Plenty of Bounce at Sealy: Fool by Numbers

• Email
• Share
• Print

On July 10, Sealy (NYSE: ZZ) announced second-quarter earnings for the period ended May 27.

• After posting nearly flat earnings in the second quarter last year, Sealy bounced back with a profit of $16.1 million, or $0.17 per share.
  
  
• Revenue rose 6.7% to $401.8 million, as sales volume soared 19.3%. But average unit selling prices sagged 10.6% in the quarter.
  
  
• Investors see little comfort in Sealy, which is currently rated a lowly one-star stock (out of a possible five) in Motley Fool CAPS, where more than half of those rating the company predict it will underperform the S&P 500.

(Figures in millions, except per-share data.)

Income Statement Highlights

	Q2 2007	Q2 2006	Change
Sales	$401.8	$376.7	6.7%
Net Profit	$16.1	$0.1	N/M*
EPS	$0.17	$0.0	N/M*
Diluted Shares	96.1	88.4	8.7%

*Not meaningful

Get back to basics with the income statement.

Margin Checkup

	Q2 2007	Q2 2006	Change*
Gross Margin	42.9%	44.7%	(1.8)
Operating Margin	3.4%	2.8%	0.7
Net Margin	4%	0%	4.0

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q2 2007	Q2 2006	Change
Cash + ST Invest.	$21.7	$24.2	(10.3%)
Accounts Rec.	$208.0	$184.1	13%
Inventory	$71.2	$67.8	5%

Liabilities	Q2 2007	Q2 2006	Change
Accounts Payable	$126.7	$108.9	16.3%
Long-Term Debt	$797.6	$806.9	(1.2%)

The balance sheet reflects the company's health.

Cash Flow Highlights

	YTD 2007	YTD 2006	Change
Cash from Ops	$22.5	($19.8)	N/A
Capital Expenditures*	$17.5	$15.6	12.1%
Free Cash Flow	$5.0	($35.4)	N/A

*Net of asset sales.

Free cash flow is a Fool's best friend.

Related Foolishness:

• The Outperform Case for Select Comfort
• Time to Sleep on Sealy
• Sealy's No Sleeper Yet

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Fool contributor Mike Cianciolo held no position in Sealy.