Scott Thompson: Yes. I don’t know. That’s something we’ve always looked at. We’ve got a great partnership with Leggett for sure. They do a fabulous job for us. We’ve got some other manufacturers that are doing good job for us. And we make a good bit of our springs already. We make our own springs in the Asian market.
Bhaskar Rao: JV.
Scott Thompson: JV. Mexico we make our own springs. We make a few here in the US. So, we’ll continue to use kind of what I’ll call a blended strategy of best-in-class spring manufacturers and build some of our own and continue to look at the economics in the pluses, but right now I think we’re very happy with the current relationships we have and the mix that’s both we’ll call it in-sourced and outsourced from a spring standpoint.
Keith Hughes: Okay. Thank you.
Operator: And one moment for our next question. Our next question will come from Laura Champine of Loop. Your line is open.
Laura Champine: Good morning. Thanks for taking my question. Could we get any more context on how TPX formulated the divestiture plan related to the Mattress Firm acquisition? And then just anything you’re comfortable saying about next steps?
Scott Thompson: Yes, you’re probably not going to get much there. The FTC lawyers will call me after the call and whip me like a dog. What I would tell you is, there is a formal process that goes on in that area and it’s ongoing and flexible. But other than that, I really can’t give you any color, other than to tell you there’s been good interest in the package and the activity.
Laura Champine: Thanks, Scott. I did not mean to cause you peril. Maybe we can talk a little bit about expected AUR and mattresses this year and that will be a little less controversial?
Scott Thompson: There you go. AUR that be you, Bhaskar.
Bhaskar Rao: Yes. And just to make sure that we’re on the same page, Laura, that’s ASP, average sales price?
Laura Champine: Correct. Correct.
Bhaskar Rao: Absolutely. So the way that we’re thinking about it currently is again, very excited about what’s happening with Adapt. Breeze continues to have legs. So just to make sure we’re grounded. Adapt largely will be complete in the first quarter and then it’s out there. That is great. It’s ahead of where we were from a Breeze standpoint. So the momentum will build. And what’s very nice about that is our expectation is, is that Adapt and Breeze will live harmoniously together if you exclude the impact of four models. So what that would mean is, we’re not expecting that ASP will be materially one way or the other let’s call it flattish. On an overall basis, when you think about the US, our expectation is that there’s not going to be a significant difference sitting here today, as it relates to how we think about units and dollars.
So the implication there is that ASP is going to be flattish broadly speaking across the world. Again, what I would call out as I referenced this before is that eventually the consumer is going to come back. We feel like there’s momentum that’s happening from a consumer getting back a little bit as we think about the back half of the year and beyond. So as that consumer does come back, they will come back at all price points; however, is it that incremental EBITDA, but it is something to be mindful of as those units come back and where they come back to.
Laura Champine: Great. Thank you very much.
Bhaskar Rao: Thank you.
Operator: One moment for our next question. Our next question will be coming from William Reuter of Bank of America. Your line is open.
William Reuter: Hi. Just kind of follows on that last question. But you mentioned you expect ASP to be flat. Are you seeing a trade down currently? Are you currently seeing ASP flat? Or are you seeing greater strength at lower price points? I know you have Stearns & Foster rollout last year so that may be contributing to some greater success there. But any comments on mix?
Scott Thompson: Yeah. On mix, we’re generally seeing the higher priced units do better than the lower-priced units. That’s a trend that has been around for a year or so. I would say the gap has narrowed some, but we continue to see that mix. We haven’t seen any deterioration in the strength of the higher end. And I think in general, what I think Bhaskar’s talked about correct me if I’m wrong, on a like-for-like basis we aren’t expecting to see ASP increases as there’s quite a bit of pricing put in the market over the last few years due to commodity increases. And it feels like the commodity thing is behind us and price on a like-for-like basis is stabilized.
William Reuter: Thanks so much.
Operator: One moment for your next question. Our next question will come from Jonathan Matuszewski of Jefferies. Your line is open.
Jonathan Matuszewski: Great. Good morning. And thanks for taking my question. Scott and Bhaskar, I was hoping you could expand upon your recent conversations with retail partners, sounds like you’re hearing from them a little bit of a change in mindset regarding advertising spend with them signaling to you some year-over-year increases in their budgets for 2024. So any added color that could provide context for us in terms of what’s changing their mindset to get a little bit more aggressive in their own ad spend? Thanks so much.
Scott Thompson: Sure. Look, when you look at the retail business model, it’s got quite a bit of fixed cost. The retailers have absorbed quite a bit of sales decrease. And so I think the obvious thing to do if you’re a retailer and you’re trying to get your sales going. If you look at your content make sure your advertising quality content and see whether or not you can spend a little bit more and get a high return on investment because floor traffic has been down. Clearly, we’re waving the flag about the need for the industry not just any individual retailer or manufacturer advertised but it takes a village and we’ve been fairly aggressive about asking others to pony up and we’re of course doing our share by historical standards we’re leaning in heavy in that.
And I think the people that have invested in advertising are getting good returns. And to the extent that that continues hopefully we’ll get some other manufacturers and some more retailers leaning in. And like I said we’ve got — I think two off the top of my head that are leaned in and I think that’s going to be part of the turnaround story in 2024 is the market — people getting back to understanding the category and the category has driven sure on consumer confidence but you also have to have a good bit of advertising in the marketplace for the industry to succeed.
Jonathan Matuszewski: That’s really helpful. Thank you.
Operator: Okay. And I’m showing no further questions at this time. I would now like to turn the call back to Scott Thompson for closing remarks.
Scott Thompson: Thank you. To our 12,000 employees all around the world, thank you for all 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 the call today, operator. Thank you.
Operator: Certainly. This concludes today’s conference call. Thank you for participating. You may now disconnect.
