00:01 Good day, and thank you for standing by. Welcome to the Tempur Sealy International, Inc. Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. 00:28 I would now like to hand the conference over to your speaker today, Aubrey Moore, Investor Relations. Please go ahead.

00:35 Thank you, operator. Good morning, everyone and thank you for participating in today's call. Joining me today are Scott Thompson, Chairman, President and CEO; and Bhaskar Rao, Executive Vice President and Chief Financial Officer. After prepared remarks, we will open the call for Q&A. 00:51 This call includes forward-looking statements that are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve uncertainties and actual results may differ materially due to a variety of factors that could adversely affect the company's business. These factors are discussed in the company's SEC filings, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, under the heading Special Note Regarding Forward-Looking Statements and Risk Factors. 01:23 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 also include non-GAAP financial information. Reconciliations of non-GAAP financial information can be found on the accompanying press release, which has been posted on the company's investor website at investor.tempursealy.com and filed with the SEC. Our comments will supplement the detailed information provided in the press release. 01:55 And now, with that introduction, it's my pleasure to turn the call over to Scott.

02:00 Thank you, Aubrey. Good morning, everyone and thank you for joining us on our 2021 fourth quarter and full-year earnings call. I'll begin with a few highlights from our fourth quarter, Bhaskar then will review our record financial performance in more detail. Finally, we'll conclude with some comments on how our long-term initiatives will drive growth. The team continues to deliver strong results across the world and our omni-channel footprint. 02:30 In the fourth quarter of 2021, net sales grew 29% year-over-year, driven by our successful company initiatives, our pricing actions, improved order-to-delivery times and a solid industry backdrop. The full-year and fourth quarter results were outstanding overall, especially considering the unexpected flare-up of COVID in the fourth quarter, causing disruption in most of our markets. We delivered strong performance across the international segment, ahead of our expectations. 03:09 U.S. order trends in the fourth quarter were slightly below our expectations, particularly with low-end consumers. In the U.S., the rapid spread of Omicron variant, combined with major retailers inventory position been stronger than anticipated, negatively impacted orders in the fourth quarter. But I should note we still achieved a record performance. The inventory dynamics has largely normalized by the end of January. 03:42 Adjusted earnings per share for the fourth quarter was $0.88, an increase of 31% versus the same period last year. This represents double-digit adjusted EPS growth for 10 out of the last 11 quarters. Consumers trend in health and wellness, advances in sleep technology and ongoing innovation in sleep products bode well for the long-term growth of our sector. We are well positioned to capitalize on this trend as the industry leader in innovation. 04:19 As testament to our confidence in our potential from 2016 through 2021, we have repurchased approximately 80 million shares of our…

12:01 Thank you, Scott. I would like to highlight a few items as compared to the prior year. Sales increased a robust 29% to approximately $1.4 billion. Adjusted EBITDA increased 24% to $297 million, and adjusted earnings per share increased 31% to $0.88. 12:25 Turning to North American results. Net sales increased 19% in the fourth quarter. On a reported basis, the wholesale channel increased 18% and the direct channel increased 24%. North American gross margin declined to 41.6%. This was driven by the operational inefficiencies related to COVID and the pricing benefit to sales with no improvement in gross margin. These declines were partially offset by favorable brand mix. Our fourth quarter gross margins improved sequentially as expected, driven by favorable brand mix, resulting from working down our elevated level of Tempur backlog from the prior quarter. 13:08 Leveraging our pricing power, we have implemented multiple price increases in the last four quarters to offset the dollar impact of the highly inflationary environment. These increases demonstrate the power of our brands and products. North American fourth quarter operating margin improved to 21.6%. The improvement was primarily driven by operating expense leverage, partially offset by the change in gross margin. 13:41 Now turning to International. Net sales increased 82% on a reported basis, inclusive of the acquisition of Dreams. On a constant currency basis, International sales increased 85%. As a multi-branded retailer, Dreams sells a variety of products across a range of price points. Their margin profile is lower than our historical International margins, which is driving a major change in year-over-year margins. Excluding Dreams, the underlying margin performance internationally met our expectations across both Europe and Asia Pacific. 14:18 As compared to the prior year, our International gross margin declined to 54.8%. The decline was driven by the acquisition…

18:09 Thank you, Bhaskar. Great job. These past two years further solidified Tempur Sealy's position as a market-leading, vertically-integrated, omni-channel, global company with solid fundamentals and growing category. 18:28 I'd like to take a moment to review the company's initiatives that have driven this performance. We estimate that about half of our growth over the last two years was driven by distribution through new retail customers. Another 35% of the growth is derived from our M&A activities and share gains from previously untapped addressable markets. This includes our acquisition of Dreams and Sherwood Bedding and the addressable markets that were unlocked through our direct and OEM initiatives. The remaining 15% of our two-year growth can be attributed to the growth in the industry overall. 19:10 I'd like to review how our four long-term initiatives underpin our confidence in our ability to continue to achieve above-market performance going forward. Our first key initiative is to develop the highest quality bedding products in all the markets that we serve. We think about our products and brands, we think of award-winning products that provide breakthrough sleep solutions to consumers around the world. 19:39 We are committed to furthering sleep innovation and are in the process of launching a new line of premium Sealy products in the U.S. This updated product line includes a significant upgrade to our industry-leading hybrid mattresses and all-new collection of premium foam mattresses. This line features improved comfort and support, and also utilizes innovative technologies that sleep up to 33% cooler than our previous models. By offering superior support and technologies, we aim to grow Sealy's strong position in the industry. 20:20 Later in 2022, we will be launching all new Tempur products in Europe and Asia-Pacific. This new line of products will have a broader price range with…

29:33 Thank you. Our first question comes from Keith Hughes with Truist Securities. Your line is open.

29:52 Thank you. Just a question on pacing of sales you talked about some order weakness things towards the end of the quarter. If you could just talk about the last couple of months, specifically here in February around President's Day and what the -- how the pace has gone?

30:08 Sure. Thank you for your question. I think you're primarily talking about the U.S., but to be fair and balanced, I would bring it out for the whole world. The International group started off the first quarter, I'd say, strong and solid. When you move to the U.S., you got a little bit of story of two different segments. If you look at the high-end, the high-end is doing well with increasing ASP both from a pricing standpoint and quite a bit of mixing up. So we have seen solid business at the high-end is evidence. 30:45 If you look at our Tempur flagship stores, they started off the first quarter solid and then we moved into President's Day, I would call it, strong with same-store sales so far in President's Day running over 20%. If you look at entry level bedding, lower-end customer, that's been a challenge probably beginning in the fourth quarter, continued into the first quarter and we don't have good information yet on President's Day. 31:18 But in general, I would say that you should expect the entry level customer or we'll call it the stimulus motivated customer to be somewhat of a challenge or a little bit weak here for a period with the higher-end customer continuing to be very strong. And I also think the other thing that's happening in the bedding industry is we're normalizing from, we call it COVID period. We’re during the COVID period the valleys were not that low and the peaks weren't that high, little more steady. 31:49 I think we're going back to more of the traditional trajectory on a month-to-month basis or promotional and non-promotional period, where non-promotional periods the comps will be difficult and maybe even negative, then in the promotional periods the comps will be positive is what it feels like, but I'd call it back to normalized bedding business.

32:15 Thank you. Our next question comes from Curtis Nagle with Bank of America. Your line is open.

32:20 Good morning. Thanks for taking my question. So maybe just piggybacking a bit off of Keith's question. I guess, how should we think about the proportion of sales and sales growth in each half, right? So you talked about 1Q with low-end a little weak, still Dreams of course, adding in the first-half pricing from last year is still there, but yes, you go into 2H, right, you have all these product launches, maybe new business, not sure if that's in the guide or not, probably not, but yeah, proportionately, how should we think about the makeup of the year between two halves?

32:56 Sure. Great question. And I'll handle, then I'll pass it off to Bhaskar to probably give a little more color. Look, we expect a reasonably solid first quarter. We don't do quarterly guidance, obviously, but we would expect certainly double-digit sales growth in the first quarter. I think, you do need to think about some of the investments we're going to be making during the year. 33:20 And let me point couple of those out, first of all, we continue to advertise throughout the fourth quarter and the first quarter as we would precede some of the product launches, which is not normal for us. We're doing something a little different, because the product launch for Stearns & Foster is so important to us as we build a $1 billion brand and the expansion of the International Tempur product is so important to us, we're advertising before those products are in the market incrementally. 33:50 But the other thing we're doing, obviously, last year was a tough year of having our customers on constraint and we've committed as a management team to get back to the service levels that our customers expect. And so, we've pre-hired and we are carrying, I don't know, 250 to 300 extra people, extra, okay, during the slow period of the first quarter from a seasonality standpoint, because we want to be ready for the second and third quarter. That's different than we normally do, but in the current labor market, we think, it's the right thing to do. 34:28 And we're committed from a management team to do everything necessary to make sure that this next year that we deliver in a way that we're used to for our customers. So you're going to get some different seasonality on the EPS growth line is what I'm walking you to. But from the sales line, should be very good. Is that a good way to explain, Bhaskar or…?

34:28 Absolutely. When you think about the sales phasing, if you -- and you called it out, Curt, is Dreams absolutely, you get the other side of that really principally for the first seven months; the pricing, if you think about what happened during the year. So what all that means is that we would expect that the first half from an overall growth standpoint to be higher than the back-half and naturally is that given our guide of 15% to 20% is that we would expect growth in all the quarters in 2022.

35:25 Thank you. Our next question comes from Seth Basham with Wedbush Securities. Your line is open.

35:31 Thanks a lot and good morning. Just a follow-up on some of those questions. If you could, give us some color that you have on Tempur-Pedic and how that brand performed through the President's Day weekend? And then secondly, what gives you the confidence that the low-end consumer softness we're seeing is temporary?

35:48 Great. So, first of all, you have to realize our information on President's Day is obviously takes a little while. So we're probably two or three days ahead of having, what I call, hard information. So let me hedge my comments, it's mainly on verbal, calling out there. Look, I think, Tempur-Pedic had a great President's Day. It feels like, and although we don't have all the public companies reporting at this point, it feels like we continue to take share at the Tempur-Pedic level and we're hearing very positive things from the Tempur side, U.S. Tempur. 36:26 And as I mentioned, probably the best information we have is our own stores, which of course, we get that information instantaneously. And from a same-store standpoint, our Tempur flagship stores are running same-store sales of over 20% in President's Day. So that part of the question, quite frankly is kind of a softball and I appreciate it. The second part of the question is more like a fastball towards the head, which is when do you think the entry level customers coming back and why you have confidence in that area. 36:59 First thing, I have to point out, quite frankly, that customer we don't make that much money on, as you know, the lower ASP beds don't have great margin on, they do cover a lot of good fixed cost. And from that standpoint, I think, in the near-term, we got some tough compares, when you look at March the stimulus checks and timing of that. But if you step back and look at in term (ph) U.S. here U.S. market, you've got consumers debt levels are in good shape, including the lower end that you're talking about, they've gotten great wage growth in that segment. They've got, I…

39:10 Thank you. Our next question comes from Bobby Griffin with Raymond James. Your line is open.

39:17 Good morning, both. Appreciate you taking my questions. I guess, Scott, I just want to, you called out a couple of times in the release, I mean, throughout the year really inefficiencies due to COVID supply chains, different things like that running through the P&L. What’s the guide for the efficiency of the operations in fiscal year '22? Do we get closer back to normal, halfway there, kind of, what are you guys assuming when you bake that in?

39:40 Yeah. Interesting, and great, and complicated question. First of all, let me point out a couple of things that we may not have talked about directly. One thing that's happened in the recent spike in COVID is staffing issues not at Tempur Sealy, but at our customers. And so specialty REIT, bedding retail stores, where they only have one or two staff maybe in the building, they've had trouble keeping some of the stores open. So we've got some closures related to COVID this time around that may not be apparent to you. So, that's hurt us a little bit. 40:21 If you go to the supply chain, I think, the supply chain is the good news. Is it perfect? No, it's not perfect. Is it significantly better than it was at the beginning of the fourth quarter? Yes, without question. Are we damn near close to normal? I'm going to say we're damn near close to normal on the supply chain. And there might be some still some inefficiencies in the manufacturing from people standpoint from absenteeisms, COVID-related stuff, but the supply chain is generally in pretty good shape. 40:57 I mean, the chemicals are back, the inventory levels for Tempur are close to normal, if not normal and we will take a little bit more inventory into the second quarter, because we're fairly bullish on the second quarter. Springs obviously are certainly in good shape and like it's done a great job there. So I think the inefficiencies that are quote left in the system have mainly to do with people and have to do with absenteeisms. So in order to protect ourselves and our customers from that risk, which we felt like we were in control of, look we've over-staffed. 41:35 We hired early. We're training people. And as I mentioned before, we are carrying extra people in U.S. manufacturing, primarily on the Sealy side to make sure that we can get back to normal. There will be some cost that we'll absorb in the first quarter, but I think by the time we get to the second quarter, with no unforeseen events, I would say, in the second quarter, we'll be back to normal operations both from time to delivery and efficiencies. Is that fair, Bhaskar? 42:09 So we're not quite there, but look, we feel -- look, the major accomplishment in the fourth quarter, all of the numbers are very strong at 29% growth, but the major accomplishment is we're back to normal and we're servicing our customers and we've got our sales force back in hunter mode as opposed to trying to service customers and chase orders down. And we think that puts us in a very strong competitive position going into '22.

42:43 Thank you. Our next question comes from Atul Maheshwari with UBS. Your line is open.

42:48 Good morning and thanks a lot for taking my question. I got a multipart question, so I'm going to apologize in advance.

42:54 Okay. So I can write them done very quickly, because I can't remember them.

43:01 Thank you. So what is the level of industry unit growth that you've assumed in this guidance of 15% to 20% revenue increase for '22? And then related to that, can you maybe provide more granular color on the contribution from the various building blocks that get you to this level of revenue growth? Then finally, if low and softness were to persist through the year, do you still believe you can achieve this guidance? Just trying to understand how conservative the guidance is.

43:30 Sure. I'll work on some of that, and then after I mess it up, Bhaskar will clean it up. Look, unit growth, I think, one thing, it's kind of interesting, unit growth in the fourth quarter, because we know our unit growth look it was negative, but we still grew sales 29%. So I think that's the first thing, not that unit growth isn't important, but probably mix is more important than unit growth. I think some other industry experts have been talking about unit growth for 2022 in the U.S. at somewhere between probably zero and 4% is kind of, sounds like to me has been the chatter, but that's probably a good -- that's probably a good estimate. I mean, if I thought we are guessing. But again mix, to us is probably more important than actual unit growth. 44:21 The second question was, the building blocks. And Bhaskar, you want to walk him through you? You got Dreams in there, you got pricing, and there you've got the retail stores that we're opening and obviously you've got some new launches going in there. So I'll let you do the building blocks.

44:40 So, the way I think about it is, with those components what I would say is, overall, outside of the items I'm specifically going to call out, we'd expect growth in all of our channels, all of our segments, all of our geos. Then building upon that, what I would say is, is that we do have Dreams, the other side of that, and let's call that mid-single digits. We have priced the wraparound effect from the 2021 price increases that we took, as well as the new one we put in place during the first quarter, and let's call that mid-single digits. 45:10 Then on top of that what we'd anticipate is again disaggregating a little bit OEM had a great 2021, we'd expect growth from OEM as we get into ‘22 DTC as Scott mentioned, nice momentum both in our online business, as well as our bricks-and-mortar business and we would expect that to drive growth in 2022 as well.

45:31 And I think there's a question as to the extent that the entry-level bedding didn't return, how we think about. I would say our estimate for entry-level bedding is not particularly aggressive. We don't go it in granular detail, where you can just pull it out of the forecast, but certainly we're expecting the entry-level bedding for the months compared to when the stimulus checks really hit be probably be very difficult in the forecast.

46:08 Thank you. Our next question comes from Peter Keith with Piper Sandler. Your line is open.

46:12 Hi. Thanks. Good morning, everyone. I was just want to look back to Q4. I'm just having a little bit difficulty reconciling some of the commentary. So you had the $100 million backlog going into the fourth quarter, but then you mentioned that retailer inventory position that were stronger than expected. So, can you bridge me to those two comments, because they seemed to conflict? And then, where did you finish the year with backlog that's carrying over into the new year?

46:40 Yeah. Good observation, because they do conflict. Look, we left -- let's go back. We left the third quarter -- the third quarter earnings conference call, there hadn't been -- we hadn't -- COVID hadn't picked back up, strong backlog in Tempur $100 million. We got comfortable normal and everybody in the industry, I would say, manufacturing kind of got caught up and the manufacturers industry-wide were providing retailers bedding at a more normal pace, okay. And then we had a little bit of a slow spot. And here is from talking to retailers, we don't get perfect information, because the retailers don't give us their inventory positions that we can tick and tie to it, but here's what I believe happened. 47:35 Remember, we had the industry on constraint for over a year probably almost 18 months, okay, which, of course, we've never done before. And during that period, we were on hard allocation. The retailers were aggressively kind of what we call it gaming (ph) the system and we were monitoring it to make sure we were doing what was fair for everybody. And over the 12-month period or 18 month period, I believe that retailers in general went from what I'll call a natural inventory in the system, which we normally don't talk about because it's not that much of two to three weeks would be kind of like normal industry inventory, and I think they squirreled away some beds and ordered some beds and they probably got their inventories up to more like three to four weeks as they try to build some safety stock, because all of the manufacturers in the industry were not delivering quote on time. 48:32 And over that period of time built up an extra week or so of inventory, which again doesn't sound like a lot and makes perfect sense. But then in the fourth quarter, when everybody opened up and it's seasonally a little softer quarter naturally, they rightsized their inventories back to the two to three weeks, which, call it, a 5% to 7% catch-up as the industry normalized their inventory from the safety stock that they had kind of squirreled away on us how we reconcile it, but it was a surprise to us. At the time retailers were screaming for more inventory, but I think they were probably a little bit of gaming of the system as they provided us the information demands that they were seeing.

49:27 Thank you. Our next question comes from Laura Champine with Loop Capital. Your line is open.

49:33 Thanks for taking my question. I wanted to ask about what looks like an inventory build as you exited the quarter. Did sales trends weaken relative to your expectations as you exited the quarter or did you build inventories because of the supply chain issues that kind of plagued the whole year last year?

49:52 Well, we certainly are building inventory of Tempur, we've been all year, we were light on Tempur, we weren't optimized from an inventory standpoint and certainly the message and business plan is to go into the busy season this year, heavier on inventory than we were last year. And since the product never becomes obsolete, it makes sense for us to carry some inventory and make sure that we're a top notch. 50:23 Having said that, I would say probably from a phasing standpoint towards the end of the fourth quarter, probably sales were a little bit wider. But I don't think that, and I think it has to do with some of this normalization of inventory levels at the retail level. So I call it, slightly softer in December. But if you've seen an inventory build, I would say, the lion's share of that is strategic.

50:47 That is correct. And Laura, just to double-tap on that a bit is, yes, we did get in a better inventory position. The majority or the most of that build associated with adjustables. So we have a very long lead time and we want to make sure that, as Scott said, as we get into the 2022 and around these holidays, we want to make sure that we have plenty of supply not only of mats, but of adjustables and foundations, et cetera.

51:09 Yeah. I really think one of the key competitive advantage is, a company like Tempur Sealy has as we've got the financial strength to make some strategic investments. And at a time when world is little complicated, we certainly are making some investments to make sure that we service our customers in the best way possible and hopefully industry leading.

51:33 Thank you. And our next question is from Brad Thomas with KeyBanc Capital Markets. Your line is open.

51:39 Hi. Good morning. Thanks for taking my question. Do you -- maybe more housekeeping items. First, Bhaskar, if I missed it, could you just remind me what the expectation is for commodities as an impact in dollars or basis points as we're thinking about this year? And then, I was wondering, if you all -- also could maybe put a little more context around what percentage of your business you think as addressing the low end versus the metal, versus luxury? I'd just be curious, if your take on how much you think you have exposure to the low end? Thanks.

52:14 As it relates to commodities, what I would say is over the last couple of years 2021, the amount of commodities that inflation that we've seen is really unprecedented. What I do also feel good about though is the power of our products and our brands, we've been able fully neutralize the impact of commodities on a dollar basis, not only in 2021, but our expectation is that in 2022, that there could be impacted commodities will be able to fully offset that with the price increases that we've taken. Don't -- we get into the magnitude of what we're seeing in ‘22. 52:51 But what I would say is that we are an expectation leaving ‘21, as we talked about in the fourth -- in our third quarter call. We've seen some slight increases since that point in time, however, still within the range of reasonableness. And in our guidance, what we've assumed is that they stay at the peak in the second quarter and they remain for the rest of the year. So if there is deflation that would be a bit of upside for us.

53:16 Yeah. I think it's probably fair to say that and they obviously could change quickly, but what we see today, we probably are anticipating another price increase in the near term. We feel pretty good about what we've done from a pricing standpoint versus cost standpoint. So we think we're in pretty good shape there and go forward. Things could change, but that's where it sits today. And then you asked about what percentage of our business is entry level. I think it was how you define entry level and I don't know about Bhaskar – I think 10%, 15% is probably.

53:55 Yeah.

53:56 Maybe kind of within the realm and the profitability of that sector is obviously as I talked about before, not the same as the higher end. So again, when we talk internally as we run our business plans and think about the business, not that you're -- not interested in that segment. But let me tell you mix is what it's about and that's one of the reasons why we're very interested in our Stearns & Foster brand and mix is much -- our P&L is much more sensitive to mix. Good news is, retailers' P&L also much more sensitive to mix. And so we're aligned with our customers from that standpoint.

54:43 Thank you. Our next question comes from Jonathan Matuszewski with Jefferies. Your line is open.

54:48 Great. Thanks so much. Appreciate all the color, Scott and Bhaskar. Following up on the topic of mix maybe from a different angle. There has been some more data points here and there regarding mattress size preferences evolving during the pandemic, and maybe if you could just share to the degree to which TPX has been benefiting and how sustainable you see that shift that we've seen from Queen to King over the past, call it, 24 months? Thanks.

55:21 Sure. No question that there has been a shift and we'll call it SKU size and the King is leading the way. I'm sure that's coming from housing formation certainly moving out of an apartment into a house gives you an opportunity to upsize your bed, probably a little bit of pandemic and spend more time, some people are working in their beds and living in their beds. And it's part of the growth that we see in ASP. And I think it's going to continue. And Bhaskar do you want anything to add -- it’s good.

56:01 Yeah.

56:06 Thank you. Our next question comes from Carla Casella with JPMorgan. Your line is open.

56:12 Hi. Just on that same question about the promotional market and lower end. I guess you talked about the valleys -- and the peaks and valleys and how promotional spend will go this year and things returning to more normal. Does that imply that the more of the products will be sold on promotion, so we could see margin pressure from that?

56:36 Yeah. We did not change our promotional cadence or discounts last year during , so maybe some of the retailers did. So from Tempur Sealy standpoint being more promotional, is it going to be significant to the financial statements and the promotions that we have during the period, even though it may be more units sold in there, won't be material to our financial statements. I think what I'm really talk is talking about is retailers. Some retailers, look because you have to look at from a retail standpoint, they did -- they were having trouble getting supply last year and so they pulled back on their promotions and pulled back on their advertising because they are having -- they couldn't service the customers that were just walking in the door. When I said, the industry is going to be more normal. It is -- the retailers are going to have to get back to spending historical amounts and promotion, and advertising and doing the things that they normally do. And now that we're able to service them at the volumes confidently. I think the retailers will step up and do their part, but we didn't change advertising or promotions last year. So we don't have a bad comp going forward in that area.

58:02 Thank you. Our next question comes from Seth Basham with Wedbush Securities. Your line is open.

58:10 Thanks for taking the follow-up. Just a couple of questions on the margins. First, in terms of the fourth quarter performance with most of the sales impact at the lower end, which doesn't carry that much in terms of March contribution. Your margin degradation, so to speak, did seem pretty high, and I am just trying to square that away? Secondly, for 2022, when you think about the building blocks for the cost pressures advertising $550 million. What was that versus in 2021 and similarly for launch cost what was that in ‘21?

58:41 Sure. Dreams is probably your margin in fourth quarter.

58:46 Well, fourth quarter, I actually I think margins were very much in line with how we thought they would come in, if you think about the sequential improvement that we saw going from the third quarter, fourth quarter, we expected some improvement, principally driven by the high-end in that backlog filling, yes, there was a bit of weakness on the low-end and the inventory rebalancing which was across both brands. But we were very pleased with the gross margin performance in the fourth quarter. Year-over-year when you look at it, yes, there is a variance. But it's caused by the fact of the power of our brands and we'll bit able to offset the commodity inflation that we're seeing price. What was the second question?

59:29 In 2022, talk about the advertising launch costs.

59:36 Incremental launch costs and incremental advertising as a dollar and probably as a percentage of sales is probably where he was shooting for?

59:42 Absolutely. So when you think about that -- our K will drop this evening. So you'll have it in front of you to do it. What I would say is, is that both on dollars as well as rate, we would expect incremental advertising to be able to support our brands and really see the market in advance of the products that we have coming out. As it relates to launch cost, the incremental investments that we're putting around these would be $50 million.

60:09 And I think when you talk about advertising, there is two ways to think about it. We're not advertising aggressively to sell current product. We're not having to add push. We're not having higher cost for customer acquisition costs, and that's what I've been trying to make sure is clear. What we're doing is something different. We have two major market moves that we're trying to do. And it is required a little bit of pre-investment and that is Stearns & Foster, we're talking about taking a brand that has been relatively minor and moving it into a category of a $1 billion brand at very good margins for us and very good margin for the retail. So this is a major move. It is not a normal Stearns launch. And so there is some incremental expenses. We're going to spend the standards up for the long term. 61:03 And then as we've talked about numerous times the Sealy, I mean the Tempur-Pedic launch internationally again is not a normal launch. This is something that we're working on for three or four years to hit a much broader addressable market. And when you do that, you're not doing a normal launch, you're willing to spend some money to make sure that this goes right. The good news is, there is clearly green shoots in both areas. Our Stearns & Foster brand in the fourth quarter grew it like 35% and this is before we have the new product in the marketplace. And the International group has continued to perform, I'll call it above our expectations and quite frankly above trend line again before the product even hits the market. So, we are feeling pretty good about it and we'll get a really good read on it, it's going to be a few quarters whether we will know whether this strategy worked or this money was productive, but right now, we feel very good about both of those strategic moves we're making from an advertising standpoint.

62:11 Thank you. This concludes the question-and-answer session. I would now like to turn the call back over to Scott Thompson for closing remarks.

62:17 Thank you, operator. To the over 12,000 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 Tempur Sealy's leadership team and the Board of Directors. This ends our call today, operator. Thank you.

62:42 This concludes today's conference call. Thank you for participating. You may now disconnect.