callen

certainly just IRS. time got from -- lot like our checks when typically because they frame stimulus getting a in spike in to see Number not surrounding around customer, they're when bed, got a a And really big of their activity necessarily performance. see with of we frankly. There's tend we smart people Sleep don’t they're they're it our We a see to But didn't demographic like -- it's April check. it, hard When the discern, don’t somebody start that you telling benefit. refunds our and doing Well, those looked at we Brad. buying when comes issued,

Shelly Ibach

but was a what in that war. we perfectly the in see in the Brad, acute time was of and strongest also consumer it March. the the of And consumer very did April that correlation then with start improve the at showed up did the we progressed. change slightly see. consumer sentiment, in inflation sentiment And that numbers the that behavior could the And overall start

Bradley Thomas

helpful. That’s

rates a for late approval talk with rates the And little similar you a higher? change of of uptick the options you any financing that in in interest Synchrony. if seeing been bit financing different terms can in perhaps of along about interest being are may you Just anything and with change your there's vein, or the how of cost

David Callen

it's goes our financing obviously, costs up, as with -- share the go Fed our affect LIBOR Synchrony. mind Brad, Well, the certainly that on or up that will discount rate we

excuse And of a financing generally our timing manage bucket However, range the the accordingly. financing at look me, offerings terms offers. -- we and of and collective of have we promotions as in of wide a them tenure, XX-year

coming Synchrony have of and to relationship also with creative with pressures. ways are offset some We those great a up

any terms In or on impact seen approval either have we of either. to rate, not dollars yet changes

Shelly Ibach

I will one add Brad, thing. And more

in some as tool for dollars, very total our color, versus color bucket an a promotion our We year-over-year attract some than most conversion of March our different business, of similar and in which on total. bucket dollars competitors. is financing this was Just specific utilized

in offers, and our specific that so pretty look that learning the same. rapid and promotions the they one the that’s the and yet, that our And of testing different is but mind or adjusting than we advantages keep financing and model make So, we actually if year-over-year total referenced often. business look prior at of you year,

So little just a there. color additional

Bradley Thomas

Shelly. just me. one for helpful, very That’s one Maybe last

customer just get that the your doesn't now? are the you that industry to talk delays complexity long are much the pretty store have widely products the sales is you right demand have that With or When and at mean, available because sense the seeing, some I we while customers were today. doesn't that to wait want seeing we do pretty loss personnel, we really levels, still of destruction any your

Shelly Ibach

and question, we delivery delay then extend obviously, is and we being stayed weeks with Brad. that, X an the relationship did few shut down, were this Well, the we direct our if with with such consumer, X a And important when ago, to us weeks, close of to the the with to know model Shanghai asked X -- is to in chips these and day -- weeks of weeks And or leave airfreight X we yet X are weeks window through they China, probably we see to X when come airfreight. couple -- X to back make well, you the a signal this. X to weeks. we And adjustment very current [ph] and our when have The will closer moment weeks.

So, it quite fluctuate bit. does a

part, is For immediate we that a solution who's customer can the in. a need most closer in with service

there some of to X weeks, majority now, are shorter right the smart -- in beds delivery but X are I’m service closer our still to So, dates customers.

of have the team that customers' Our understanding a the do servicing they are customers relationship, lot we way them, need that great such we members our service to confidence developing job of that a needs in continuing and to.

Bradley Thomas

helpful. very Thank you, That’s Shelly.

Operator

next line of question Curtis Nagle the comes from Your Bank America. with of

is open. line Your

Curtis Nagle

Good Thanks. afternoon.

you on dig higher Just the tactics Could conversion guess, might Some, ordered it's drove a again conversion. question wanted that People on XQ. that? XX-point environment delivered or sales be the lower. talk a beds what little in are in on, worried price Like delta? delta I pricing or was think, or where higher in led I whatever to unit an new it about the to economy. given that surprising, between promotions a demand and the it's I guess

David Callen

Curtis. sure, our ARU For are And XX-point the in swing metrics. about you talking

I the in ARU. increase metrics the demand XX% decline the highlighted was X in the So, that nearly point versus delivered ARU

#X, our folks And as to delivered. And of longer the this embrace. Because of comes that wanting foot and and wait we warming consumers a get they adjustable come a excuse that so, had benefits benefits the time FlexFit with really what features to constraints willing QX, -- were quarter some the knew that they on is into with are our into period that for higher needed FlexFit we result, line. which that you're coming gamut seeing end me, other full chips base. of It's

was are happening. at value out end that’s shopping shopping And line. so want what's and the that higher of -- the Consumers that they're

Curtis Nagle

sure in the that because then want just [indiscernible] negative Okay. I it. And you make just understand [indiscernible] -- terms point, that’s I beds to of couldn't the deliver

beds Okay. between You with there's couldn't or why out I'm two? All Flex difference high-end figure deliver right. those [indiscernible]. the X just That’s to trying very

David Callen

were Yes, undelivered X% X% delivered down backlog. added million that’s our into sales down $XX we and our the worth the mean, exactly side. benefit At same of right. time, our was I units net ARU on

Curtis Nagle

for price called And don't Okay. commentary, guys just Understood. reach headwind little I thousands other focusing surprised of hear out a gas you dollars. many in or the quarter. I headwind And was as about your on to [indiscernible] some know, of potential a out a that higher

why be that. how for, sure just -- more would are headwind I I think we not guess, I [indiscernible] I square consumer? a premier

David Callen

and pump impact where highlighted a terms of they're One there they're of what on that in was remarks. Well, my are the the couple food elements I inflation prices. that seeing consumers, impact in and the in at seeing

the were And sentiment surveys was triggers them inflation I consumer that those out to as causing were that cautious. more that highlighted so, be called in

the gasoline have absolutely in our we so business. as for an in that side. prices for consumer sure cost cost saw March And we sentiment side, On input structure our

X,XXX our that that And component have vehicles fuel process. part is using smart are a to of that technicians customers' country around deliver home delivery to homes. We of course, the beds is

Curtis Nagle

Maybe Okay. I … But follow offline. will up

David Callen

missing Okay. Maybe I’m it.

to happy after. are talk we about So, it

Josh, questions? other Okay. any you are Operator, there?

Operator

We Yes. do have question. another

Bobby Raymond from question James. a Griffin have with We

line open. Your is

Robert Griffin

Thanks.

in sneak more. me Let one

more you it demand to guidance? the ended we X% Just to when tough. up quick dependent just where follow-up. the lower. are these are that cost or slightly things on now Dave, way, X% pretty another and the if down demand, guide to I kind end predicting demand guide also dependent bit that of of we hard back snapping XQ to Or drive Shelly side be hit of quarter said still about get would $X? is little trends, And flat in one can with the year enough below line $X understanding guess, predict? -- of to to we the do that demand right to more on and want we the assuming the go? Or guys -- is -- think kind you EPS we of a it But Is

David Callen

of to lot all. are drive use a to and going them levers are there we performance, Bobby,

some if of So, have expect, backlog obviously, lower demand that. than what is we we cushion to

also we what spending gamut do. control opportunity to business our will all those levers are the And We have within of the within the differently.

demand the get down, can we the still said digits, we to range. end So, yes, low of even is if guidance low think I believe you single

Robert Griffin

what That’s I you. was here very environment. luck helpful. in tough Exactly Thank Best a asking. of

David Callen

Bobby. a lot, Thanks

Operator

with Your comes next Sandler. question the Piper Keith of Peter line from

Your line is open.

Peter Keith

if follow-up Dave, on could Thanks. I that.

guidance include does the excess servicing backlog. significant So,

around land think of you $XXX the Is I -- excess right about it? midpoint would you're million backlog? servicing half guidance So, running it's for that of now. Where

David Callen

on. depends. It depends It

Shelly Ibach

Yes.

David Callen

it Peter, -- things so to demand Bobby, structure. -- I'm sorry, and depends -- our just different meaning a being could to but elusive, like I be said go of flow trying It ebb not depends from ways, cost can lot

It's will ebb challenging certainly supply. positive be sometimes. that can flow We and and shown it certainly

less modeling And in the include midpoint if of I to the helpful. call, that territory that double-digit that's the sense. the is that the the of get positive after help So, to that guidance, the midpoint of the Did make would you I for say, net year. in sales is seeing backlog total, -- we demand growth our use with would for year. can low which are

Peter Keith

difficult QX? I to Yes. right sales positive? we model are Maybe we have Are we I one How just think while one public in about now. last no for mean, should are a for idea. The we negative? are forum. us

David Callen

did Yes, It expect I QX. units you -- probably be good. I units in it, by, And Yes, in XXX,XXX very they to call to than agree. is up our we hard. -- less QX look, were

that higher to We QX. ARU XX said be on XX,XXX will know, based in to XXX,XXX it, we units significantly our call call comments the will I don't But earlier. -- it, do, XXX

that modeling, When will going bake have get our we of the chips then year be FlexFit QX is in that benefit so deliveries. of sales much XXXX remind needed than service to for we’ve thinking having in now QX. we bases, you had to into our and a we X that, adjustable your But of flip will backlog because as what that well. profitability that to So, our you this us normal and bigger

have than thought. you should you QX So, would higher model sales otherwise

Shelly Ibach

sales. net Per

David Callen

Per net sales.

Peter Keith

Thanks helpful. Very good. so Very much.

David Callen

You bet.

Shelly Ibach

you. Thank bet. You

David Callen

All right, Josh.

I takes to think us the end. that

Operator

no Yes, the back will you I for further there remarks. call to questions. closing turn are

David Schwantes

to today. quarter performance Thank XXXX with second in well dream joining our discussing forward you big. and look us We July. you for Sleep

Operator

today's concludes for This call. conference you Thank joining.

may You now disconnect.