Tempur-Pedic Pillow R&D Pays Off: Fool by Numbers

On April 19, Tempur-Pedic (NYSE: TPX  ) released first-quarter earnings for the period ended March 31.

• Revenue rose by 16.4% to $226 million, driven by growth across all sectors, as well as strong domestic and international retail sales of 20% and 19%, respectively.
• The company will launch its SymphonyBed line next quarter after delaying the original launch date because of capacity constraints in U.S. stores. 
• Tempur-Pedic's renewed focus on pillows has produced some fluffy results, with sales improving over 22% year over year. With the company identifying several opportunities to increase pillow sales, it may use sales in this area to drive continued growth.
• Tempur-Pedic is a three-star stock in Motley Fool CAPS, our free interactive stock database.  Our CAPS community counts four sheep for Select Comfort (Nasdaq: SCSS  ) while they hit the snooze button on Sealy (NYSE: ZZ  ) with a one-star ranking.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q1 2007	Q1 2006	Change
Sales	$266.0	$228.6	16.4%
Net Profit	$29.8	$26.9	10.7%
EPS	$0.35	$0.29	20.7%
Diluted Shares	85.8	93.1	(7.9%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q1 2007	Q1 2006	Change*
	48.0%	48.7%	(0.7)
	20.2%	20.6%	(0.4)
	11.2%	11.8%	(0.6)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q1 2007	Q1 2006	Change
Cash + ST Invest.	$16.8	$13.2	27.3%
Accounts Rec.	$146.2	$122.6	19.2%
Inventory	$74.3	$78.2	(5.1%)

Liabilities	Q1 2007	Q1 2006	Change
Accounts Payable	$60.2	$37.1	62.5%
Long-Term Debt	$349.9	$371.8	(5.9%)

Learn the ways of the balance sheet.

Cash Flow Highlights

	2007	2006	Change
Cash From Ops.	$28.6	$51.6	(44.6%)
Capital Expenditures	$2.4	$9.3	(73.8%)
Free Cash Flow	$26.1	$42.3	(38.2%)

Related Foolishness:

• Tempur-Pedic's Comfy Quarter
• Tempur-Pedic Lays 2006 to Rest: Fool by Numbers
• The Best Small Cap for 2007: Tempur-Pedic

Select Comfort is a Hidden Gems recommendation.  A free 30-day trial will have your portfolio resting easy. 

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