You, operator. Good morning, everyone, and thank you for participating in today's call. Joining me in our Lexington headquarters are Scott Thompson, Chairman, President and CEO and Bhaskar Rao, Executive Vice President and CFO. After prepared remarks, we will open the call for Q and A. Forward looking statements that we make during this call are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that these forward looking statements, including the company's expectations regarding sales, earnings, net income and adjusted EBITDA and anticipated performance for 2019 and subsequent periods involve uncertainties. Actual results may differ due to a variety of factors that could adversely affect the company's business. The factors that could cause actual results to differ materially from those identified include economic, regulatory, competitive, operating and other factors discussed in the press release issued today. These factors are also discussed in the company's SEC filings, including, but not limited to, annual reports on Form 10 ks and the company's quarterly reports on Form 10 Q under the headings Special Note Regarding Forward Looking Statements and or Risk Factors. Any forward looking statement speaks only as of the date on which it is made.
The company undertakes no obligation to update any forward looking statement. This morning's commentary will include non GAAP financial information. The press release contains reconciliations of this non GAAP financial information to the most directly comparable GAAP information, except as otherwise discussed in the press release, as well as information regarding the methodology used in our constant currency presentation. We have posted the press release on the company's investor website at investor. Tempersili.com and have also filed it with the SEC.
Our comments will supplement the detailed information provided in the press release. And now with that introduction, it is my pleasure to turn the call over to Scott.
Thank you, Aubrey. Good morning, and thank you for joining us on our 2019 Q2 earnings call. I'll start with comments on the quarter's operating performance, then Bhaskar will review our financial performance with you in more detail. Finally, I'll wrap up with our overview of our long term corporate initiatives. Our strong momentum from earlier this year continued into the Q2 and beyond.
In fact, from adjusted EBITDA perspective, the 2nd quarter was just short of our best second quarter in the company's history. For the Q2 2019, net sales increased double digits. Adjusted EBITDA grew 21% and adjusted EPS was $0.79 a share, a robust increase of 39%. The adjusted EPS growth was driven by growth in operations, not share repurchase. Our results have been propelled by our premium brands and our industry leading product quality and services, combined with our powerful worldwide omnichannel platform.
Now some highlights. First, we grew our relationships with existing third party retailers in North America. During the quarter, we grew North America wholesale channel by 7%, including significant growth from our Tempur Pedic brand, which has benefited from the strength of our new Tempur Breeze products. As a reminder, this is the 1st quarter that our full lineup of the new Tempur Pedic products were in market, and these new products continue to receive rave reviews on the basis of their innovation and product quality. Total North American Tempur Pedic sales grew 17% in the quarter and excluding floor models grew 30%.
Clearly, we are expanding the higher end mattress market and taking a good bit of market share. Sealy, including Stearns and Foster, continued to outperform our expectations during the quarter, growing 7% versus the Q2 last year. We were particularly pleased that the Sealy growth was broad based across all price points. The Sealy Hybrid continues to perform exceptionally well, even against very difficult comps, and our new Stearns and Foster line has exceeded our expectation and has been successful in driving average retail sales price. Perhaps the biggest positive inflection this quarter was Sealy's return to growth within the challenging sub-one thousand price point.
I believe Sealy's performance was driven by internal initiatives targeting new channels of distribution, market leading product quality and the recent favorable tariff rulings. We believe this momentum will continue. The second highlight is our global direct channel, which grew a robust 55% in the second quarter. In North America, our direct channel grew 78%, which was above our expectation. Excluding the recently acquired Sleep Outfitter business, North America direct channel grew a very robust 37% in the quarter.
This was driven by strong growth in both our e commerce business and our company owned stores. During the quarter, we opened 3 new Tempur Pedic stores, bringing our total to 47, and we expect to be approximately 60 by year end. In terms of our recent acquisition of Sleep Outfitters, I'm pleased to report the integration is complete, and the turnaround of that business is running a good bit ahead of plan. In addition to driving sales growth, our North America direct to consumer web team has continued to focus on marketing efficiencies, keeping our customer acquisition cost low, resulting in a very profitable business. This is the 2nd quarter in a row we have experienced declining customer acquisition cost and expanding profit margins.
The 3rd and last highlight I'd like to discuss is our record 2nd quarter gross profit margin. Our gross margin expanded over 200 basis points versus the same period last year. After several quarters of ongoing efforts to offset significant headwinds from commodities, launch costs and unfavorable merchandising mix, we are now reporting the positive impact of our efforts. Drivers of margin expansion are the completion of our Tempur Pedic product launch, all our price actions implemented in 2018 being fully set to market, our continued efficiency efforts and our expansion of our direct channel. One area that was a bit of a challenge during the quarter was international.
Although we experienced 7% net sales growth on a constant currency basis, this was slightly below our expectations. Our internal operations dealt with an unprecedented heat wave in Europe, uncertainty of Brexit, unrest in France and a slowing Asia business. I think all these items are industry or country specific issues. I believe our international team is performing well considering the environment. This quarter points out one of our strengths, diversity of operation, which mitigates regional issues and makes Tempur Sealy a stronger enterprise.
Let me save someone a question regarding current trends. The 3rd quarter from a sales perspective overall has started off well, with growth rates in North America being similar to the 2nd quarter and international a bit slower but in line with expectations. We're very pleased with our market position and our recent financial performance. It is interesting that this quarter is just short of our best second quarter in the company's history with or without Mattress Firm as a customer. As you know, we are now working on rolling out our full array of brands to Mattress Firm and expect to ship in the Q4 of 2019 through the Q1 of 2020.
We expect this incremental volume will fund increased advertising, improve operating leverage and enhance our relationship with our component suppliers all over the world. Now I'll turn the call over to Bhaskar to review our financial results with you in more detail.
Before going into the details, a few highlights from the Q2. Global net sales were $723,000,000 an increase of 10%. Gross margin was 43.4%. Adjusted operating margin improved 200 basis points to 11.6%. Adjusted EBITDA increased 21 percent to $213,000,000 And adjusted earnings per share for the quarter was $0.79 an increase of 39%.
Turning to North America. First, I would like to discuss some financial reporting items. As previously announced, we have acquired Sleep Outfitters, which was fully integrated into North American direct channel beginning in the second quarter. Sleep Outfitters had historically been one of our part of our wholesale channel since they were previously a third party retailer. Accordingly, this impacts our growth rates within both channels.
In addition, our GAAP operating income in North America was impacted by changes from post acquisition restructuring activities and professional fees. We do not expect further pro form a charges related to Sleep Outfitters. North American net sales increased 11%. On a reported basis, the North American wholesale channel increased 7% and the direct channel increased 78%. Excluding Sleep Outfitters, the wholesale channel increased 10%.
North American gross profit margin improved 230 basis points to 40.8% as compared to the prior year. This was primarily driven by favorable brand and Tempur merchandising mix, pricing benefits and decreased floor model expenses. This was partially offset by incremental overtime at our plants due to the higher than expected demand for Sealy products. Going forward, we expect Tempur merchandising mix to continue to be favorable, marking the end of negative mix, which we had experienced in 2018 due to the phased launch. North American adjusted operating margin improved 170 basis points to 13.9% as compared to the prior year.
This was primarily driven by improved gross margins and slight deleverage to operating expenses from the integration of Sleep Outfitters. Turning to international. Net sales increased 2% on a reported basis. On a constant currency basis, international net sales increased 7%. The direct channel increased a robust 32% and the wholesale channel increased slightly.
As Scott previously mentioned, we faced a challenging environment across a handful of countries during the Q2. We anticipate these headwinds will continue into the back half of the year. Our international gross margin improved 200 basis points to 54.5% as compared to the prior year. This was primarily driven by foreign exchange country mix. International operating margin improved 190 basis points to 20.3%.
This was principally driven by improvement in gross margin and advertising expense leverage. Turning to our company's global performance. Adjusted operating margin was $84,000,000 and adjusted EBITDA was $113,000,000 up $20,000,000 from last year. The increase in adjusted EBITDA was primarily driven by pricing benefits, higher volume, favorable floor model expenses and product mix. This was partially offset by higher variable compensation, innovation investments and headwinds as we turn around the Sleep Outfitters business.
The adjusted tax rate was 28%, interest expense was $23,000,000 and adjusted EPS for the quarter was $0.79 Now moving to the balance sheet and cash flow items. We generated operating cash flow from continuing operations of $41,000,000 in the Q2. The cash cycle was unfavorable by 7 days compared to the Q2 of 2018. This was principally driven by the timing of cash payments. At the end of the 2nd quarter, net debt was $1,600,000,000 down slightly from the Q1 of 2019.
Our leverage ratio was 3.65 times down versus the prior quarter. Turning now to our annual adjusted EBITDA guidance. We have raised our adjusted EBITDA guidance to be between $450,000,000 $480,000,000 This narrows the range around the midpoint of 465,000,000 dollars The increase of the midpoint is primarily driven by our over performance of the North American Sealy Betty products and our direct business to date. Both have been above our expectations. This is slightly offset by increases to variable compensation and softness internationally.
As previously announced, we recently signed supply agreements with 2 new retail accounts, Mattress Firm and Big Lots. We will be bringing on significantly higher volume into our North American operations. We anticipate some investments during these launches. We will hire new personnel and our focus will remain on producing quality products and continue to provide great customer service to our existing 3rd party retailers. This will result in some inefficiencies of about $5,000,000 in the 3rd quarter, which will not be offset by incremental revenues.
We continue to expect that these new accounts will be immaterial to EBITDA in total for 2019, but will be significant contributors in 2020 beyond. I would like to flag a few items for modeling purposes. For the full year 2019, we currently expect D and A to be between $115,000,000 $120,000,000 total CapEx to be between $70,000,000 75,000,000 which includes maintenance CapEx of $60,000,000 interest expense of $90,000,000 to $95,000,000 a tax rate of 27% to 28% and a diluted share count of 56,000,000 to 57,000,000 shares. Please note, the above items consider the impact of our new share repurchase plan. With that, I will turn the call back over to Scott.
Thank you, Bhaskar. Great job. Turning to our long term corporate initiatives. First, developing the most innovative bedding products in all the markets we serve. In the Q2, as I mentioned, we finished the North American launch with our all new Tempur Pedic Breeze lineup.
This completed the largest Tempur Pedic rollout in the company's history. With industry leading technology from core to cover, the new formulation of these mattresses provide the ultimate Tempur Pedic sleep experience. Most importantly, the new Breeze is positioned to accelerate ASP growth and drive improved product mix for both third party retailers and our direct to consumer business. So far, the Breeze products are doing what we thought they would do, improving Tempur product mix. As an example, Breeze represents almost 40% of the mattress units sold in our Tempur Pedic retail stores.
This is helping drive same store sales growth of 29% for the quarter. Last quarter, we introduced 3 new innovative products that are being tested in the market. 1st, a cutting edge sleep tracker and monitoring solution 2nd, an all new innovative Tempur Pedic mattress in a box product and finally, the most premium Tempur Pedic mattress in history, featuring state of the art active cooling technology. These opportunities complement our existing product lines. Although we do not expect them to be meaningful meaningfully benefit to sales or EBITDA in 2019, they ensure our brands continue to be most highly desired in the industry, and they are expected to contribute in 2020.
All three products are in market with limited distribution for continued evaluation throughout the year. Now turning to our 2nd long term initiative, to invest significant marketing dollars to promote our worldwide brands. We continue to make progress in reaching customers more efficiently across media channels wherever they wish to engage. We are complementing our mass media tactics with improved digital media programs that allow more unique 1 on 1 interactions. This allows us to unlock new efficiencies in our advertising spend.
And as I mentioned previously, the combination of new products and new media mix has allowed improved return on advertising spend. Our brands are stronger than ever, and we will continue to support them to drive more customers to seek out our products. The 3rd long term initiative is to optimize worldwide distribution to make sure our products are properly represented in all channels. During the quarter, we made significant strides by expanding our global third party retailer network. As previously announced, we recently expanded our long term supply agreement with Big Lots and entered into a new agreement with Mattress Firms.
These wins are testament to our premium brands, innovative products and best in class service. While the most important aspect of our worldwide omnichannel distribution strategy is 3rd party retail, our direct to consumer business continues to grow, representing 13% of our global sales in the quarter. We continue to operate this portion of our business in a very profitable manner, keeping our customer acquisition costs low while matching high end customers with high end products. These expansions and further diversification of our worldwide distribution network strengthen our operating model and allow us to reach even more customers around the world. Our last initiative is to drive EBITDA.
Our business generates significant profit and cash flow. We're committed to invest capital and opportunities with the highest return on invested capital, while balancing our leverage target of between 3x and 4x net debt to adjusted EBITDA. We anticipate EBITDA to grow, which will organically lower our leverage over time. Additionally, we expect to generate cash in excess of our business needs. Based on current circumstances, we anticipate accelerating our share repurchase program.
We will manage share buyback based on current and expected cash flows, share price and alternative investment opportunities. In the near term, we expect to deploy excess cash flow to repurchase shares. For modeling purposes, we are estimating $50,000,000 of share repurchase a quarter going forward. As a reminder of our history, before we paused our share repurchase program in 2017, our robust cash flow allowed us to repurchase almost 50% of our outstanding shares over the preceding 12 years. We expect our expanding adjusted EBITDA combined with our share repurchase will drive EPS and shareholder value.
In summary, we expect strong momentum going forward with growth across all of our brands, Tempur Pedic, Sealy and Stearns and Foster. Looking past 2019, the progress we are making on our long term initiatives has 2020 poised to be the best year in the company's history. Operator, will you please open the call up for questions?
Thank Our first question comes from Seth Basham of Wedbush Securities. Your line is now open.
Thanks a lot and good morning.
Good morning.
Congrats on a good quarter. My question is on the outlook. You guys raised the EBITDA outlook for the year. I'm just hoping to understand a little bit more some of the drivers behind and the moving pieces in the back half of the year. First as it relates to Sealy, do you expect the strength to continue or do you expect acceleration?
2nd as it relates to some of the costs associated with Big Lots and Mattress Firm, you mentioned a $5,000,000 headwind. What's the gross number you're expecting in incremental costs for the back half
of the year? Thank you.
Great. Good questions. First of all, let me take Sealy, and then we'll pass it on to Bhaskar for some of the details. Sealy has surprised us so far this year. The momentum was obviously strong in the Q2 at 7%, if I remember correctly, Bhaskar.
Correct.
And I think as I said on the call, it has continued, and we would expect that momentum to continue for a good while.
As it relates to the Mattress Firm Big Lots cost, what we'd estimate is during the Q3 is to make sure that our quality is where it needs to be and then obviously scaling for the launches that we have is that we would invest an incremental $5,000,000 into the Q3.
And I think we highlighted even on this last call that during this period where we're taking on large customers, the primary focus will be on quality of product and service, and we won't be shy about spending some money to get those businesses up and running correctly and continuing to support our other third party retailers.
Thank you. And our next question comes from Curtis Nagle of Bank of America Merrill Lynch. Your line is now open.
Great. Thanks very much for taking my question. So kind of looking at the quarter, outstanding gross margin numbers, particularly in North America, just kind of rolling through the next year or the rest of the year, I should say, how should we think about rate growth in terms of things like commodities that continue to be pretty weak, product mix, mix within brands, DTC growing really well? Should we continue or expect to continue gross margin to grow on a rate basis at a very high rate, I guess?
Sure. Good question, Kurt. So the way I would think about that is the underlying margin, excluding the new business that we're adding, we would expect that the gross margin to grow on that. So as you mentioned is that we would anticipate getting continued improvement from a channel mix perspective as well as our outlook for commodities has slightly improved from where we were at the end of the Q1. What I would want to call out is that at the end of the Q3, we'll be selling in the Big Lots business, which is principally in that $1,000 and below.
And then the Q4, what we would have is the Mattress Firm sell in, which is going to be heavily weighted toward floor models, which will be filled at a discount.
Thank you. And our next question comes from Bobby Griffin of Raymond James. Your line is now open.
Good morning and thank you for taking my questions. Congrats on another good quarter. Thanks. I guess I want to talk a little bit about advertising expense during the quarter and then kind of plans going forward and when we should expect kind of the uptick to involve Master's Firm in the new and Big Lots as well and what promotional activity or advertising we could expect from those 2 new relationships in the Q4?
Okay. Sure. First of all, advertising, we think of as core expense, but certainly there's some variability in it. And as you can see from the sales growth numbers, there was no reason to pull the advertising lever very hard during the quarter, but we certainly expect that we'll continue to spend approximately the same percentage of our sales number in advertising. There's no uptick in advertising expense as a ratio during the 3rd Q4, But certainly, we would expect from a ratio standpoint for it to continue about the same.
Is that fair, Bhaskar?
Sure. We would continue to on a if I just think about it on a full year basis is that we would continue to believe that our dollars would be up and our rate would be up on a year over year basis.
Thank you. And our next question comes from Michael Lasser of UBS. Your line is now open.
Good morning. Thanks a lot for taking my question. What do you think drove your improvement in return on advertising or your lower customer acquisition cost? Is it possible because Master's firm is going through this transition that they're being less aggressive and it's allowing you to take share, particularly at a time where one of your big competitors is going through some of its own dynamic?
No. I don't think our advertising efficiency has anything to do with anything with Mattress Firm, although I think your theory has some validity. I think it's more likely that the very aggressive bed in the box companies, that their advertising budgets have been probably pulled back quite a bit as those companies continue to run at a deficit. I think probably that has helped to some. Also, I think as a company, we continue to get better from an advertising standpoint and the new team is doing a great job focusing on efficiency.
So I'm going to say some less competitive market coming from the bed in the box guys as their volumes have in North America mattress is probably flat at best and then our own efficiencies from internal initiatives.
Thank you. And our next question comes from John Baugh of Stifel. Your line is now open.
Good morning and thanks for taking my question. I was curious, Scott, it's too early in the Breeze launch to look at the mix of what you're selling and you commented about it for your stores, but I was thinking about overall, including wholesale. Has there been enough time to get a sense for North America Tempur Pedic brand only, how the mix compares today, say, to pre the initial launch of Pro and Adapt? Is it same, better or worse? Any trends there?
Thank you.
Yes, great question. Clearly, we called out some outstanding performance in our direct channel where we can control the process. When I look at the total Tempur launch in North America, I think we can clearly say that we've eliminated the negative mix that we've been working through. And when you look at the totality of the launch, the mix is where we expected it. We don't expect mix issues in Tempur Pedic going forward.
Having said that, the mix is going to be slightly less rich than it was before, but that was planned. And so overall, the new launch was a big driver in the creation of EBITDA, and we again don't expect any negative mix issues going forward out of the Tempur product.
Thank you. And our next question comes from Laura Champine of Loop Capital. Your line is now open.
Thanks for taking my question. The gross margin beat was particularly impressive. And I'm wondering if you got any help, any material help from input costs and what the trend is in the current quarter?
Sure. As it relates to the Q2 and what we saw from a gross margin standpoint, the outlook where we're sitting at today is slightly improved versus where we were in the Q2. Some of that came to pass in the Q2. However, what I would say is that from an overall perspective, what we felt good about was our product mix, specifically as it related to what we've seen historically, which was the cannibalization, and we saw the beginning of that turning. As Scott mentioned, what we'd anticipate going forward is that, that would be fully offset.
So when you look at the Q2, what was driven basically on brand, and then positive temper mix and then a very strong performance by direct, all of which should continue. And really no help from commodities to speak of in the Q2, although going forward, we'd expect it to be a little bit, correct, a benefit.
And our next question comes from Peter Keith of Piper Jaffray.
Great results, guys. Just looking at the adjustment to the guidance, if you could tie it together, the midpoint implies a notable step down in the growth rate of EBITDA from first half to second half. So I wonder if you could just give us some insight on what some of the changes in headwinds might be that are evolving.
Sure. We had a couple of things that we called out. So on the what we have working in our direction is the continuing momentum that we see on the Sealy side as well as what's happening from a direct. Direct has performed very well in the first half and we would expect that, that would continue. We did call out a couple of items that we have headwinds.
Principally, it is the variable compensation. Just a little bit about that is, is that it does vary based on our expectations. In prior year, it was zeroed out based on our performance. And in the current year, we're achieving above our expectations. So it's a headwind as we think about the back half.
And then finally, we did call out some softness internationally, and that helps us bridge from midpoint to midpoint.
Thank you. And our next question comes from Brad Thomas of KeyBanc Capital. Your line is now open.
Thanks. Good morning. Great quarter, great results and I'm looking forward to seeing the new products next week. My question is around capital allocation. I mean you're pretty explicit today with what your plans are.
But I guess, Scott and Bhaskar, I was hoping for a little bit more thinking on why not be a little bit more aggressive today with share repurchase given the strong cash flow outlook and strong EBITDA outlook? Yes,
good question. Obviously, capital allocation is a Board issue. So we get lots of input from investors, debt holders, Board members and everybody else. And it's one of our core responsibilities. Mean, if you look at the history of the company, I mean, in 2016, we bought back over $500,000,000 worth of stock buyback.
So from a strategy standpoint or an appetite standpoint, the company has had a history at times to be very aggressive. I think what we said today basically is, look, things look pretty good and we've given you some number that we've kind of budgeted for share repurchase. It could be more. We've given you some the way we look at it as far as our expectations of cash flow, stock price, alternative investments. But then at the same time, we said, look, we would like the leverage ratio to come down a little bit from where we are, but still obviously within the range that we've said.
But I'd look at the $50,000,000 more as a minimum than a maximum, and we'll continue to fine tune the actual investment as we learn more about as the year goes forward, as Mattress Firm and Big Lots come on board. But I wouldn't be surprised if the company didn't become more aggressive in share buyback over the next couple of years when you look at the anticipated cash flows, not just really for this year, but if you start looking at 2020, the flow through and the cash flows are really impressive when you get to 2020, and I suspect a lot of that cash flow will end up in share repurchase.
Thank you. And our next question comes from Carla Casella of JPMorgan. Your line is now open.
On the other side of the capital allocation question, any thoughts on you've got one bond that's callable and that continues to tip down on call price, your thoughts on refinancing or cap structure in terms of loans versus bonds? Do you prefer to be to tap certain market versus the other?
Yes, great question. And we do look on up in the capital structure at the debt structure too. And we'll continue to study that. Obviously, the markets are very attractive. Obviously, our leverage profile is getting better and our outlook certainly looks rosy.
So we'll continue to look at the debt structure. And I think that sometime in the future, there's some opportunity to optimize in the debt structure also.
Thank you. And our next question comes from Karru Martinson of Jefferies. Your line is now open.
Good morning. Given the strong direct to consumer business that you had, are we seeing a shakeout in the bed in the box model
here? I don't know. I'm going to say you're seeing several things. One is, I think that we're tapping a market that's not well served right now, which I'm just going to call high end bedding in North America. And our Tempur Pedic flagship stores are designed for high end customers, and I think that's an underserved market.
So I think that would be the first driver. I think the second driver is clearly a lot of disruption in the traditional distribution model. Some large customers have gotten into financial trouble and their share of the market has declined. So there's quite a bit of what a bedding is kind of open for good retail performers. And we're seeing some of our strong retail performers who are really good taking significant share themselves.
So I think there's some bedding that's up for grab in the marketplace. And then I think 3rd is really kind of the point you probably raised, is there's certainly a significant deceleration of what I'll call the traditional bed in the box brands in the marketplace. But having said that, some people get confused. That doesn't mean that there's a decline in compressed bedding. If we look at our compressed bedding offerings, in total, they grew 40% in the Q2.
And most people haven't really focused on we've got a total compressed bed offering starting with Sealy Conform, which is starts at $3.99 which is very competitive in the marketplace. Then we kind of have our middle market compressed bed Cocoon, which is like a $7.99 product, which is doing very well. And in fact, since we've changed some marketing strategies to go kind of directly after the disruptors, it's up 2 50%. And then we have in test, our Tempur Cloud product, which is a premium product that starts at $17.99 and you compare that premium product with what some of the bed in the box guys are trying to do in the premium area, you would see that it's a relative value. So when you look across our offering in that area, because we're vertically integrated in our scale, we can produce a higher quality bed for a lower cost and make money.
The part that we needed to learn over the last couple of years was really marketing and how to market online. And I think our performance recently shows that we've learned a lot in that area and are very competitive.
And we do have a follow-up question from Michael Lasser of UBS.
Can you give us more detail on the breakdown between units and price for the Tempur line? And on the Sealy business, how much of the improvement is coming on a same store basis versus expanded relationship?
Sealy is easy because that's all on same stores effectively. Sure. We haven't picked up any of the new business yet on Sealy.
Right. And more broadly, the nicety about Sealy is that we're seeing growth in all the price points. We were challenged from legacy standpoint in that sub-one thousand dollars business. So what we've seen in the second quarter is remaining growing in the above $1,000 and a good opportunity there in the below $1,000 As it relates to the Tempur side is that we have seen a growth in units. The momentum that we saw in the Q1, that continues in the Q2.
And with the launching of the Breeze in the high end, our ASP continues to improve.
Thank you. And ladies and gentlemen, this does conclude our question and answer session. I would now like to turn the call back over to Todd Thompson for any closing remarks.
Thank you. To the over 6,000 employees worldwide, thank you for what you do every day to make the company successful. To our retail partners, thank you for your outstanding representation of our brands. To our shareholders and lenders, thank you for your confidence in Tempur Sealy's leadership team and its Board of Directors. This ends our call today, operator.
Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.