Ladies and gentlemen, thank you for standing by, welcome to the Tempur Sealy First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Aubrey Moore, Investor Relations. Please go ahead. Thank you, operator. Good morning, everyone, and thank you for participating in today's call. Joining me are Scott Thompson, Chairman, President, and CEO, and Bhaskar Rao, Executive Vice President and Chief Financial Officer. After the prepared remarks, we will open the call for Q&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, EPS, net income, and adjusted EBITDA, and anticipated performance for 2021 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 included, but not limited to, annual reports on the Form 10-K and the company's quarterly reports on Form 10-Q under the heading 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 statements. 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 presentations. We have posted the press release on the company's investor website at investor.tempursealy.com and have also filed it with the SEC. Our comments will supplement the detailed information provided in the press release. Now, with that introduction, it's my pleasure to turn the call over to Scott. Thank you, Aubrey. Good morning, and thank you for joining us on our 2021 first quarter earnings call. Our thoughts continue to be with those around the world whose lives have been impacted by the global health crisis. I want to say a sincere thank you to our entire global team, who continue to work hard every day to ensure the safety of our employees and customers. I'll begin with a few highlights on our record first quarter financial performance and a discussion about our future growth. Bhaskar will then review our financial performance in more detail. Finally, I'll conclude with an update on our long-term initiatives, some thoughts about capital allocation, and an update on our current market trends. We're very pleased to report a very strong first quarter with global net sales up 27% year-over-year or over 50% as compared to the first quarter of 2019. We delivered strong performance across our North America and international segments with growth across all of our brands, channels, and price points. Our strong sales performance was driven by industry strength, successful company initiatives, and our overall outperformance within the market. This resulted in first quarter adjusted EBITDA of $230 million, an increase of 52%, and a record adjusted EPS of $0.64, an increase of 88%. GAAP EPS increased 121% versus the prior year. The only notable adjustment to current quarter GAAP results is related to our early payment of our 2023 bonds as we moved to capture lower long-term interest rates and extended the duration of our debt. Our first quarter results were robust and would've been stronger if it had not been for constraints, once again, by industry-wide supply chain challenges for both innerspring and chemicals. I'm glad to report that the innerspring shortage that we've been dealing with over the last three quarters is now behind us. Our major innerspring supplier has done a great job normalizing the supply chain. Bhaskar will discuss our supply chain in more detail in a moment. Looking ahead, we're optimistic about our prospects for future growth as we see various tailwinds fueling our business over the long term. First, the industry has exhibited consistent long-term growth. We expect this to continue. Over the last 45 years, the U.S. mattress industry has averaged mid-single-digit annual growth. Looking at the industry today, I believe it's never been healthier. As a result of significant retail rationalization over the past few years, domestic store counts have returned to a more appropriate level. The remaining retailers have shifted their focus more towards customer service and professional sales processes. They've also learned to compete online while also modernizing their marketing approach, all resulting in better retail profitability. Not only are we seeing more rational behavior from traditional retailers, but we're even seeing many of the bed-in-a-box startups being forced to focus on profitability. A big change from a few years ago when instead they were focused more on unprofitable sales growth at almost any cost. In recent years, there's been a surge in the number of units imported and sold below cost, resulting in an uneven playing field for domestic manufacturers. The U.S. government has taken various anti-dumping actions, including, most recently, decision to assess tariffs on imports from seven countries. As a result, import data over the last three months show there's been an average year-over-year decrease of about 50% in bedding units imported to the U.S., implying five million annualized units no longer being imported today. With a strong industry and the rationalization of import units, there's an opportunity for domestic manufacturers to capture those incremental units needed to fill the demand. While these are typically lower end units, this represents an ideal opportunity to leverage our fixed cost structure. We believe that Sealy, the number one mattress brand in America, and our OEM business are both well-positioned to take their fair share of this opportunity. Second, consumers have been increasingly willing to invest a larger share of their wallet in the home and furnishing category. Over the past several years, consumers have leaned into health and wellness. Sleep quality is squarely in the middle of this emerging wellness trend. We saw this benefit of this trend emerge pre-pandemic as consumers began to migrate towards higher price points. This trend has really accelerated as a result of the pandemic. As more and more consumers make the connection between a good night's sleep and overall health and wellness, we believe this long-term consumer trend will drive higher sales prices and likely shorten the replacement cycle as consumers increasingly choose to replace their existing mattresses with the latest technology. In the first quarter, the average selling price of mattresses increased double digits compared to prior year. Additionally, the bedding industry historic performance has correlated to consumer confidence, consumer spending, and housing formation. The housing market has been very strong, with average prices nationwide appreciating by about 11% in 2020, and that strength continues in 2021. Consumer spending is forecasted to increase significantly in 2021, supported by material household savings in 2020, the economic stimulus package, and rising consumer confidence. These economic indicators point to a healthy bedding industry going forward. Third, our competitive position has never been stronger. In 2020, our North American business grew 21%, well above the industry. We believe our North American segment at 28% growth in the first quarter of 2021 is a clear sign of our ability to continue to gain market share. As a result of investments we have made in our business over the past five years, we are clearly an industry leader in every category, channel, and price point. We expect these investments to further build our advantages in the marketplace, carrying the momentum of flywheel effect, and enabling us to continue to drive sales growth. Lastly, innovation is in our DNA as a clear competitive advantage. For example, we are very excited to launch our entirely new product line for Tempur International in 2022. The underlying technology of the new lineup builds on the innovation we've already been well received in North America. We expect these new products to help us grow our market share internationally, where our share is currently low in most geographic regions. We see international as a significant long-term growth opportunity for our business, with the Asian market leading organic growth. With that, I'll turn it over to Bhaskar to walk you through the financial results in more detail. Thanks, Scott. Before going into the details, I would like to highlight a few items as compared to the prior year. Gross margin improved 60 basis points to 44%. Adjusted operating margin improved 330 basis points to 18%. Adjusted EBITDA increased 52% to $230 million. Adjusted earnings per share increased 88% to $0.64. As Scott mentioned, our first quarter results would have been stronger had we not experienced supply chain constraints for innersprings and chemicals that are used across the entire bedding industry. While the supply of innersprings greatly improved during the quarter, the disruption from the winter storm in the Gulf is causing a temporary industry-wide reduction in chemical availability. This disruption is impacting commodity prices on what we believe is a short-term basis. These supply issues have impacted our North American Sealy and Sherwood businesses, resulting in our backlog remaining elevated throughout the first quarter and into the second. In addition, had we been unconstrained, we estimate sales could have been stronger by $80 million-$100 million during the quarter. Based on our current outlook, we anticipate the chemical constraints will largely be resolved by the end of the second quarter. These issues also caused our operations to run inefficiently, reducing this quarter's gross profit by approximately $10 million. We expect these same inefficiencies will repeat in the second quarter. In addition to working through supply constraints, we have also been managing a high inflationary environment for key bedding inputs. We implemented pricing actions in the fourth quarter of 2020 and again in the beginning of the second quarter of 2021 to mitigate the known commodity headwinds. Commodity prices have continued to increase since our last update, as the winter storm has pressured chemical prices, but we believe these increases are temporary. We have chosen to absorb this short-term cost increase for now, but we will take price actions in the future if costs do not normalize. Based on our current commodity outlook, we expect to be negatively impacted by approximately $25 million, predominantly in the second quarter, which will not be offset by price. Turning to North American results. Net sales increased 28% in the first quarter. On a reported basis, the wholesale channel increased 23%, and the direct channel increased a robust 74%. North American gross margin improved 60 basis points to 41.2%. The improvement was primarily driven by brand and channel mix, partially offset by operational inefficiencies. North American first-quarter adjusted operating margin was a record 19.6%, an improvement of 300 basis points as compared to the prior year. This improvement was driven by operating expense leverage and the improvement in gross margin. Turning to international. Net sales increased 23% on a reported basis. On a constant currency basis, international increased 14%. We are pleased with our international performance during the first quarter. Sales were driven by strong demand for our products in the Asia-Pacific market. Europe performed well as shipments continued during the period, despite COVID lockdowns. Retail orders in Europe were strong during the period ahead of anticipated store reopenings. In fact, we have seen a surge in end consumer demand in the U.K. since the stores have reopened. As compared to the prior year, our international gross margin improved 90 basis points to 59.2%. The improvement was primarily due to favorable mix and productivity on our operations, partially offset by increased commodity costs. International adjusted operating margin was 28.8%, an improvement of 670 basis points as compared to the prior year. This improvement was primarily driven by improved performance of our Asia-Pacific joint venture, operating expense leverage, and improvement in gross margin. Turning to the balance sheet and cash flow items. We generated record first-quarter operating cash of $86 million. At the end of the first quarter, consolidated debt less cash was $1.7 billion. Our leverage ratio under our credit facility was 1.9 x, down from 3.0 x at the end of the first quarter of 2020, and slightly below our target range of 2x-3x. We repurchased $313 million of shares in the first quarter, utilizing our strong cash flow and our ample liquidity. This brings our total share repurchases over the last 12 months to about $450 million. For the full year 2021, we expect to repurchase at least 6% of shares outstanding. Turning to 2021 guidance. We currently expect sales growth to exceed 20% and adjusted EPS to be between $2.50 and $2.70, a growth rate of 36% at the midpoint. This implies EBITDA to be between $925 million and $975 million, an increase of $50 million at both the high and low ends. We assume full-year gross margins are stable to prior year. We expect gross margins to improve within our brand. This will be offset by brand mix headwinds as Sealy and OEM operational constraints ease following the second quarter. This also contemplates our incremental investments in new innovative products and record advertising spend that Scott will discuss in a moment. Lastly, I would like to flag a few modeling items. For the full year 2021, we currently expect total CapEx to be between $125 million and $140 million, which includes maintenance CapEx of $75 million, D&A to be between $160 million and $180 million, interest expense between $50 million and $55 million on a tax rate of 26%, and a full-year average diluted share count of 205 million shares. With that, I will turn the call back over to Scott. Thank you, Bhaskar. Great job to you and the team. Our competitive positioning and record first quarter earnings are a result of our commitment to our long-term corporate initiatives. These initiatives guide us in our action and jumpstart the flywheel effect that is powering the momentum at Tempur Sealy. Our first key initiative is to develop the best bedding products in all the markets we serve worldwide. We're incredibly proud of the fact that Tempur-Pedic, Stearns & Foster, and Sealy products lead the market in each of their respective categories. In our business, long-term success starts and ends with products. Both our products portfolio and our innovation pipeline have never been stronger. Tempur has successfully addressed the two biggest reported issues associated with poor sleep, sleeping hot and snoring. Over the years, we've addressed the first, difficulty of sleeping hot, with our proprietary cooling technology. To address the second issue, snoring, we developed the TEMPUR-Ergo Smart Base sleep tracker. This past quarter, we completed the rollout of this smart base to our North American third-party retail partners. The sleep tracker is the only sleep system on the market with technology that automatically detects and responds to snoring. It also monitors key health metrics and sends personalized sleep analytics and coaching to consumers via a personal app. Retailers continue to tell us they are thrilled with the consumer response to this product, citing improved ASP and adjustable rate attachment rates. As an additional benefit, the sleep data from this product brings us closer to the consumer and provides critical insights for our research and development processes. Turning to Sealy, the number one mattress brand in the U.S., we're proud of the achievements of our Sealy brand. It was rated America's number one selling mattress brand last year and was most recently voted America's most trusted mattress brand according to 2021 BrandSpark American Trust Study. We continually innovate and invest in the products. This year, we are refreshing the Sealy portfolio with the launch of the new models across our Essentials, Posturepedic, and Posturepedic Plus lineups. The updated Sealy mattresses offer superior support and include our SealyChill and Surface-Guard Technology. We expect to complete the rollout of the Essentials and Posturepedic mattresses in the second quarter, and to begin shipping the higher end Posturepedic Plus line in the back half of the year. We're excited about these new products and expect they will further extend Sealy's lead as the number one brand mattress in the U.S. Our second key initiative is support our global brands with compelling marketing. Robust order trends combined with the strength of the market has driven us to increase our 2021 advertising investment by an additional $50 million to a projected $450 million. This will be the largest advertising investment in the company's history and provide even more momentum for growth in the future. Consumers' demand for the brand is strong, and our consumer research shows record levels of purchase intent and consideration. Our investments in advertising, our best-in-class sales force, our data-driven media investments ensure our products remain top of mind for consumers throughout their purchase journey. A portion of our 2021 advertising dollars is being dedicated towards Stearns & Foster brand. The brand is celebrating its 175th anniversary this year, and we have a new campaign that highlights the brand's heritage and high-quality products. We believe the amplification of the brand story will raise consumers' awareness and consideration for luxury innerspring and hybrid products, benefiting third-party retailers and the company. Our third key initiative is to optimize our powerful omni-channel platform to be wherever the customer wants to shop. The largest pillar of our omni-channel distribution strategy is our third-party retail partners. We continue to build momentum as we've added to our diverse third-party retail footprint, and now include over 25,000 retail doors. This broad footprint ensures that consumers can easily find and experience our products in person. This is critical to our research, as our research shows that about 90% of consumers want to touch and feel a mattress before they buy. We've strengthened our retail relationships with our Retail Edge program, as well as our in-depth sales training, innovative advertising solutions, market-leading consumer insights, and robust logistics and manufacturing capabilities. To ensure our products are present where and how and when customers want to shop, we continue to expand our own direct-to-consumer channel, both online and with brick-and-mortar retail stores. Our direct-to-consumer channel had a great quarter. In our company-owned stores, we saw increased traffic as more consumers felt comfortable shopping in store, and this resulted in double-digit same-store sales growth. Our web sales grew over 100%, which includes robust triple-digit growth on our compressed bedding products. Likely comparing favorable to others in the industry. At the same time, we experienced favorable customer acquisition costs compared to the first quarter of 2020. I want to note that our web sales are still growing at a strong rate, even as we begin to lap the triple-digit growth rates in prior years. We do expect web sales growth rate to diminish as 2021 comps get very hard. Our worldwide direct business is on a run rate of over $600 million and is highly profitable. In fact, over the last three years, our direct business has grown an annual compounded rate of 35%. Another one of our market expansion initiatives is grow our share of North American OEM bedding market business. We believe the OEM market is a sizable opportunity, as the recent enactment of anti-dumping duties has disrupted the market. We are well equipped to take advantage of this disruption and service the market. Our OEM business performed well in the quarter, running slightly ahead of our expectations. Our fourth key initiative is to drive increased profits. We have been and remain committed to balancing top-line initiatives with expense control and operational improvements to optimize profitability. This has enabled us to deliver record earnings in the quarter and positions us to drive earnings growth over the long term. Turning to capital allocation. Our business generates a significant amount of cash flow, as demonstrated by our first quarter operating cash flow of $86 million and a cumulative cash flow of over $600 million over the last 12 months. We have taken key opportunistic capital structuring actions to optimize our balance sheet. Over the last few quarter s, we extended the maturity of our long-term debt by six years and lowered our annual run rate interest expense by approximately $23 million. We also reduced our target leverage ratio range to 2x-3x, and we've chosen to stay slightly below the range as we manage through the global health crisis. We view our financial strength and flexibility as a competitive advantage. Under our capital allocation strategy, we run a balanced approach supporting the business, returning value to shareholders via share repurchases and dividends, and on an opportunistic basis, acquiring businesses that enhance our global competitiveness. Over the last 12 months, we've allocated capital as follows: capital expenditures of over $100 million, return to shareholders approximately $460 million. This includes investing over $445 million in share repurchase, which is approximately 6% of our shares outstanding during the period, paying $14 million in cash dividends. Given the progress we've made and confidence that we have in our long-term outlook, we did accelerate some of our share repurchase this quarter. I also want to briefly touch on our latest order trends. In the U.S., current orders accelerated relative to the first quarter on a two-year basis, which we view as the most useful comparative given the COVID-19 impact of the prior year numbers, making the comps unreasonably low. This acceleration is built upon our prior momentum and likely also firming economy, a robust housing market, and fiscal stimulus related to COVID. We anticipate the temporary lift from COVID relief checks is now behind us. Our international trends are volatile as markets reopen and close and reopen. Company-wide, we are internally targeting second quarter sales growth of approximately the first quarter at about 50% versus the second quarter of 2019. I'm proud of how the entire team stepped up to meet the challenges the pandemic has presented over the last 12 months. There have been a lot of ups and downs during the unprecedented period, but the groundwork that we've laid over the previous years established a strong foundation, and it's allowed us to become even stronger. The team and I are incredibly excited about what the future holds. With that, operator, will you please open the call up for questions? Thank you. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, press the pound key. Please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Peter Keith with Piper Sandler. You may proceed with your question. Hi, good morning and great results, guys. Thank you. You may have just answered my question with the Q2 sales guide, but what I did want to ask was the guidance raise was rather significant. It's a little bit uncharacteristic for you guys this early in the year to take up guidance that much. You also highlighted $25 million of input cost headwind and $50 million of extra ad spend. The context of the question is what's giving you the confidence to raise the guidance by this much so far early in the year that may have changed from a couple of months ago? Sure. Thank you for the question. Basically everything. Look, the economy worldwide continues to recover from the healthcare crisis. We've become, I guess, more comfortable that we can operate in an environment where stores open and close. I think most everything we see, compared to last time we reported to you, feels stronger. If you look at North America, the sales increased 20%, 28%, a great number. As the stores opened, we didn't see a slowdown in the online business like we probably did expect. No, it feels good. From a guidance raise standpoint, we try to keep the guidance in the middle of the fairway. The strength of the underlying business was such that we felt like we needed to move the guidance up. Thank you. Our next question comes from Curtis Nagle with Bank of America. You may proceed with your question. Yeah, awesome. Thanks very much. Good morning, guys. Good morning. Good morning, Scott. Maybe taking the focus a bit more on the long term here. Obviously the numbers right now are just off the charts, really, really strong. I guess, how are you thinking about revenue and earnings growth over, say, the next few years? What do you think is a sustainable way to grow? What's the balance, I suppose, in terms of North America versus the rest of the world? It sounds like international is getting a lot more focus here, and you've got some new product launches that could be pretty big. Yeah, how should we think about that? Sure. Great question. Look, international probably has a larger opportunity over a qualified five-year period. Our balance of share internationally is relatively small, and I think you can see from our prepared comments, we're focusing on international over the next few years. It's going to take a little while. I think when you talk about core growth rate, look, we've been studying consumer spending on household because obviously the question we get a lot is we call it the share of wallet shift that the world is experiencing. I guess the best data we've been looking at is from Goldman on their consumer spending in the household category. To me, it was interesting. I think last year in 2020, total spend in the home category was $314 billion, and certainly was up from 2019 by about 4.5%, which is good. It wasn't up as much as I thought, or at least as much as the chatter I was feeling from investors. If you go look at that data, we were really on an upward trend for the past eight years in spend on home, and it was growing from a dollar standpoint of about 2% a year. It ticked up a couple of hundred basis points in 2020. Ticking up a couple of hundred basis points, compare it to our North American growth of 28% growth. I'll say, yeah, we got a little bit of a tailwind from shift to wallet. The lion's share of what you see from a performance standpoint is clearly the impact of our advertising, the quality of our products, our new growth initiatives, whether it be in OEM or direct, that's driving it. That gives me confidence that those initiatives will continue to bear fruit, and we don't really just have a little bit of a sugar high. If you look at a percentage of disposable income, it ticked up a little bit too during the period, but it's still significantly less than in the U.S. we spent in-home in 2008, 2007, 2006. I think there's a more solid foundation for the industry. The other thing that we're seeing is, look, when the industry's healthy, the retailers can advertise and certainly drive the market. I think you've seen that we've defined the addressable market as $50 billion worldwide. I think we got plenty of room to grow in various areas, including, quite frankly, just the deployment of our cash flow, whether it be in share repurchase or it being some kind of acquisition or some other growth initiative. Thank you. Our next question comes from Bobby Griffin with Raymond James. You may proceed with your question. Good morning, everybody. Congrats on the great results. Scott, I just wanted to touch back on the international. Clearly exciting time here for the company for growth for the next couple of years. You've talked a lot about the product investment. Is there any other kind of capital investments we should be considering or on the expense side as well to really fund that growth going forward for the next few years, from a distribution standpoint, production standpoint, or even people on the ground standpoint that we should consider in the model? I don't think so. Bhaskar, help me with that, because as the sales come, we'll obviously be adding some people. It'll be minor as far as priming from an advertising standpoint. Right. From a production standpoint, the plant over there has enough capacity to meet our objectives. No, I don't think so. Obviously, like always, as we talked about in our capital allocation, we'll continue to look at acquisitions that can help us both from a retail standpoint and from a supplier standpoint worldwide. We'll continue to look in that area, both domestically and internationally. Thank you. Our next question comes from Keith Hughes with Truist. You may proceed with your question. Thank you. My question's on international as well. Some just fantastic results there in the segment. As you look at the rest of the year, will the international segment be above? Into company growth for the year above that 20% you talked about, or still a little bit below? No. The international group is going to be below the consolidated group. North America will drive the larger portion of the growth rate in 2021. I think what we're highlighting for you is initiatives that will hit in early 2022. Okay. Thank you. Thank you. Our next question comes from Seth Basham with Wedbush Securities. You may proceed with your question. Thanks a lot. Congrats on the strong results. My question's around the Sealy and Sherwood businesses. First of all, the pressures that you're seeing there from a commodity standpoint, are they primarily confined to those businesses relative to Tempur-Pedic? Secondly, are the sales that you left on the table, the $80 million-$100 million, primarily in those areas, and do you expect to capture them pretty much entirely in the second quarter? Thank you. First of all, let's talk about the constraints that impacted sales. Call it $80 million-$100 million of foregone sales in the first quarter in North America. That primarily would have been in Sealy and Sherwood and maybe a little bit in OEM. I think it's interesting, if you added those sales to our North American sales number, they'd probably put, I don't know, 9%-10% growth rate on it, so rather than 28%, if you're into doing adjusted sales, unconstrained, I guess we would have been getting close to 30%. I guess I would make that point to start with. On commodity increases, look, the commodities hit everything. They don't hit just the Sealy and Sherwood brand. They certainly hit the Tempur brand also. We had plenty of supplies from a chemical standpoint for Tempur, and Tempur's build to stock rather than build to order. What else was in his question, Bhaskar? Is there anything else I missed? How is that $80 million-$100 million going to come back? Oh, I don't know. You tell me. I think we'll learn a lot more over the next few weeks as other people report their earnings. Certainly, we were constrained because of innerspring some in the first quarter, although, as we said on the prepared remarks, our major supplier did a great job from an innerspring standpoint. We think that's behind us, but it still was disruptive for us in the first quarter. The chemical event was really an event from the freeze. That was a mess in the first quarter, and we're going to feel the effects of it some in the second quarter. I think Bhaskar called out that impacted our plants also from an efficiency standpoint. Although first quarter Look, the first quarter was a good quarter. We're very proud of the numbers, but it certainly wasn't Goldilocks. We had sales we missed. We had plant inefficiencies. Our pricing increases didn't come into effect until April 1, so we were eating commodities in the first quarter. Part of Europe was closed. Right. Quite frankly, for most of the quarter. We got customers on allocation. Although the numbers are good, we certainly don't think that it was Goldilocks by any means. Thank you. Our next question comes from Jonathan Matuszewski with Jefferies. You may proceed with your question. Order. Thanks for taking my question. Scott, you mentioned the sleep data from the smart base bringing you closer to the consumer. With the rollout now complete, could you elaborate on that a little bit more? What's surprising you in the data, and how is that informing your latest thoughts in terms of innovation efforts to solve consumer pain points beyond temperature and snoring in the future? Thanks. That's a great long-term question, but I'm going to have to kind of kick it for a few quarters because we have launched it, the base. The base is doing better than we expected in the marketplace, and our retailers are extremely happy with increased attachment rates and increased ASP. We are just now gathering the data, and our partners are analyzing the data, so it's a little early to really point to any particular insights. We're thrilled about getting closer to the customers, and I think over time, I'll be able to answer that question probably more crisply than I can answer it today. Thank you. Our next question comes from Brad Thomas with KeyBanc Capital Markets. You may proceed with your question. Hi, thanks. Great quarter here. My question was around ASP. Clearly, a lot of favorable drivers that you have in terms of ASP, but a question that we're often asked is how much price you're taking and how much that might open up the risk to demand destruction or competitive pressures in the future. Scott, I was hoping you could just talk a little bit more about the different drivers of ASP between mix and attachment rate and how you're feeling about the trends in price right now. Sure. A couple of things. One, ASP was very strong, and ASP was strong last quarter. I think it goes to health and wellness, quality of products, and quite frankly, a great job the retailers are doing out in the field explaining customers the benefits of a higher quality bed rather than a lower quality bed. Our whole industry's obviously pushed some price through from a commodity standpoint, so that's part of it. I think really the health and wellness factor is probably the bigger driver from an ASP standpoint. From a competitive standpoint, I guess I don't really feel that too much. We're at all price points, so we can play at any price point with a suite of brands, and we can pick and choose where we want to put those price points within the family of the company, which gives us quite a bit of optionality from a competitive standpoint. I don't feel a lot of pressure, I guess, from others. I think others are being rational in their pricing. We've seen pretty much everybody move price up as commodities move up. As Bhaskar called out in his prepared remarks, now we do have this, what I'll call this short-term hit in commodities. On that, we chose to not pass that on because that commodity increase is on chemicals. It is directly related to a weather event. Based on history, when we look at hurricanes or other events, those kind of things have a tendency to spike and then come back very quickly. That's a price increase that doesn't seem appropriate to pass on to our customers. One thing to add there is that as you think about ASP, the growth is not only price. However, it's the mix within Tempur, and it's the mix within Sealy as well. They're mixing up. The ASP increase is not purely driven by price. Yeah, I guess to the point we should call out, which we've done a few times, but it's a good watch-out, is in 2020, in this quarter, the Sealy brand was constrained. As it gets unconstrained, it's probable that the Sealy brand would grow faster than Tempur as we work off backlog and meet customer demand in that price point that we haven't been able to meet over the last, I don't know, nine months or so. Thank you. Our next question comes from Carla Casella with JP Morgan. You may proceed with your question. The M&A environment and whether that's changed at all given the supply chain that you and I'm sure others have seen. The M&A environment, I guess it changes every week. Just kind of an overview so we're all on the same page. Lots of opportunities in our sector. Generally smaller companies, both from a supplier standpoint, retail standpoint. There's a lot of smaller players out there. A lot of liquidity in the marketplace, so sometimes pricing isn't rational, and so we've kind of pulled back. We're kind of patient and opportunistic. I would say everyone, if you're talking about the supply chain specifically, which is the direction of your question, I think all of us are looking at our supply chain and making sure that we have the right relationships long term, making sure those relationships are robust. We're continuing to aggressively look at our supply chain and make sure that we've got the right partners long term. Thank you. Our next question comes from Atul Maheswari with UBS. You may proceed with your question. Good morning. Thanks a lot for taking my question. How much did stimulus benefit the first quarter sales? Are you able to quantify that in any which way? Second part of the question is related to your guidance. The guidance would imply nearly a double-digit growth rate in the back half of the year for revenues, assuming the second quarter is up 50%. You are lapping very tough comparison in the back half, and there is the possibility of consumers focusing less on home as the economy hopefully reopens by then. At this point, what's giving you the confidence that you can achieve that level in the back half? Thank you. Let me see if I You're very tactful in getting 12 questions in on one, because Bhaskar's been writing them down rapidly as you ask the questions. The stimulus checks, look, we just wanted to call out, there's no question that when stimulus checks go through the U.S., our retailers feel that almost instantly at retail. Generally, that's been lower-end product, so I don't think it drives much from any of the DSO standpoint, but we certainly wanted to call it out. My guess is, and it's a guess, you can't really, look, the stimulus checks probably helped a little bit the first quarter. Let's just say they go away, and I'm not sure they're going away, but the improving economy should more than make up for the stimulus checks going forward is our expectation is continued growth in employment. What else was on his list of questions, Bhaskar? Back half. Back half growth. Looks good. Right. I guess barring some event that derails the economy, it looks like to us, consumers in the U.S. and quite frankly, worldwide, are in pretty dang good shape. Their savings rate was up quite a bit. Interest rates continue to be in control. Consumer confidence seems to be growing everywhere we look. That all feels good, and like I said, barring some event, we don't see a problem there. If you're worried about, we'll call it the shift wallet effect, one, I gave you some numbers a second ago that we got from some Goldman reports. More importantly, probably from my perspective, is when we look at economies that have been opened longer and have gotten closer to what we'll call normal, whether that be China or whether that be Korea- These markets, they're not quite normal, but they're pretty close to normal, we are not seeing a big pullback in furnishing and bedding expenditures. In fact, those markets are probably doing even better. I guess that's a long-winded answer to say we don't see a lot of black clouds. What do we worry about? We worry about what maybe we don't see or don't know, but from what we can see and know, things look pretty good to us. Thank you. Our next question comes from William Reuter with Bank of America. You may proceed with your question. Hi. My question is about the $25 million number that you mentioned. I think that was inflation for 2021 as a whole, does that encompass more than just raw materials, including ocean freight, et c? As we think about another round of price increases, do you believe that a subsequent round will make it such that there will not be gross margin pressure in the back half of the year? As it relates to the $25 million, that is specifically what we have seen during the first quarter that will not be impacted or not be offset by price during the second. Let me say that again. The commodity increases for going from 2020 to 2021 are greater than what we've seen in a while. The specific call-out on the $25 million is associated with a temporary inflation that we see that directly coming out of the winter storm that we believe is temporary, therefore, we're not putting price out there to offset it. The majority of that $25 million we should see in the second quarter. However, all that said, is that to the extent it hangs around a little bit, we will consider price as we think about that from a go-forward perspective. As it relates to what's included in there, the $25 million is predominantly associated with chemicals, associated materials coming out of the disruption caused by the storms. Thank you. Our next question comes from Laura Champine with Loop Capital. You may proceed with your question. Thanks for taking my question. It's to dig in a little bit more on the supply chain issues. You mentioned that the Tempur brand builds to stock, whereas the Sealy and Sherwood, I think, build to order. What's your normal practice for chemical purchases in terms of weeks of supply? Is that changing at all as a result of some of the supply chain issues we've seen? Sure. First of all, let me give a call out to our operation team that over the last few years, they have requested capital expenditures to increase our tank size, for just this kind of event, to have more safety stock from a chemical standpoint. Those investments were made at their request and certainly been helpful during this period. Obviously, when you talk about days supply, it obviously depends on demand, and so demands vary. I'm going to say that from a chemical standpoint, we probably have 30 days buffer- Yep. ... would be kind of a general target. Right. in chemicals. Also, we have inventory. Again, thank you, operations. Probably, I guess it was May last year, we went through and purposely upped the inventory from a days supply in anticipation of pretty robust coming out of lockup. We've been carrying more inventory for Tempur starting, I think, last May or last June. Right. I'm going to say that's generally north of 30 days. Combined, that works as a pretty good cushion for what we would've probably planned on more like a hurricane event. Thus Tempur has been in stock and on shelf during this period where we've had constraints from innerspring and from a chemical standpoint. Thank you. Our next question comes from Jenna Giannelli with Goldman Sachs. You may proceed with your question. Hi. Thanks for taking my question. I know there's been a few on just the supply chain, but one more if I can, perhaps clarification. The $80 million-$100 million of sales headwind and the $10 million of gross margin, that was helpful color. In prior quarters, has it been about the same or to a similar degree as we've dealt with some of those supply chain headwinds, just as we think about as we start to comp out of it, what the potential tailwind could be going forward? Thank you. Sure. I'm going to say the constrained sales, I think, were slightly less. I think we've been calling out about $100 million- $100 million ... in the second and third quarter from a sales line. Again, that's Sealy and Sherwood product. It's probably more like $80 million-$100 million in the first quarter. I would say slightly less from a sales standpoint. I'm probably going to say the disruption in the plants has been worse this quarter than in the second and third quarter because we got hit from a combination of the spring issue and the chemical issue. The chemical issue has been probably more difficult from a plant operation standpoint- That's right. ... because it's disrupted Tempur and Sealy. Quite frankly, it's hard to figure out what to do if you don't get the foam you need when you need it. It's been worse from a run sloppy or whatever we want to call the call out from an operational standpoint by probably several million this quarter versus. I would say about $10 million versus what we've seen. We've had the running sloppy implications, as you called out, Scott, but it was worse, complicated by the chemical shortages that we faced. As we said, is that we do anticipate those to go away as we get out of the second quarter, but I would imagine we'll see a bit of sloppy in the second quarter as well. Yeah, the point really is on the compare for first quarter next year, you've got the constrained sales, you've got the running sloppy, you got the price effects- Yep. ... for the commodities that didn't go into play till April 1st. European operations were closed, open, closed, open, depending on which country. Look, it wasn't very much fun for our sales group because we have some customers on customer allocation in North America. It does lead you to believe that there are some tailwinds first quarter next year. 100%. Thank you. Our next question comes from Seth Basham with Wedbush Securities. You may proceed with your question. I just have a follow-up thinking about the incremental operating margins. In the first quarter, despite the inefficiencies, you guys had very strong incremental operating margins of over 30%. How should we think about the rest of the year? Should we think about the second quarter, given these commodity cost headwinds, relative pricing being the lowest, and then seeing acceleration again in the back half of the year? Sure. Just broadly speaking, the way I would think about it is gross profit on a full year basis. I think about it as stable. As I think about diving into the second quarter, let's call it, we had a really nice first quarter, just given all some of the challenges, perhaps stable to slightly down on GP. As I think about, again, full year operating margin, one of the items to consider is we always do think in the long term. We do intend to continue to support our brands from an advertising standpoint. We'll make that investment as we think about the rest of the year. Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Scott Thompson for any further remarks. Thank you. To the over 9,000 employees around the world, 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 the Tempur Sealy leadership team and its board of directors. That ends our call today, operator. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.