Q4 2025 Somnigroup International Inc Earnings Call

February 17, 2026

Operator: At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn the conference call over to Aubrey Moore, Investor Relations. Please go ahead.

This time all lines are in a lesson. Only about following the presentation, we will conduct a question and answer session.

If anyone has any difficulties hearing the conference?

Please press star zero for operator assistance at any time.

I would now like to turn the conference call over to Aubrey Moore investor relations. Please go ahead.

Thank you, operator.

Aubrey Moore: Thank you, operator. Good morning, 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. 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. Any forward-looking statement speaks only as upon the date it, from 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.

Good morning and thank you for participating in today's call. Joining me today, are Scott Thompson chairman president and CEO.

And Bhaskar Ralph Executive, Vice President and Chief Financial Officer.

This calling includes 4 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 former 10K and quarterly reports on form 10 Q.

Any forward-looking statements speaks only as of on the date that from 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. Reconciliations of this non-gaap, financial information can be found in the accompanying. Press release.

Aubrey Moore: Reconciliations of this non-GAAP financial information can be found in the accompanying press release, which has been posted on the company's website at www.somnigroup.com and filed with the SEC. Our comments will supplement the detailed information provided in the press release. Finally, before I turn the call over to Scott, I want to take a moment to share that this is my final earnings call in this role. I am transitioning to Somnigroup Vice President, Consumer and Market Intelligence. I'm pleased to say that Lauren, who many of you know well, will be leading investor relations going forward. It has been a privilege to work closely with our investor community, and I'm confident Lauren will continue to serve as a strong partner going forward. With that, it is my pleasure to turn the call over to Scott.

which has been posted on the company's website at www.somnomed.com

Before I turn the call over to Scott. I want to take a moment to share that. This is my final earnings call in this role.

I am transitioning to sneaker vice president consumer and Market intelligence, I'm pleased to say that Lauren whom many of, you know, well will be leading investor relations going forward.

It has been a privilege to work closely with our investor community and I'm confident Lauren will continue to serve as a strong partner going forward.

And with that, it is my pleasure to turn the call over to Scott.

Aubrey, thank you for your outstanding contributions to investor relations.

Scott Thompson: Aubrey, thank you for your outstanding contributions to investor relations. Maybe even a bigger thank you for you jumping into your new role at SGI. It is important to our future success. Moving on to today's earnings call. Good morning, thank you for joining us on our Q4 and full year 2025 earnings call. I'll begin with highlights for the quarter and full year and then turn the call over to Bhaskar to review our financial performance in more detail and discuss our 2026 guidance and our updated 3-year EPS targets. After that, I'll open the call up for Q&A. In the Q4 2025, we achieved record net sales and Adjusted EBITDA, while our Adjusted EPS increased a robust 20%. Year-over-year, net sales were up approximately 55% to $1.9 billion.

Scott L. Thompson: Aubrey, thank you for your outstanding contributions to investor relations. Maybe even a bigger thank you for you jumping into your new role at SGI. It is important to our future success. Moving on to today's earnings call. Good morning, thank you for joining us on our Q4 and full year 2025 earnings call. I'll begin with highlights for the quarter and full year and then turn the call over to Bhaskar to review our financial performance in more detail and discuss our 2026 guidance and our updated 3-year EPS targets. After that, I'll open the call up for Q&A. In the Q4 2025, we achieved record net sales and Adjusted EBITDA, while our Adjusted EPS increased a robust 20%. Year-over-year, net sales were up approximately 55% to $1.9 billion.

Maybe even a bigger thank you. For you jumping into your new role at SGI. It is important to our future success.

Moving on, to today's earnings call.

Good morning, thank you for joining us on our fourth quarter in full year 2025 earnings call.

I'll begin with highlights for the quarter in full year and then turn the call over to bosker to review our financial performance in more detail and discuss our 2026 guidance and our updated 3year EPS targets.

After that, I'll open the call up for Q&A.

And the fourth quarter of 2025. We achieved record net sales and adjusted ibid die. All our adjusted EPS increased a robust 20%.

Year-over-year, net sales were up approximately 55% to 1.9 billion.

Scott Thompson: Adjusted EBITDA was up approximately 59% to $349 million, and adjusted EPS was $0.72 per share. This financial performance was particularly notable, given it was achieved while the industry is at a record low and underperformed our expectations. 2025 proved to be another challenging year for the bedding industry. We estimate the US industry trend declined mid-single digits in the Q4 and full year. The non-US markets we operate in were similarly challenged. After multiple year headwinds, we are confident the bedding industry will normalize to at least historical growth trends in the near future. Our conviction and our industry outlook is supported by our demand-driven innovation, compelling advertising, the industry's pent-up product demand, growing health and wellness trends, consumer confidence, and future growth in housing formation.

Scott L. Thompson: Adjusted EBITDA was up approximately 59% to $349 million, and adjusted EPS was $0.72 per share. This financial performance was particularly notable, given it was achieved while the industry is at a record low and underperformed our expectations. 2025 proved to be another challenging year for the bedding industry. We estimate the US industry trend declined mid-single digits in the Q4 and full year. The non-US markets we operate in were similarly challenged. After multiple year headwinds, we are confident the bedding industry will normalize to at least historical growth trends in the near future. Our conviction and our industry outlook is supported by our demand-driven innovation, compelling advertising, the industry's pent-up product demand, growing health and wellness trends, consumer confidence, and future growth in housing formation.

Adjusted debit de was up approximately 59%, to 349 million and adjusted EPS was 72 cents per share.

This financial performance was, particularly notable given it was achieved while the industry is at a record, low and underperformed, our expectations.

2025 proved to be another challenging year for the betting industry.

We estimate the US industry Trend declined. Mid single digits in the fourth quarter and full year.

the non-us markets we operate in were similarly, challenged

After multiple year headwinds, we are confident in the betting industry will normalize to at least historical growth Trends in the near future.

Our conviction in our industry Outlook is supported by our demand-driven Innovation compelling advertising. The industry's pent-up product demand

Growing health and wellness, Trends, consumer confidence and future growth. In housing formation.

Scott Thompson: We'll continue to strive to win market share gains, drive cost efficiencies, and prudently allocate capital, all to deliver shareholder returns. Before turning the call over to Bhaskar, let me highlight several notable achievements in 2025, which marked a transformational year for Somnigroup. Our first highlight is the successful execution of the Mattress Firm combination and transition to Somnigroup International. We've made significant progress with the combination in our first year, and we're still in the early stages of realizing all of the benefits. We brought all of our business units together through a holding company structure with unified management and a shared business strategy and focus. This structure allows us to operate effectively while maintaining a large degree of independence at the business unit level.

Scott L. Thompson: We'll continue to strive to win market share gains, drive cost efficiencies, and prudently allocate capital, all to deliver shareholder returns. Before turning the call over to Bhaskar, let me highlight several notable achievements in 2025, which marked a transformational year for Somnigroup. Our first highlight is the successful execution of the Mattress Firm combination and transition to Somnigroup International. We've made significant progress with the combination in our first year, and we're still in the early stages of realizing all of the benefits. We brought all of our business units together through a holding company structure with unified management and a shared business strategy and focus. This structure allows us to operate effectively while maintaining a large degree of independence at the business unit level.

We'll continue to strive to win market. Share gains drive cost, efficiencies and prudently allocate Capital all to deliver shareholder returns.

Before turning the call over to bosser, let me highlight several notable achievements in 2025, which marked a transformational year for somi group.

Our first highlight is a successful execution of The Mattress Firm combination and transition to somni Group International.

We've made significant progress with the combination in our first year and we're still in the early stages of realizing, all of the benefits.

Brought all of our business units together. If you're a holding company structure with unified Management, in a shared business, strategy and focus,

This structure allows us to operate effectively while maintaining a large degree of Independence at the business unit level.

Scott Thompson: Building upon the successful combination of Mattress Firm, we were able to accelerate the pace of sales and cost synergies, exceeding our initial expectations. We now expect to deliver $225 million in total EBITDA synergies, $125 million in cost synergies, and $100 million from sales synergies. Bhaskar will provide more color on the increase in our cost synergy outlook in just a moment. We cemented our position as the largest bedding company in the world, allowing us to drive economies of scale, streamline operations, reduce product cost, invest in advertising, and fully support industry partners. Lastly, this transaction drove earnings, de-risked distribution volatility, as we are now 65% direct to consumer, and positioned us for sustainable growth.

Scott L. Thompson: Building upon the successful combination of Mattress Firm, we were able to accelerate the pace of sales and cost synergies, exceeding our initial expectations. We now expect to deliver $225 million in total EBITDA synergies, $125 million in cost synergies, and $100 million from sales synergies. Bhaskar will provide more color on the increase in our cost synergy outlook in just a moment. We cemented our position as the largest bedding company in the world, allowing us to drive economies of scale, streamline operations, reduce product cost, invest in advertising, and fully support industry partners. Lastly, this transaction drove earnings, de-risked distribution volatility, as we are now 65% direct to consumer, and positioned us for sustainable growth.

building upon the successful combination of Mattress Firm, we're able to accelerate the pace of sales and cost synergies exceeding, our initial expectations

We now expect to deliver 225 million in total ibid dose synergies.

125 million in cost synergies and 100 million from sales synergies Bhaskar will provide more color on the increase in our cost Synergy Outlook in just a moment.

We seem in at our position as the largest Betting Company in the world allowing us to drive economies of scale. Streamline operations, reduce product costs and best in advertising and fully support industry partners.

Lastly, this transaction drove earnings.

De-risk distribution volatility, as we are now 65% direct to consumer.

Any positioned us for sustainable growth.

Our second highlight is the strength of our operating model.

Scott Thompson: Our second highlight is the strength of our operating model, which allows us to aggressively execute its long-term growth initiatives while remaining responsive to current market conditions. In 2025, we drove share gains across all business segments, extending our lead as the world's largest bedding company. Our competitive advantage underpin these strong results and include a diverse portfolio of trusted brands and innovative products, our unmatched global scale and vertically integrated business model, a broad omni-channel reach with our products sold through tens of thousands of third-party retail stores worldwide and direct-to-consumer. And finally, our strong cash generation and disciplined capital allocations, which supports reinvestment in the business, returning cash to shareholders, deleveraging, and providing dry powder to capitalize on compelling opportunities, such as our recent investments in Purple and Kingsdown.

Scott L. Thompson: Our second highlight is the strength of our operating model, which allows us to aggressively execute its long-term growth initiatives while remaining responsive to current market conditions. In 2025, we drove share gains across all business segments, extending our lead as the world's largest bedding company. Our competitive advantage underpin these strong results and include a diverse portfolio of trusted brands and innovative products, our unmatched global scale and vertically integrated business model, a broad omni-channel reach with our products sold through tens of thousands of third-party retail stores worldwide and direct-to-consumer. And finally, our strong cash generation and disciplined capital allocations, which supports reinvestment in the business, returning cash to shareholders, deleveraging, and providing dry powder to capitalize on compelling opportunities, such as our recent investments in Purple and Kingsdown.

Which allows us to aggressively execute, its long-term growth initiatives, while remaining responsive to current market conditions.

In 2025, we drove share gains across all business, segments, extending our lead as the world's largest debt in company.

Our competitive Advantage, underpin, these strong results and include.

Our diverse portfolio of trusted Brands and Innovative products.

Our unmatched global scale and vertically integrated business model.

A broad Omni Channel reach with our products. Sold through tens of thousands of third-party. Retail stores worldwide.

And directed consumer.

And finally, our strong cash generation and discipline Capital allocations, which supports reinvestment in the business returning, cash to shareholders.

be leveraging and providing dry power to capitalize on compelling opportunities, such as our recent investments, in full power in Kingstowne,

The third highlight is the outperformance of our us empirically business.

Scott Thompson: The third highlight is the outperformance of our US Tempur Sealy business, supported by innovative new products, targeted advertising initiatives, and expanded distribution. In 2025, we launched our all-new Sealy Posturepedic line, the largest launch in our history, with over 65,000 floor samples shipped. The launch is performing well, and the new collection is driving meaningful sales growth. This year also marked the first national advertising investment to support the Sealy brand and product, amplifying Sealy's share of voice and driving valuable customer traffic industry-wide. As we look ahead to 2026, we're excited to continue investing in national advertising designed to drive traffic to retailers and reinforce our commitment to innovation with the launch of our new Stearns & Foster products in the back half of the year.

Scott L. Thompson: The third highlight is the outperformance of our US Tempur Sealy business, supported by innovative new products, targeted advertising initiatives, and expanded distribution. In 2025, we launched our all-new Sealy Posturepedic line, the largest launch in our history, with over 65,000 floor samples shipped. The launch is performing well, and the new collection is driving meaningful sales growth. This year also marked the first national advertising investment to support the Sealy brand and product, amplifying Sealy's share of voice and driving valuable customer traffic industry-wide. As we look ahead to 2026, we're excited to continue investing in national advertising designed to drive traffic to retailers and reinforce our commitment to innovation with the launch of our new Stearns & Foster products in the back half of the year.

Supported by Innovative new products.

Targeted advertising initiatives and expanded distribution.

In 2025, we launched our all-new, cely postup line.

The largest launch in our history with over 65,000, floor samples shipped.

The launch is performing well, and the new collections driving meaningful sales growth.

This year. Also, marked the first national advertising investment to support the seaweed brand. And products, amplifying, cely, share a voice and driving valuable customer traffic industrywide.

As we look ahead to 2026, we're excited to continue investing in National advertising, designed to drive traffic to retailers, and reinforce our commitment, to Innovation with the launch of our new Stearns, and Foster products in the back half of the year.

Fourth highlight. Is that matches firms. All year performance outpace the broader US market.

Scott Thompson: Fourth highlight is that Mattress Firm's full-year performance outpaced the broader US market, driven by our refined merchandising strategy, strengthened supplier relations, and exceptional in-store execution. Since closing the acquisition, we've elevated Mattress Firm's merchandising. Our focus has been on curating a portfolio of complementary products that deliver exceptional quality and value across all price points. We deepened partnerships with some suppliers, who not only met our quality standards, but also actively supported Mattress Firm's success through differentiated offerings and traffic-driving advertising initiatives. We also activated multiple initiatives to deliver retail excellence, including optimizing marketing strategies, enhancing the in-store experience, and leveraging our best-in-class retail talent, supporting them with quality sales tools and training to provide customers with targeted sleep solutions.

Scott L. Thompson: Fourth highlight is that Mattress Firm's full-year performance outpaced the broader US market, driven by our refined merchandising strategy, strengthened supplier relations, and exceptional in-store execution. Since closing the acquisition, we've elevated Mattress Firm's merchandising. Our focus has been on curating a portfolio of complementary products that deliver exceptional quality and value across all price points. We deepened partnerships with some suppliers, who not only met our quality standards, but also actively supported Mattress Firm's success through differentiated offerings and traffic-driving advertising initiatives. We also activated multiple initiatives to deliver retail excellence, including optimizing marketing strategies, enhancing the in-store experience, and leveraging our best-in-class retail talent, supporting them with quality sales tools and training to provide customers with targeted sleep solutions.

Driven by our refined merchandising strategy.

Strengthening supplier relations and exceptional in store execution.

Since closing the acquisition, we've elevated mattress. Firm's merchandising.

Our Focus has been on curating and portfolio complimentary products that deliver exceptional quality and value across all price points.

We deepened Partnerships with some suppliers. We not only met our quality standards but also actively supported mattress room Success Through differentiated offerings and traffic driving advertising initiatives.

We also activated multiple initiatives to deliver retail excellence.

Scott Thompson: Now 65% direct-to-consumer and positioned us for sustainable growth. Our second highlight is the strength of our operating model, which allows us to aggressively execute its long-term growth initiatives while remaining responsive to current market conditions. In 2025, we drove share gains across all business segments, extending our lead as the world's largest bedding company. Our competitive advantage underpin these strong results and include a diverse portfolio of trusted brands and innovative products, our unmatched global scale and vertically integrated business model, a broad omni-channel reach with our products sold through tens of thousands of third-party retail stores worldwide, and direct-to-consumer. Finally, our strong cash generation and disciplined capital allocations, which supports reinvestment in the business, returning cash to shareholders, deleveraging, and providing dry powder to capitalize on compelling opportunities, such as our recent investments in Purple and Kingsdown.

Positioned us for sustainable growth.

Including optimizing marketing strategies and enhancing the in-store experience and leveraging, our best-in-class retail Talent.

Our second highlight is the strength of our operating model, which allows us to aggressively execute against long term growth initiatives.

Supporting them with Quality, Sales tools, and training to provide customers with targeted sleep Solutions.

Remaining responsive to current market conditions.

Scott Thompson: Additionally, we're making steady progress on our plan to invest $150 million between 2025 and 2027 to refresh certain Mattress Firm stores, bringing them up to our brand standards. Further, we've ramped installation of Tempur brand walls, which lead to improved customer engagement and education. These brand walls, placed at both Mattress Firm and other retailers, have proven to be a worthwhile investment by driving higher retail ASP. We made substantial progress in expanding this initiative in the back half of 2025, and we remain firmly on track to complete the rollout across all Mattress Firm stores nationwide by the end of the year.

Scott L. Thompson: Additionally, we're making steady progress on our plan to invest $150 million between 2025 and 2027 to refresh certain Mattress Firm stores, bringing them up to our brand standards. Further, we've ramped installation of Tempur brand walls, which lead to improved customer engagement and education. These brand walls, placed at both Mattress Firm and other retailers, have proven to be a worthwhile investment by driving higher retail ASP. We made substantial progress in expanding this initiative in the back half of 2025, and we remain firmly on track to complete the rollout across all Mattress Firm stores nationwide by the end of the year.

In 2025, we drove share gains across all business segments, extending our lead as the worlds largest bedding company.

To refresh certain mattress from stores, bringing them up to our brand standards.

Our competitive advantage underpinned the strong results and include.

Further, we've ramped installation of Timber brand walls, which lead to improved customer engagement and education.

Our diverse portfolio of trusted brands and innovative products.

Our unmatched global scale and vertically integrated business model.

Abroad, Omnichannel reach with our products sold through tens of thousands of third party retail stores worldwide.

These brand walls placed at both Mattress Firm, and other retailers have proven to be a worthwhile investment by driving higher retail. Asp.

Direct to consumer.

And finally, our strong cash generation and disciplined capital allocations, which support reinvestment in the business.

They made substantial progress in expanding this initiative in the back half of 2025 and we remain firmly on track to complete the rollout across all mattress from stores nationwide at the end of the year.

Turning cash to shareholders dealer.

Deleveraging.

Providing dry powder to capitalize on compelling opportunities such as our recent investments in full-power in Kingston.

As previously mentioned, we entered took a new advertising strategy from mattress for to harmonize the message.

Scott Thompson: As previously mentioned, we undertook a new advertising strategy for Mattress Firm to harmonize the message with Somnigroup initiatives, culminating in the launch of our new Mattress Firm advertising campaign, Sleep Easy, in the back half of 2025. We introduced new campaign iterations into the marketplace over the last quarter and continued to achieve all-time high market research scores. Key performance indicators consistently indicate that the campaign is having a measurably positive impact upon customers' impression of Mattress Firm and the brands being presented, enhancing awareness and triggering consumers' interest in bedding, benefiting all bedding retailers. The campaign's strong performance has already prompted two non-SGI vendor partners to commit additional advertising dollars directly to Mattress Firm to capitalize on the opportunity both our scale and our new messaging platform now clearly represents for bedding brands.

Scott L. Thompson: As previously mentioned, we undertook a new advertising strategy for Mattress Firm to harmonize the message with Somnigroup initiatives, culminating in the launch of our new Mattress Firm advertising campaign, Sleep Easy, in the back half of 2025. We introduced new campaign iterations into the marketplace over the last quarter and continued to achieve all-time high market research scores. Key performance indicators consistently indicate that the campaign is having a measurably positive impact upon customers' impression of Mattress Firm and the brands being presented, enhancing awareness and triggering consumers' interest in bedding, benefiting all bedding retailers. The campaign's strong performance has already prompted two non-SGI vendor partners to commit additional advertising dollars directly to Mattress Firm to capitalize on the opportunity both our scale and our new messaging platform now clearly represents for bedding brands.

With somni group initiatives, culminating in the launch of our new mattress firm advertising campaign.

The third highlight is the outperformance of our U S Tempur Sealy business.

Sleep, easy in the back half of 2025.

Courted by innovative new products.

We introduced new campaign iterations into the marketplace.

Targeted advertising initiatives.

Expanded distribution.

Over the last quarter and continues to achieve all-time.

In 2025, we launched our all new Sealy posture P decline.

Hi market, research scores.

The largest launch in our history with over 65000 more samples ship.

The launch is performing well and our new collections driving meaningful sales growth.

This year also marked the first national advertising investments to support the Sealy brand and product amplifying.

Key performance indicators consistently indicate that the campaign is having a measurably positive impact on customers impression of Mattress, Firm and Brands being presented enhancing awareness and triggering consumer's interest in betting benefiting all betting retailers.

Amplifying sealy share of voice and driving valuable customer traffic industry wide.

As we look ahead to 2026, we're excited to continue investing in national advertising designed to drive traffic to retailers and reinforce our commitment to innovation with the launch of our new Stearns <unk> Foster products in the back half of the year.

Campaign. Strong performance has already prompted 2 non SGI, vendor Partners to commit additional advertising dollars directly to Mattress Firm, to capitalize, on the opportunity.

Both our scale and our new messaging platform. Now, clearly represents our betting brands.

Fourth highlight is it mattress firm's full year performance outpaced the broader U S market.

Scott Thompson: We are pleased with these preliminary results and expect to see additional momentum as the campaign becomes more established in the market. Our fifth highlight is related to our international business. We saw impressive sales growth, demonstrating the long-term global growth opportunity ahead. Our Tempur international business delivered low double-digit sales growth in the quarter, or on a constant currency basis, high single-digit sales growth in the fourth quarter and full year, outpacing the broader industry while navigating a challenging market. This marks our third consecutive year of solid growth across all key international regions, driven by the refreshed Tempur product lineup, expanded distribution reach, and enhanced marketing investments. Dreams, our UK-based retail brand, also posted another solid year of market outperformance, driven by conversion and increased order volume. Full-year performance was supported by robust same-store sales and strategic new store openings.

Scott L. Thompson: We are pleased with these preliminary results and expect to see additional momentum as the campaign becomes more established in the market. Our fifth highlight is related to our international business. We saw impressive sales growth, demonstrating the long-term global growth opportunity ahead. Our Tempur international business delivered low double-digit sales growth in the quarter, or on a constant currency basis, high single-digit sales growth in the fourth quarter and full year, outpacing the broader industry while navigating a challenging market. This marks our third consecutive year of solid growth across all key international regions, driven by the refreshed Tempur product lineup, expanded distribution reach, and enhanced marketing investments. Dreams, our UK-based retail brand, also posted another solid year of market outperformance, driven by conversion and increased order volume. Full-year performance was supported by robust same-store sales and strategic new store openings.

We are pleased with these preliminary results and expect to see additional momentum as a campaign becomes more established in the market.

Our fifth highlight is related to our international business.

Given by our refined merchandising strategy.

And supplier relations and exceptional in store execution.

We saw impressive sales, growth administrating, the long-term Global growth opportunity ahead.

Since closing the acquisition, we've elevated mattress firm's merchandising.

Our focus has been on Curating and portfolio of complementary products.

Exceptional quality and value across all price points.

For temporary international business. Delivered in low double-digit sales growth in the quarter, or on a constant currency basis by single digit sales growth. In the fourth quarter in, full year outpacing, the broader industry while navigating a challenging Market

We deepened partnerships with some suppliers.

Not only met our quality standards, but also actively supported mattress firm success through differentiated offerings and traffic driving advertising initiatives.

This marks our third consecutive year of solid growth across all key International regions driven by the refreshed, temper product lineup.

Standard distribution reach and enhanced marketing Investments.

We also activated multiple initiatives to deliver retail excellence.

Including optimizing marketing strategies enhancing the in store experience and leveraging our best in class retail talent.

Greens are uk-based. Retail brands also posted another solid year of Market, outperformance, driven by conversion and increase order volume.

Supporting them with quality sales tools and training to provide customers with targeted sleep solutions.

Pull your performance with supported by robust, same store sales and strategic new store openings.

Additionally, we're making steady progress on our plan to invest $150 million between 2025, and 2027 to refresh certain mattress firm stores, bringing them up to our brand standards.

The team continued to deliver operational efficiencies.

Execute on growth initiatives.

Scott Thompson: The team continued to deliver operational efficiencies, execute on growth initiatives, and uphold exceptional product quality and customer satisfaction, driving share gains against a challenging UK bedding market. Overall, we're pleased with the momentum we've accumulated during 2025 and look forward to carrying that momentum into 2026. And with that, I'll turn the call over to Bhaskar.

Scott L. Thompson: The team continued to deliver operational efficiencies, execute on growth initiatives, and uphold exceptional product quality and customer satisfaction, driving share gains against a challenging UK bedding market. Overall, we're pleased with the momentum we've accumulated during 2025 and look forward to carrying that momentum into 2026. And with that, I'll turn the call over to Bhaskar.

Apple exceptional product quality and customer satisfaction driving share gains against the challenging, UK betting Market.

Further we've ramped installation of Tempur brand walls, which lead to improved customer engagement and education.

Overall we're pleased with the momentum, we've accumulated during 2025, and look forward to carrying that momentum into 2026.

These brand was placed.

And with that, I'll turn the call over to bosser.

Mattress firm and other retailers have proven to be a worthwhile investment by driving higher retail ASP.

Thank you, Scott.

In the fourth quarter of 2025 Consolidated, sales were 1.9 billion dollars.

Bhaskar Rao: Thank you, Scott. In Q4 2025, consolidated sales were $1.9 billion, and adjusted earnings per share was $0.72, up 20% over the prior year. There are approximately $10 million of pro forma adjustments in the quarter, all of which are consistent with the terms of our senior credit facility. As a reminder, we have aligned accounting for store occupancy costs across Somnigroup, which resulted in Tempur Sealy reclassifying their store occupancy costs from operating expense to cost of goods sold. We've adjusted prior year Tempur Sealy financial information included in today's earnings release to reflect the change for ease of comparability.

We made substantial progress in expanding this initiative in the back half of 2025, and we remain firmly on track to complete the rollout across all mattress firm stores nationwide.

And adjusted earnings per share was 72 cents up 20% over the prior year.

There are approximately 10 million of proforma adjustments in the quarter.

For the year.

Scott Thompson: As previously mentioned, we undertook a new advertising strategy for Mattress Firm to harmonize the message with Somnigroup initiatives, culminating in the launch of our new Mattress Firm advertising campaign, Sleep Easy, in the back half of 2025. We introduced new campaign iterations into the marketplace over the last quarter and continued to achieve all-time high market research scores. Key performance indicators consistently indicate that the campaign is having a measurably positive impact on customers' impression of Mattress Firm and the brands being presented, enhancing awareness and triggering consumers' interest in bedding, benefiting all bedding retailers. Campaign's strong performance has already prompted two non-SGI vendor partners to commit additional advertising dollars directly to Mattress Firm to capitalize on the opportunity both our scale and our new messaging platform now clearly represents for bedding brands.

As previously mentioned, we undertook a new advertising strategy for mattress firm to harmonize the message.

All of which are consistent with the terms of our senior credit facility.

With Tommy group initiatives culminated in the launch of our new mattress firm advertising campaign.

As a reminder we have aligned accounting restored occupancy costs across Omni group.

Sleep easy and the <unk>.

Which resulted in 10% Sealy, reclassifying, their store occupancy costs from operating expense to cost of goods sold.

Back half of 2020.

We introduced new campaign iterations into the marketplace.

The last quarter and continued to achieve all time.

We've adjusted prior year 10 per Sealy financial information, included in today's earnings, release to reflect the change for ease of comparability.

Market research scores.

Key performance indicators consistently indicate that the campaign is having a measurably positive impact on customers impression of mattress firm.

Bhaskar Rao: As a reminder, year-over-year comparisons are impacted by the acquisition of Mattress Firm in Q1 2025 and the related divestitures of Sleep Outfitters and certain Mattress Firm retail locations in Q2 2025. I will be highlighting like-for-like comparisons, defined as reported numbers adjusted for the acquisition and divestiture impacts, to normalize for these items in our commentary. Now turning to Mattress Firm results. Net sales through Mattress Firm were approximately $890 million in Q4 and declined 3% on a like-for-like basis. Same-store sales were flattish, outperforming a market we believe declined mid-single digits in the quarter. Mattress Firm's adjusted gross margin was 32.4%, and adjusted operating margin was 5.4%. Turning to Tempur Sealy North American results.

And brands being presented.

as a reminder year-over-year comparisons are impacted by the acquisition of Mattress Firm in the first quarter of 2025 in the related, daggers of Sleep Outfitters and certain Mattress Firm retail locations in the second quarter of 2025

Enhancing awareness and triggering consumers' interest embedding benefiting all getting retailers.

Campaign strong performance has already prompted.

Message or impacts to normalize for these items in our commentary.

Two non STI vendor partners to commit additional advertising dollars.

Now turning to Mattress Firm results.

Correct late to mattress firm.

Capitalize on the opportunity.

Both our scale and our new messaging platform now clearly represents for bedding brands.

Net sales through Mattress Firm were approximately 890 million in the fourth quarter and declined. 3% on a like for like basis.

Scott Thompson: We are pleased with these preliminary results and expect to see additional momentum as the campaign becomes more established in the market. Our fifth highlight is related to our international business. We saw impressive sales growth, demonstrating the long-term global growth opportunity ahead. Our Tempur International business delivered low double-digit sales growth in the quarter, or on a constant currency basis, high single-digit sales growth in the fourth quarter and full year, outpacing the broader industry while navigating a challenging market. This marks our third consecutive year of solid growth across all key international regions, driven by the refreshed Tempur product lineup, expanded distribution reach, and enhanced marketing investments. Dreams, our UK-based retail brand, also posted another solid year of market outperformance, driven by conversion and increased order volume. Full-year performance was supported by robust same-store sales and strategic new store openings.

We are pleased with these preliminary results.

Same store sales were flattish outperforming a market We Believe declined mid single digits in a quarter.

<unk> to see additional momentum as the campaign becomes more established in the market.

Our fifth highlight is related to our international business.

Mattress firms. Adjusted gross margin was 32.4% and adjusted operating margin was 5.4%.

Saw impressive sales growth demonstrating the long term global growth opportunity ahead.

Turning to 10% in North American results.

Tempur International business delivered low double digit sales growth in the quarter or on a constant currency basis high single digit sales growth in the fourth quarter and full year.

Like for like net sales through the wholesale Channel increase, approximately 6% in the fourth quarter.

Bhaskar Rao: Like-for-Like net sales through the wholesale channel increased approximately 6% in Q4, normalizing for the previously disclosed close distribution. Our sales with third-party retailers were flattish on a Like-for-Like basis, outperforming the broader industry by a solid margin. Like-for-Like net sales through the direct channel declined 7% in Q4, as our direct Tempur stores underperformed our expectations and our e-commerce sales faced difficult comps. North American adjusted gross margins increased 2,000 basis points to 59.5%, primarily driven by the elimination of the intercompany sales to Mattress Firm from Tempur Sealy. On a Like-for-Like basis, North American gross margins increased 250 basis points versus the prior year, primarily driven by operational efficiencies and mix, as the premium consumer demonstrated continued resilience.

Normalizing for the previously disclosed warehouse distribution.

Pacing in the broader industry, while navigating a challenging market.

Our sales with third-party retailers were flattish on a like, for like basis, outperforming the broader industry by a solid margin?

This marks our third consecutive year of solid growth across all key international regions, driven by the refreshed tempur product lineup.

Standard distribution reach and enhanced marketing investments.

Like for like net sales through the direct Channel declined 7% in the fourth quarter, as our direct temper stores, underperformed, our expectations and our e-commerce sales face difficult comps.

Greens are UK based retail brand also posted another solid year of market outperformance driven by conversion and increased order volume.

North American, adjusted, gross. Margins, increased 2,000 basis points to 59.5% primarily driven by the elimination of the intercompany sales to Mattress Firm from temporarily.

Full year performance was supported by robust same store sales and strategic new store openings.

On a like for like basis, North American gross, margins increased, 250 basis points versus the prior year.

The team continued to deliver operational efficiencies.

<unk> on growth initiatives.

Primarily driven by operational efficiencies and mix. As a premium consumer, demonstrated continued resilience.

Exceptional product quality and customer satisfaction.

Driving share gains against the challenging U K betting market.

Overall, we're pleased with the momentum we've accumulated during 2025 and look forward to carrying that momentum into 2026.

North American adjusted, operating margins improved 1300 basis points to 27.6%.

Bhaskar Rao: North American adjusted operating margins improved 1,300 basis points to 27.6%, primarily driven by Mattress Firm intercompany sales elimination. On a like-for-like basis, North American adjusted operating margins increased 450 basis points versus the prior year, primarily driven by the improvement in gross margin and fixed cost leverage. Now turning to international results. International net sales grew a robust 13% on a reported basis and 9% on a constant currency basis. Our international gross margins increased 40 basis points to 51.1%, primarily driven by operational efficiencies, offset by modest headwinds from a competitive UK marketplace. Our international operating margin increased 110 basis points to 22.4%, driven by the expansion in gross margins and fixed cost leverage. Now turning to our sales and cost synergy targets.

Primarily driven by Mattress Firm intercompany sales elimination.

And with that I'll turn the call over to Bob <unk>.

Thank you Scott.

In the fourth quarter of 2025 consolidated sales were $1 9 billion.

I'd like for like bases, North American adjusted, operating margins increase 450 basis points, versus the prior year, primarily driven by the Improvement in gross margin and fixed cost Leverage.

Now turning to International results.

And adjusted earnings per share was <unk> 72.

20% over the prior year.

International, net sales grew a robust. 13%. On a reported basis.

There are approximately $10 million of pro forma adjustments in the quarter.

And 9% on a constant currency basis.

All of which are consistent with the terms of our senior credit facility.

As a reminder, we have aligned accounting for store occupancy cost across omni group.

Our International gross. Margins increased 40 basis points to 51.1%, primarily driven by operational efficiencies offset by Modest headwinds from a competitive, UK Marketplace.

Which resulted in Tempur Sealy reclassifying their store occupancy costs from operating expense to cost of goods sold.

We've adjusted prior year Tempur Sealy financial information included in today's earnings release to reflect the change for ease of comparability.

Our International operating margin increased 110, basis points to 22.4% driven by the expansion and gross margins and fixed cost Leverage.

Now, turning to our sales and cost Synergy targets.

Bhaskar Rao: As a reminder, year-over-year comparisons are impacted by the acquisition of Mattress Firm in Q1 2025, and the related divestitures of Sleep Outfitters and certain Mattress Firm retail locations in Q2 2025. I will be highlighting like-for-like comparisons, defined as reported numbers, adjusted for the acquisition and divestiture impacts to normalize for these items in our commentary. Now turning to Mattress Firm results. Net sales through Mattress Firm were approximately $890 million in Q4 and declined 3% on a like-for-like basis. Same-store sales were flattish, outperforming a market we believe declined mid-single digits in the quarter. Mattress Firm's adjusted gross margin was 32.4%, and adjusted operating margin was 5.4%. Turning to Tempur Sealy North American results.

As a reminder year over year comparisons are impacted by the acquisition of mattress firm in the first quarter of 2025, and the related divestitures of sleep outfitters and certain mattress firm retail locations in the second quarter of 2025.

Bhaskar Rao: In 2025, we achieved a $60 million benefit in adjusted EBITDA from sales synergies ahead of our initial expectations. We exited the year at a low 60% of Mattress Firm's total sales, averaging mid-50s for the full year. At the same time, Purple and Kingsdown both grew share at Mattress Firm. We will see the wraparound effect of Tempur Sealy share gains in 2026, resulting in an incremental $40 million of EBITDA benefit and positioning us to confidently deliver on our $100 million run rate sales synergy target. Since we have held Mattress Firm sales flat in estimating this balance of share opportunity, we expect the synergy benefit to grow as we start to see the US bedding industry normalize.

In 2025, we achieved a million dollar benefit in adjusted evaa from sales. Synergies ahead of our initial expectations.

We exited the year at a low 60% of mattress. Firm's total sales at 5050 for the full year.

I will be highlighting like for like comparisons defined as reported numbers adjusted for the acquisition and divestiture impacts to normalize for these items in our commentary.

At the same time, purple and Kingdom, both grew share at Mattress Firm.

Now turning to mattress firm results.

Net sales through mattress firm were approximately $890 million in the fourth quarter and declined 3% on a like for like basis.

We will see the wraparound effect of 10% per share gains in 2026, resulting in an incremental, $40 million of evaa, benefit, and positioning us to confidently deliver on our hundred million dollar. Run rate sales, Synergy Target

Same store sales were flattish outperforming a market we believe declined mid single digits in the quarter.

since we have held matches Forum sales flat in estimating, this balance of share opportunity, we expect the Synergy benefit to grow as we start to see the US betting industry normalized.

Mattress firm's adjusted gross margin was 32, 4% and adjusted operating margin was five 4%.

Bhaskar Rao: On cost synergies, I'm excited to share that we are increasing our estimate to $125 million, with $20 million realized in 2025, $55 million expected in 2026, and an incremental $50 million in 2027. Our increased cost synergy outlook is principally being driven by increased expected savings from logistics and supply chain activities. Now moving on to Somnigroup's balance sheet and cash flow items. At the end of Q4, consolidated debt, less cash, was $4.6 billion, and our leverage ratio under our credit facility was 3.2 times, down nearly a third of a turn versus the Mattress Firm acquisition date, demonstrating our strong cash flow generation and disciplined capital allocation. We expect to return to our target leverage range of 2 to 3 times in the next six months.

Turning to Tempur Sealy North American results.

Some cost synergies. I'm excited to share that. We are increasing our estimate to 125 million with 20 million realized in 2025.

Bhaskar Rao: Like-for-like net sales through the wholesale channel increased approximately 6% in Q4, normalizing for the previously disclosed or closed distribution. Our sales with third-party retailers were flattish on a like-for-like basis, outperforming the broader industry by a solid margin. Like-for-like net sales through the direct channel declined 7% in Q4, as our direct Tempur stores underperformed our expectations and our e-commerce sales faced difficult comps. North American adjusted gross margins increased 2,000 basis points to 59.5%, primarily driven by the elimination of the intercompany sales to Mattress Firm from Tempur Sealy. On a like-for-like basis, North American gross margins increased 250 basis points versus the prior year, primarily driven by operational efficiencies and mix, as the premium consumer demonstrated continued resilience.

Like for like net sales through the wholesale channel increased approximately 6% in the fourth quarter.

55 million expected in 2026 and incremental, 50 million in 2027.

Normalizing for the previously disclosed or coast distribution.

Our sales with third party retailers were flattish on a like for like basis outperforming the broader industry by a solid margin.

Our increased cost energy Outlook is principally. Being driven by increased expected savings from Logistics and supply chain activities.

Now, moving on to somni group's balance sheet and cash flow items.

Like for like net sales through the direct channel declined 7% in the fourth quarter as our direct tempur stores underperformed, our expectations and our e-commerce sales faced difficult comps.

At the end of the fourth quarter consolidated, debt less cash was 4.6 billion dollars and our leverage ratio under our credit facility was 3.2 times.

North American adjusted gross margins increased 2000 basis points to 59, 5%, primarily driven by the elimination of the intercompany sales to mattress firm from Tempur Sealy.

down nearly a third of a turn versus The Mattress Firm acquisition day, demonstrating our strong cash flow, generation and discipline Capital allocation,

We expect to return to our Target. Leverage range of 2 to 3 times, in the next 6 months.

On a like for like basis, North American gross margins increased 250 basis points versus the prior year.

Bhaskar Rao: We also expect lower market interest rates will drive improved cost of our variable rate debt, which will add to future EPS growth. Finally, as we announced this morning, we are increasing our quarterly dividend 13% to $0.17 in 2026. This marks the sixth consecutive year of dividend increases, reflecting our confidence in sustained cash generation. Now turning to guidance. As a reminder, our guidance considers the elimination of intercompany sales between Mattress Firm and Tempur Sealy, which we expect to represent approximately 23% of global Tempur Sealy 2026 sales. Intercompany eliminations, in accordance with GAAP, will reduce Tempur Sealy sales, but be margin accretive and neutral to dollars of operating profit. Please also note that we acquired Mattress Firm in February 2025.

Primarily driven by operational efficiencies and mix as the premium consumer demonstrated continued resilience.

North American adjusted operating margins improved 300 basis points to 27, 6%.

Finally, as we announced this morning, we are increasing our quarterly dividend 13% to 17 cents in 2026.

This marks the sixth consecutive year of dividend increases reflecting our confidence in sustained. Cash, generation.

Primarily driven by mattress firm intercompany sales elimination.

Now turning to guidance.

On a like for like basis, North American adjusted operating margins increased 450 basis points versus the prior year, primarily driven by the improvement in gross margin and fixed cost leverage.

as a reminder, our guidance considers the elimination of intercompany sales between Mattress Firm and temporary, which we expect to represent approximately 23% of global temperature, 2026 sales,

Now turning to international results.

International net sales grew a robust 13% on a reported basis and 9% on a constant currency basis.

Intercompany eliminations in accordance with gaap will reduce temporarily sales, but be margin accretive and neutral to dollars of operating profit.

Our international gross margins increased 40 basis points to 51, 1%, primarily driven by operational efficiencies.

Offset by modest headwinds from a competitive UK marketplace.

Bhaskar Rao: As a result, our Q1 and full year 2026 reported results will reflect the impact of a little over 1 additional month of Mattress Firm financial results. We expect adjusted earnings per share to be between $3 and $3.40. This guidance range contemplates a sales midpoint of approximately $7.9 billion after intercompany eliminations. Our annual guidance also reflects our expectation that the global bedding industry will grow slightly versus the prior year, driven by low single-digit growth in the first half of the year. Tempur Sealy North America sales grow in mid-single digits on a like-for-like basis, and reported sales to be impacted by the intercompany elimination I referenced a moment ago.

Please also note that we acquired Mattress Firm in February 2025. As a result, our first quarter and full year 2026, reported results will reflect the impact of a little over 1 additional month of Mattress Firm Financial results.

Our international operating margin increased 110 basis points to 22, 4% driven by the expansion in gross margins and fixed cost leverage.

We expect adjusted earnings per share to be between 3 dollars and 3.40.

Now turning to our sales and cost synergy targets.

Bhaskar Rao: In 2025, we achieved a $60 million benefit in Adjusted EBITDA from sales synergies ahead of our initial expectations. We exited the year at a low 60% of Mattress Firm's total sales, averaging mid-50s for the full year. At the same time, Purple and Kingsdown both grew share at Mattress Firm. We will see the wraparound effect of Tempur Sealy share gains in 2026,... resulting in an incremental $40 million of EBITDA benefit and positioning us to confidently deliver on our $100 million run rate sales synergy target. Since we have held Mattress Firm sales flat in estimating this balance of share opportunity, we expect the synergy benefit to grow as we start to see the US bedding industry normalize.

Bhaskar Rao: In 2025, we achieved a $60 million benefit in Adjusted EBITDA from sales synergies ahead of our initial expectations. We exited the year at a low 60% of Mattress Firm's total sales, averaging mid-50s for the full year. At the same time, Purple and Kingsdown both grew share at Mattress Firm. We will see the wraparound effect of Tempur Sealy share gains in 2026, resulting in an incremental $40 million of EBITDA benefit and positioning us to confidently deliver on our $100 million run rate sales synergy target. Since we have held Mattress Firm sales flat in estimating this balance of share opportunity, we expect the synergy benefit to grow as we start to see the US bedding industry normalize.

This guidance range contemplates, the sales midpoint of approximately 7.9 billion dollars after intercompany eliminations.

In 2025, we achieved a $60 million benefit in adjusted EBITDA from sales synergies ahead of our initial expectations.

We exited the year at a low 60% of mattress firm's total sales averaging mid fifties for the full year.

Our annual guidance also reflects our expectation, that the global betting industry will go slightly versus the prior year, driven by low single-digit growth in the first half of the year.

At the same time propylene Kingsdown, both grew share at mattress firm.

Temporarily North, America sales grow in mid single digits on a like for like basis and reported sales to be impacted by the intercompany elimination. I referenced the moment ago

We will see the wraparound effect of Tempur Sealy share gains in 2026, resulting in an incremental $40 million of EBITDA benefit in positioning us to confidently deliver on our $100 million run rate sales synergy target.

Bhaskar Rao: International business growing mid- to high-single digits, as our legacy international continues to drive new distribution through its product strategy, and Dreams continue to drive share in a competitive UK market. Our like-for-like Mattress Firm sales to grow low- to mid-single digits. We also expect reported gross margins slightly above 45%, driven by approximately 100 basis points of net margin expansion from operational efficiencies, including synergies and fixed cost leverage. Our 2026 outlook also contemplates our assumption for Tempur Sealy brands and private labels to be in the low 60% of Mattress Firm total sales.

International business growing mid to high single digits. As our Legacy, International continues to drive new distribution through its product strategy and dreams. Continue to drive. Share in a competitive UK Market.

Since we have held mattress firm sales flat in estimating this balance of share opportunity. We expect the synergy benefit to grow as we start to see the U S bedding industry normalize.

and our like, for like Mattress Firm sales to grow low to mid single digits,

On cost synergies I'm excited to share that we are increasing our estimate to $125 million with $20 million realized in 2025.

We also expect reported gross, margins slightly above 45% driven by approximately 100 basis. Points of net margin expansion from operational efficiencies, including synergies and fixed cost Leverage.

$55 million expected in 2026, and an incremental $50 million in 2027.

Our increased cost synergy outlook is principally being driven by increased expected savings from logistics and supply chain activities.

Our 2026 Outlook also contemplates our assumption for 10 per se Brands and private labels to be in the low 60% of matches for our total sales.

Now moving onto <unk> balance sheet and cash flow items.

Bhaskar Rao: This represents about an incremental $40 million of EBITDA benefit for 2026 compared to 2025, and approximately $720 million of advertising investments, all of which we expect to result in adjusted EBITDA of approximately $1.45 billion at the midpoint. Regarding capital expenditures, we expect 2026 CapEx of approximately $250 million, which includes $75 million of investments in Mattress Firm store refreshes and brand wall installations. We expect our CapEx to normalize to $200 million in future years, and for at least 50% of our free cash flow in 2026 to go to quarterly dividends and share repurchases. Now, I would like to flag a few modeling items.

This represents about an incremental, $0 million of iPad, do benefit for 2026 compared to 2025.

At the end of the fourth quarter consolidated debt less cash was $4 6 billion.

And approximately 720 million of advertising Investments.

And our leverage ratio under our credit facility was three two times.

Down nearly a third of a turn versus the mattress firm acquisition date, demonstrating our strong cash flow generation and disciplined capital allocation.

All of which we expect to result in adjusted Eva Dov approximately 1.45 billion dollars at the midpoint.

We expect to return to our target leverage range of two to three times in the next six months.

We also expect lower market interest rates will drive improved cost of our variable rate debt, which will add to future EPS growth.

Regarding Capital expenditures, we expect 2026 capex of approximately 250 million, which includes 75 million of investments in Mattress Firm store, refreshes and brand wall installations.

We expect our capex to normalize to $200 million in future years.

Finally, as we announced this morning, we are increasing our quarterly dividend, 13% to 17 and 2026.

And for at least 50% of our free cash flow in 2026, to go to quarterly, dividends and share repurchases.

This marks the sixth consecutive year of dividend increases, reflecting our confidence in sustained cash generation.

Now, I would like to flag a fee modeling items.

Now turning to guidance.

for the full year 2026, we expect DNA of approximately 315 million

Bhaskar Rao: For the full year 2026, we expect D&A of approximately $315 million, interest expense of approximately $225 million on a tax rate of 25%, with a diluted share count of 214 million shares. Lastly, we are raising our 2028 target EPS to $5.15, representing a 24% compound annual growth rate from 2025. We are also targeting mid-single-digit annual sales growth and double-digit annual adjusted EBITDA growth over that period. With that, I'll turn the call back over to Scott.

As a reminder, our guidance considers the elimination of intercompany sales between mattress firm and Tempur Sealy, which we expect to represent approximately 23% of global Tempur Sealy 2026 sales.

Interest expense of approximately 225 million.

On a tax rate of 25%.

With a diluted share count of 214 million shares.

Intercompany eliminations in accordance with GAAP or reduce tempur, sealy sales, but be margin accretive and neutral the dollars of operating profit.

Lastly, we are raising our 2028 Target EPS to 5.15.

Please also note that we acquired mattress firm in February 2025, as a result, our first quarter and full year 2026 reported results will reflect the impact of a little over one additional month of mattress firm financial results.

Representing a 24%, compound annual growth rate from 2025?

Bhaskar Rao: As a result, our Q1 and full year 2026 reported results will reflect the impact of a little over 1 additional month of Mattress Firm financial results. We expect adjusted earnings per share to be between $3.00 and $3.40. This guidance range contemplates a sales midpoint of approximately $7.9 billion after intercompany elimination. Our annual guidance also reflects our expectation that the global bedding industry will grow slightly versus the prior year, driven by low single-digit growth in the first half of the year. Tempur Sealy North America sales grow in mid-single digits on a like-for-like basis, and reported sales to be impacted by the intercompany elimination I referenced a moment ago.

We are also targeting mid single digit, annual sales growth and double-digit annual adjusted, Eva dog roads, over that period.

With that, I'll turn the call back over to Scott.

We expect adjusted earnings per share to be between $3 and $3 40.

Thank you. Oscar. Well done.

Now, I want to quickly address our proposed.

Scott Thompson: Thank you, Oscar. Well done. Now, I want to quickly address our proposed position of Leggett & Platt before opening the call up for Q&A. We welcome Leggett & Platt's board's willingness to engage in discussions and conduct customary due diligence, which is currently underway.... Somnigroup remains committed to pursuing a transaction that will deliver substantial value to shareholders of both companies. There can be no assurances regarding the completion of a transaction or the terms of any transactions, and we will not be commenting further on this topic. Lastly, I'd like to highlight that we will be hosting an Investor Day in New York on 4 March. During that day, we expect to share more information on our three-year EPS target, our strategic vision for Somnigroup, discuss growth initiatives for Tempur Sealy, Mattress Firm, and Dreams, and provide additional details on our capital allocation strategy.

Scott L. Thompson: Thank you, Bhaskar. Well done. Now, I want to quickly address our proposed position of Leggett & Platt before opening the call up for Q&A. We welcome Leggett & Platt's board's willingness to engage in discussions and conduct customary due diligence, which is currently underway.... Somnigroup remains committed to pursuing a transaction that will deliver substantial value to shareholders of both companies. There can be no assurances regarding the completion of a transaction or the terms of any transactions, and we will not be commenting further on this topic. Lastly, I'd like to highlight that we will be hosting an Investor Day in New York on 4 March. During that day, we expect to share more information on our three-year EPS target, our strategic vision for Somnigroup, discuss growth initiatives for Tempur Sealy, Mattress Firm, and Dreams, and provide additional details on our capital allocation strategy.

This guidance range contemplates the sales midpoint of approximately seven 9 billion after intercompany eliminations.

Acquisition of Leed, plat for opening the call of the Q&A.

Our annual guidance also reflects our expectation that the global bedding industry will go slightly versus the prior year driven by low single digit growth in the first half of the year.

We welcome like in plats or its willingness to engage in discussions and conduct customary due diligence which is currently underway.

Tempur Sealy North America sales growing mid single digits on a like for like basis and reported sales to be impacted by the intercompany elimination I referenced a moment ago.

There can be no assurances regarding the completion of a transaction or the terms of any transactions.

And we will not be commenting further on this topic.

Bhaskar Rao: International business growing mid to high single digits, as our legacy international continues to drive new distribution through its product strategy, and Dreams continue to drive share in a competitive UK market. Our like-for-like Mattress Firm sales [are expected] to grow low to mid-single digits. We also expect reported gross margins slightly above 45%, driven by approximately 100 basis points of net margin expansion from operational efficiencies, including synergies and fixed cost leverage. Our 2026 outlook also contemplates our assumption for Tempur Sealy brands and private labels to be in the low 60% of Mattress Firm total sales.

International business growing mid to high single digits as our legacy International continues to drive new distribution. There was product strategy and dreams continue to drive share in a competitive U K market.

Lastly, I would like to headline that we will be hosting an investor day in New York, on March 4th,

During that day, we expect.

And our like for like mattress firm sales to grow low to mid single digits.

To share more information on our 3-year, EPS Target.

Our strategic division for Omni group.

We also expect reported gross margin slightly above 45% driven by approximately 100 basis points of net margin expansion from operational efficiencies, including synergies and fixed cost leverage.

Discuss growth initiatives for temporarily.

Actress firm and dreams and provide additional details on our Capital allocation strategy.

Our 2026 outlook also contemplates our assumption for Tempur Sealy brands and private label to be in the low 60% of mattress firm coal sales.

With that operator that mser call, please open the call for questions.

Scott Thompson: With that, operator, that ends our call. Please open the call up for questions.

Scott L. Thompson: With that, operator, that ends our call. Please open the call up for questions.

Thank you, ladies and gentlemen, we will now begin the question and answer session.

This represents about an incremental $40 million of EBITDA benefit for 2026 compared to 2025.

Operator: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. Should you wish to cancel your request, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Susan McClary from Goldman Sachs Canada. Your line is now open.

Should you have a question please? Press the star followed by the 1 and a touchdown phone? Should you wish to cancel your request? Please press the star, followed, by the 2.

And approximately $720 million of advertising investments.

If you're using a speaker-phone, please lift the handset, before pressing any keys?

All of which we expect to result in adjusted EBITDA of approximately $145 billion at the midpoint.

Once again, that is star 1. Should you wish to ask a question?

Your first question is from Susan mclary from Goldman Sachs Canada. Your line is now open.

Regarding capital expenditures, we expect 2026 capex of approximately $250 million, which includes $75 million of investments in mattress firm store refreshes and brand law installations.

Thank you. Good morning everyone.

Good morning.

Susan Maklari: Thank you. Good morning, everyone.

Scott Thompson: Good morning.

Scott L. Thompson: Good morning.

Susan Maklari: Good morning, Scott. My question is around the outlook for demand. Can you talk a bit about the state of the consumer, how you're thinking about the shape of demand as we come into 2026, and how you're thinking of the drivers and the potential for out or underperformance relative to the guide for Tempur North America sales to be up low single digits on a like-for-like basis?

We expect our capex to normalize to $200 million in future years.

And for at least 50% of our free cash flow in 2026 to go through quarterly dividends and share repurchases.

Good morning Scott. My question is around the outlook for demand. Can you talk a bit about the state of the consumer, how you're thinking about the shape of demand as we come into 2026 and how you're thinking of the drivers and the potential for out or underperformance relative to the guide for temporary North? America sales to be up below single digits on the like for like basis.

Now I would like to flag a few modeling items.

Sure, Susan. Thank you for the question.

For the full year 2026, we expect DNA of approximately $315 million.

Scott Thompson: Sure, Susan, thank you for the question. I mean, first thing in demand, I'd say our estimates are for $3, $3.40 for 2026. You know, one of the foundations of it is basically a flat market. We didn't call a turn in there, and if we had, obviously the flow-through on that guidance would be significant. But we thought, you know, considering the Q4 came in a little light from an industry standpoint, from our expectations, that probably flat was the right way to go into the year. And then we'll see how demand develops. If you're talking about how—what are we thinking about? Geez, you know, Q4, again, came in a little bit less from an industry standpoint than we expected.

Scott L. Thompson: Sure, Susan, thank you for the question. I mean, first thing in demand, I'd say our estimates are for $3, $3.40 for 2026. You know, one of the foundations of it is basically a flat market. We didn't call a turn in there, and if we had, obviously the flow-through on that guidance would be significant. But we thought, you know, considering the Q4 came in a little light from an industry standpoint, from our expectations, that probably flat was the right way to go into the year. And then we'll see how demand develops. If you're talking about how—what are we thinking about? Geez, you know, Q4, again, came in a little bit less from an industry standpoint than we expected.

Interest expense of approximately $225 million.

A tax rate of 25%.

With a diluted share count of 214 million shares.

Lastly, we are raising our 2028 target EPS to $5 15.

Representing a 24% compound annual growth rate from 2025.

Uh, I mean, first thing in in demand, I said, our estimates are for for 3 dollars, 3 dollars 40 cents for 2026. You know, the 1 of the foundations of it is, is basically a flat Market. Uh, we didn't call a turn uh, in there and if we had obviously the flow through on, that guidance is would be significant. But we thought uh you know, considering the fourth quarter came in a little light from the industry standpoint from our expectations that uh probably flat was the right way to go into the year and then we'll we'll see how how demand uh

Developed.

We're also targeting mid single digit annual sales growth and double digit annual adjusted EBITDA growth over that period.

With that I'll turn the call back over to Scott.

[Company Representative] (Somnigroup International Inc.): Thank you, Oscar. Well done. Now, I want to quickly address our proposed position of Leggett & Platt before opening the call for Q&A.

Scott Thompson: Thank you, Oscar. Well done. Now, I want to quickly address our proposed position of Leggett & Platt before opening the call for Q&A.

Thank you Oscar well done.

Scott Thompson: And if you look at, you know, the start of Q1, it's kind of a tale of two cities. If you look at the pre-President's Day holiday period, you know, call it 1 January to, I don't know, 10 February or so, you know, we had tough weather, and I hate talking about weather, obviously, but it. You talk about short periods, you always have to think about it. And it was tough weather in the US. And the way I always look at that is I look at lost days, and if you look at Mattress Firm, we had 5,000 days of store losses that were incremental to last year. So to be clear, that's not like rain or something. That means this weather was so bad, the store didn't open.

Scott L. Thompson: And if you look at, you know, the start of Q1, it's kind of a tale of two cities. If you look at the pre-President's Day holiday period, you know, call it 1 January to, I don't know, 10 February or so, you know, we had tough weather, and I hate talking about weather, obviously, but it. You talk about short periods, you always have to think about it. And it was tough weather in the US. And the way I always look at that is I look at lost days, and if you look at Mattress Firm, we had 5,000 days of store losses that were incremental to last year. So to be clear, that's not like rain or something. That means this weather was so bad, the store didn't open.

Now I don't want to.

Quickly addressed our proposed.

If you're talking about how what are we thinking about geez you know, fourth quarter again came in a little bit less from an industry standpoint than we expected. And and if you look at, you know, the start of the first quarter, it's kind of a tale of of 2 cities. If you look at the pre-presidential,

<unk> of Leggett <unk> Platt for opening the call up for Q&A.

Scott Thompson: ... We welcome Leggett & Platt's board's willingness to engage in discussions and conduct customary due diligence, which is currently underway. Somnigroup remains committed to pursuing a transaction that will deliver substantial value to shareholders of both companies. There can be no assurances regarding the completion of a transaction or the terms of any transactions, and we will not be commenting further on this topic. Lastly, I'd like to headline that we will be hosting an Investor Day in New York on 4 March. During that day, we expect to share more information on our three-year EPS target, our strategic vision for Somnigroup, discuss growth initiatives for Tempur Sealy, Mattress Firm, and Dreams, and provide additional details on our capital allocation strategy. With that, operator, that ends our call. Please open the call up for questions.

Scott Thompson: We welcome Leggett & Platt's board's willingness to engage in discussions and conduct customary due diligence, which is currently underway. Somnigroup remains committed to pursuing a transaction that will deliver substantial value to shareholders of both companies. There can be no assurances regarding the completion of a transaction or the terms of any transactions, and we will not be commenting further on this topic. Lastly, I'd like to headline that we will be hosting an Investor Day in New York on 4 March. During that day, we expect to share more information on our three-year EPS target, our strategic vision for Somnigroup, discuss growth initiatives for Tempur Sealy, Mattress Firm, and Dreams, and provide additional details on our capital allocation strategy. With that, operator, that ends our call. Please open the call up for questions.

We welcome Leggett, and Platt or willingness to engage in discussions.

Customary due diligence, which is currently underway.

The group remains committed to pursuing a transaction.

Deliver substantial value to shareholders of both companies there.

There can be no assurances regarding the completion of the transaction or the terms of any transactions.

And we will not be commenting further.

On this topic.

Lastly, I would like to headline that we will be hosting an investor day.

Scott Thompson: So we lost 5,000 days of sales during that period off of the possibility of 90,000 days. So it's about a 6% headwind incrementally in store closings. So as you would expect during that period, Mattress Firm's same-store sales were slightly down. But then as soon as you get into the Presidents' Day holiday period, which we'll call that, you know, 11 February forward, sales have been very robust. And when I say very robust, I mean double digits robust, driven by strong AOV, driven by Tempur, clearly a customer that's in the market wanting to buy. And the result is, you know, looking at US Mattress Firm sales, because that's kind of the best index for consumers, and it has real-time data, is now we're running positive same-store sales at Mattress Firm to start the quarter.

Scott L. Thompson: So we lost 5,000 days of sales during that period off of the possibility of 90,000 days. So it's about a 6% headwind incrementally in store closings. So as you would expect during that period, Mattress Firm's same-store sales were slightly down. But then as soon as you get into the Presidents' Day holiday period, which we'll call that, you know, 11 February forward, sales have been very robust. And when I say very robust, I mean double digits robust, driven by strong AOV, driven by Tempur, clearly a customer that's in the market wanting to buy. And the result is, you know, looking at US Mattress Firm sales, because that's kind of the best index for consumers, and it has real-time data, is now we're running positive same-store sales at Mattress Firm to start the quarter.

New York on March 4th.

During that day, we expect.

Um, you know, we had tough weather and I hate talking about whether obviously, but you talk about short periods, you always have to think about it. And it was tough weather in the US. And the way I always look at that is, I look at lost days and if you look at Mattress Firm, uh, we had 5,000 days of store losses that were incremental to last year. So to be clear that's not like rain or something. That means this weather was so bad, the store didn't open. So we lost 5,000 days of sales during that period off of the possibility of 90,000 days. So it's about a, a 6% headwind incrementally saying store, closings. So, as you would expect, during that period, uh, mattress firms, thanks to our sales work. We're, we're slightly down

To share more information on our three year EPS target.

Our strategic vision for some new group.

Discuss growth initiatives or Tempur sealy accuracy.

Mattress firm and dreams and provide additional details on our capital allocation strategy.

But then as soon as you get into the president holiday period, which we'll call that, you know, February 11th, forward sales have been very robust. And when I say very robust, I mean you double digits, uh, robust

With that operator that ends our call. Please open the call up for questions.

Operator: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. Should you wish to cancel your request, please press the star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Susan McClary from Goldman Sachs Canada. Your line is now open.

Thank you ladies and gentlemen, we will now begin the question and answer session.

Should you have a question. Please press the star followed by the one and you touched on Cowen should you wish to cancel your request. Please press the star followed by the tail.

Scott Thompson: So when I look at it, it looks like a bedding market and a consumer that wants the market to grow. And we've got to get out of our way, whether it be some drama in Washington or whether it be, you know, an unusually strong storm slows you down a little bit. But it does feel like it's a market that's poised for growth.

Scott L. Thompson: So when I look at it, it looks like a bedding market and a consumer that wants the market to grow. And we've got to get out of our way, whether it be some drama in Washington or whether it be, you know, an unusually strong storm slows you down a little bit. But it does feel like it's a market that's poised for growth.

You're using a speaker phone please lift Dan said before pressing any case.

Once again that is star one should you wish to ask a question.

Your first question is from Susan Mcclary from Goldman Sachs, Canada. Your line is now open.

Driven by strong aov driven by Temper. Uh, clearly a customer that's in the market, uh, wanting to buy. And the result is, uh, you know, looking at us Mattress Firm sales because that's kind of the best index for consumers. And it has real-time data is now we're running positive, same store sales at Mattress Firm uh to start the quarter. So when so when I look at it, it looks like a, a betting market and a consumer that that wants the market to grow, and we got to get out of our way, whether it be some drama in Washington, or whether it be, you know, an unusually strong storm slows you down a little bit, but it does feel like it's a market that, uh, that poised for growth.

Susan Maklari: Thank you. Good morning, everyone.

Good morning, everyone.

Scott Thompson: Good morning.

Bhaskar Rao: And if I could add on to that, then the way to think about the quarter when you put all that together is from a Q1 sales standpoint, we would expect something in and around positive 14% or a little over $1.8 billion, with EPS growing in and around 20%.

Good morning.

Good morning, Scott.

It is around the outlook for demand can you talk a bit about the state of the consumer how youre thinking about the shape of demand as we come into 2020, and how you are thinking of the drivers and the potential for our underperformance relative to the guide for Tempur North America.

With EPS growing, uh, in and around 20%.

Operator. Next question.

Sales to be up low single digits on a like for like basis.

Scott Thompson: Operator, next question.

Scott L. Thompson: Operator, next question.

Your next question is from Bobby Griffin from Raymond James. Your line is now open.

Scott Thompson: Sure, Susan, thank you for the question. I mean, first thing in demand, I'd say our estimates are for $3, $2.40 for 2026. You know, one of the foundations of it is basically a flat market. We didn't call a turn in there, and if we had, obviously, the flow-through on that guidance would be significant. But we thought, you know, considering Q4 came in a little light from an industry standpoint, from our expectations, that probably flat was the right way to go into the year. And then we'll see how demand develops. If you're talking about what are we thinking about? Geez, you know, Q4, again, came in a little bit less from an industry standpoint than we expected.

Sure Susan Thank you for the question.

Operator: Your next question is from Bobby Griffin from Raymond James. Your line is now open.

I mean first thing in demand our estimates are four or $3 $3 40 for 2026.

Morning guys, thanks for taking the questions and Aubrey from grabs on the new positions. It's been great working with you over the last few years.

Bobby Griffin: Good morning, guys. Thanks for taking the questions. And Aubrey, congrats on the new position. It's been great working with you over the last few years. I guess, Foster and Scott, for my question, I want to maybe unpack the guide a little bit. And Foster, can you help us and just kind of clean up some things in the model in terms of, like, what's less on the customer in transition, as well as I know we have the wraparound benefit of Mattress Firm and some of the divestiture, divestitures. And I guess I'm asking in the context, if I take the cost synergies, the EBITDA benefit from the floor shift, as well as our guess at what the one month of Mattress Firm is, we can walk our way pretty close to the midpoint just on those.

One of the foundations of it is basically a flat market.

Didn't call it turn in there and if we had obviously the flow through on that guidance would be significant but we thought.

<unk> the fourth quarter came in a little light from an industry standpoint my expectations.

I guess Foster and Scott for my question, I wanted to maybe unpack the guide a little bit and in Boston can you help us and just kind of clean up some things in the model in terms of like what's left on the customer transition as well. As I know we have the wraparound benefit of Mattress Firm and some of the investors deers and I guess I'm asking in the context if I take the cost synergies,

Probably flat was the right way to go into the year and then we'll see we'll see how demand.

<unk> develops.

If youre talking about how we're thinking about Ges fourth quarter again came in a little bit less from an industry standpoint than we expected and if you look at the start of the first quarter, it's kind of a tale of two cities. If you look at the pre Presidents' day holiday period call. It January one I.

Peter Keith: ... So is there anything I'm missing on an offset, or is the way to view that more just conservative in the model? Like, just want to make sure we're thinking about all the parts the right way.

Bobby Griffin: ... So is there anything I'm missing on an offset, or is the way to view that more just conservative in the model? Like, just want to make sure we're thinking about all the parts the right way.

Scott Thompson: And if you look at, you know, the start of Q1, it's kind of a tale of two cities. If you look at the pre-President's Day holiday period, you know, call it 1 January to, I don't know, 10 February or so, you know, we had tough weather, and I hate talking about weather, obviously, but if you talk about short periods, you always have to think about it. And there was tough weather in the US. And the way I always look at that is I look at lost days, and if you look at Mattress Firm, we had 5,000 days of store losses that were incremental to last year. So to be clear, that's not like rain or something.

The EVAP benefit from uh, the floor shift, as well as our guests at what the 1 month. The maximum is we can walk our way pretty close to the midpoint just on those. So is there anything I'm missing on an offset or is the way to view that mortgage is conservative and the model like just want to make sure we're thinking about all the parts the right way.

Scott Thompson: Sure. Let me, let me give it a try, and then you can follow up as necessary. So when I think about this fundamentally is, it's all based on an industry that's flat to slightly up. On top of that, what we have is share gains in all of our geos. So internationally growing high single, and in North America, call it that mid-single. And that would get you, let's call it in and around $7.9 billion. When you go forward from a gross profit standpoint, well, let's talk about the stub period. So the stub period, you're correct, is about one month shy relative to prior year, and call that in and around, call it $280 million or so net.

Scott L. Thompson: Sure. Let me, let me give it a try, and then you can follow up as necessary. So when I think about this fundamentally is, it's all based on an industry that's flat to slightly up. On top of that, what we have is share gains in all of our geos. So internationally growing high single, and in North America, call it that mid-single. And that would get you, let's call it in and around $7.9 billion. When you go forward from a gross profit standpoint, well, let's talk about the stub period. So the stub period, you're correct, is about one month shy relative to prior year, and call that in and around, call it $280 million or so net.

I don't know February 10th or so.

We had tough weather and I hate talking about weather, obviously, but you talked about short periods, you always have to think about it and it was tough weather in the U S and the way I always look at that as I look at lost days and if you look at mattress firm.

We had 5000 days of store losses that were incremental to last year, so to be clear that's not like rain or weather was so bad the store didn't open. So we lost five days of sales during that period off of a possibility of 90000 days. So it's about a 6% headwind.

Scott Thompson: That means the weather was so bad, the store didn't open, so we lost 5,000 days of sales during that period off of a possibility of 90,000 days. So it's about a 6% headwind incrementally in store closings. So as you would expect during that period, Mattress Firm's same-store sales were slightly down. But then as soon as you get into the President holiday period, which we'll call that, you know, 11 February forward, sales have been very robust. And when I say very robust, I mean double digits robust, driven by strong AOV, driven by Tempur, clearly a customer that's in the market wanting to buy.

Sure, let me, let me give it a try and then you can uh, uh, follow up as necessary. So when I think about this fundamentally is, it's all based on an industry that's flat to slightly up on top of that. What we have is share gains in in all of our GEOS. So internationally growing High single uh and in in North America call it that mid single and that would get you, let's call an in and around 7.9 billion dollars when you go forward from a gross profit standpoint. Uh well let's talk about the stub, period. So the stub period. You're correct is about 1 month's shy relative to Prior years and call that in and around, call it 280 or so million dollars. Net.

Scott Thompson: When you think about from a profitability standpoint, is we're gonna continue to support those brands. We call that about $720 million of advertising to continue to support from a launch standpoint. What's embedded in there is very nice gross profit improvement, let's call it about 100 basis points, on a year-over-year perspective. And the principal drivers of that is a couple of things. One is productivity through the plants, and on top of that would be the synergies that we've identified. And as noted in the prepared material, we've taken that number up about 25 basis points - sorry, $25 million on a year-over-year basis. There is a bit of a headwind associated with, let's call it, commodities, that would offset from a gross profit standpoint.

Scott L. Thompson: When you think about from a profitability standpoint, is we're gonna continue to support those brands. We call that about $720 million of advertising to continue to support from a launch standpoint. What's embedded in there is very nice gross profit improvement, let's call it about 100 basis points, on a year-over-year perspective. And the principal drivers of that is a couple of things. One is productivity through the plants, and on top of that would be the synergies that we've identified. And as noted in the prepared material, we've taken that number up about 25 basis points - sorry, $25 million on a year-over-year basis. There is a bit of a headwind associated with, let's call it, commodities, that would offset from a gross profit standpoint.

Incrementally and store closings. So as you would expect during that period.

Mattress firm's same store sales were slightly down.

But then as soon as you get into the President holiday period.

Which we'll call that.

February 11th forward sales have been very robust and when I say very robust I mean double digits robust driven by strong <unk>.

Driven by Tempur clearly of customers in the market wanting to buy and the result is.

Scott Thompson: And the result is, you know, looking at US Mattress Firm sales, because that's kind of the best index for consumers, and it has real-time data, is now we're running positive same-store sales at Mattress Firm to start the quarter. So when I look at it, it looks like a betting market and a consumer that wants the market to grow, and we've got to get out of our way, whether it be some drama in Washington or whether it be, you know, an unusually strong storm slows you down a little bit. But it does feel like it's a market that's poised for growth.

Looking at U S mattress firm sales because thats, probably the best index for consumers and real time data is now we're running positive same store sales at mattress firm.

Uh, when you think about from a profitability standpoint is, we're going to continue to support those Brands. We call that about 720 million dollars of advertising to continue to support from a launch standpoint. What's embedded in there is uh is very nice. Gross profit Improvement. Let's call it about a 100 basis points, uh, on a year-over-year perspective and the principal drivers of that is a couple of things. 1 is productivity through the plants and on top of that would be the the the synergies that we've identified. And as noted in the prepared material, we've taken that number up about 25 basis points. Sorry, 25 million dollars on a year-over-year basis. There is a bit of a headwind uh, associated with let's call it Commodities. That would offset from a gross profit standpoint. But if you add, all those pieces of big fundamentally the, the foundation being industry market share gains and margin expansion. It gets you to

Scott Thompson: But if you add all those pieces up, I think fundamentally, the foundation being industry, market share gains, and margin expansion, it gets you to in and around the midpoint. Operator, next question.

Scott L. Thompson: But if you add all those pieces up, I think fundamentally, the foundation being industry, market share gains, and margin expansion, it gets you to in and around the midpoint. Operator, next question.

For the quarter. So so when I look at it it looks like the bedding market in a consumer.

Operator. Next question.

Once the market to grow and we've got to get out of our way whether it be some drama in Washington, or whether it would be an unusually strong storm slows you down a little bit but it does feel like it's a market that.

The next question is from Le Jed rasage from Bank of America. Your line is open.

Operator: The next question is from Rafe Jadrosich from Bank of America. Your line is now open.

It's poised for growth.

Bhaskar Rao: If I could add on to that, it, then the way to think about the quarter when you put all that together is from a Q1 sales standpoint, we would expect something in and around positive 14% or a little over $1.8 billion, with EPS growing in and around 20%.

And if I could add on to that then.

Victoria Piskarev: Hi, you have Victoria Pipscher on for Dave Judge. Thanks for taking our question. I was wondering if you could talk a little bit more about the elasticity of demand and, how did price increases impact your volume?

Rafe Jadrosich: Hi, you have Victoria Pipscher on for Dave Judge. Thanks for taking our question. I was wondering if you could talk a little bit more about the elasticity of demand and, how did price increases impact your volume?

Way to think about the quarter when you put all that together.

Is from our first quarter sales standpoint, we would expect something in and around positive, 14% or little over $1 8 billion with EPS growing.

Um, hi. You have Victoria Pittsburgh on for. We've got research. Thanks for taking taking your question. Um, I was wondering if you could talk a little bit more about the last elasticity of demand and um how did price increase has been packed to volume?

Yeah, you know, we we took quite a bit of price over the last couple of years.

In and around 20%.

Scott Thompson: Yeah. You know, we, we took quite a bit of price over the last couple of years, and I can't really see any significant impact from, from a volume standpoint. This is an industry that has always been very efficient in passing actual cost, commodity cost increases, through the channel, and it looks like it's could continue to do that.

Scott L. Thompson: Yeah. You know, we, we took quite a bit of price over the last couple of years, and I can't really see any significant impact from, from a volume standpoint. This is an industry that has always been very efficient in passing actual cost, commodity cost increases, through the channel, and it looks like it's could continue to do that.

Yeah.

Scott Thompson: Operator, next question.

Operator next question.

Operator: Your next question is from Bobby Griffin from Raymond James. Your line is now open.

Your next question is from Bobby Griffin from Raymond James Your line is now open.

Um, and I can't really see any significant impact from from a volume standpoint. Uh, this is an industry that has always been very efficient in passing actual cost commodity cost increases, uh, through the channel. Uh, and it looks like it's uh, continued to do that.

Bobby Griffin: Good morning, guys. Thanks for taking the questions. And Aubrey, congrats on the new position. It's been great working with you over the last few years. I guess, Foster and Scott, for my question, I want to maybe unpack the guide a little bit. And Foster, can you help us and just kind of clean up some things in the model in terms of, like, what's less on the customer in transition, as well as I know we have the wraparound benefit of Mattress Firm and some of the divestitures. And I guess I'm asking in the context of, I take the cost synergies,

Good morning, guys. Thanks for taking the questions and operator, congrats on the new position has been great working with you over the last few years.

I guess foster and Scott for my question I wanted to maybe unpack the guide a little bit in Boston can you help us just kind of clean up some things in the model in terms of what's the last one the customer transition as well as I know, we have the wraparound benefit of mattress firm and some of the divestitures divestitures and I guess I'm asking in the context of I T.

Thank you. The next question is from Dan Silverstein from UBS. Your line is open.

Operator: Thank you. The next question is from Dan Silverstein from UBS. Your line is now open.

Thank you and good morning. Appreciate you taking our question.

Daniel Silverstein: Thank you, and good morning. Appreciate you taking our question. Maybe just to build on Bobby's question, if we kind of expand that out to the 2028 target, is the raise there just the additional synergies, or has anything else changed on kind of the outlook on the pace of an industry recovery or Somnigroup's growth against that industry? Thank you.

maybe just to build on Bobby's question if, if we kind of expand that out to the the 2028 Target,

The cost synergies.

Bhaskar Rao: ... the EBITDA benefit from the floor shift as well as our guess at what the one month de-match is from is, we can walk our way pretty close to the midpoint just on those. So is there anything I'm missing on an offset, or is the way to view that more just conservative in the model? Like, just wanna make sure we're thinking about all the parts the right way.

Bhaskar Rao: the EBITDA benefit from the floor shift as well as our guess at what the one month de-match is from is, we can walk our way pretty close to the midpoint just on those. So is there anything I'm missing on an offset, or is the way to view that more just conservative in the model? Like, just wanna make sure we're thinking about all the parts the right way.

The EBITDA benefit from the floor ship as well as our guests are what the one month of matches for them as we can work our way pretty close to the midpoint just on those so is there anything I'm missing on an offset or is the way to view that more just conservative in the model I just want to make sure we're thinking about all the parts of the right way.

Is is the raise their just the additional synergies or has anything else changed on? Kind of the outlook on the pace of an Industry Recovery or or somni groups growth against that industry? Thank you.

Scott Thompson: Great question. Some of it is synergies and success that we've achieved in synergies, plus what we see going into the funnel from a synergy standpoint, primarily in the area of logistics-

Scott L. Thompson: Great question. Some of it is synergies and success that we've achieved in synergies, plus what we see going into the funnel from a synergy standpoint, primarily in the area of logistics-

Scott Thompson: Sure. Let me give it a try, and then you can follow up as necessary. So when I think about this fundamentally is it's all based on an industry that's flat to slightly up. On top of that, what we have is share gains in all of our geos. So internationally growing high single, and in North America, call it that mid-single. And that would get you, let's call it in and around $7.9 billion. When you go forward from a gross profit standpoint, well, let's talk about the stub period. So the stub period, you're correct, is about one month shy relative to prior year, and call that in and around, call it $280 million or so net.

Sure Let me, let me give it a try and then you can.

Follow up as necessary. So when I think about this fundamentally it's all based on an industry that's flat to slightly up on top of that what we have are share gains in all of our geos. So internationally growing high single.

Daniel Silverstein: Mm-hmm.

Scott Thompson: And advertising. The other probably big driver would be when we look at our relative competitive position, and it's a little early in the reporting quarter to have, you know, all the numbers and have the industry fully analyzed. But we think we took a major step forward from a competitiveness, and everywhere we look. I'd highlight that we're growing in all of our geos, and those are in markets that we believe had a tough, tough Q4. So again, I guess it's confidence in our competitive position, and synergies are the main drivers. I mean, and if the industry turns in 2026, which we did not embed in our guidance, our guidance range would be light.

Scott L. Thompson: And advertising. The other probably big driver would be when we look at our relative competitive position, and it's a little early in the reporting quarter to have, you know, all the numbers and have the industry fully analyzed. But we think we took a major step forward from a competitiveness, and everywhere we look. I'd highlight that we're growing in all of our geos, and those are in markets that we believe had a tough, tough Q4. So again, I guess it's confidence in our competitive position, and synergies are the main drivers. I mean, and if the industry turns in 2026, which we did not embed in our guidance, our guidance range would be light.

In North America call it that mid single and that would get you, let's call it in and around $7 $9 billion. When you go forward from a gross profit standpoint.

But great, great question. Uh some of it is synergies and success uh that we've achieved in synergies plus what we see going into the funnel um from from a Synergy standpoint primarily in the area of logistics. Uh and and advertising the other probably Big Driver would be would we look at our relative competitive position and it's a little early in the reporting quarter to have, you know, all the numbers and have the industry fully analyzed. Uh, but we think we took a major step forward from a competitiveness.

<unk> talked about the stub period, so the stub period Youre correct as about one month shy relative to prior year and call that internal around call. It 280, or so million dollars net.

Look I've highlighted that we're growing in all of our GEOS and those are in markets that we believe uh had a tough, tough fourth quarter. So again I guess it's confidence in our competitive position.

Scott Thompson: When you think about from a profitability standpoint, is we're gonna continue to support those brands. We call that about $720 million of advertising to continue to support from a launch standpoint. What's embedded in there is, is very nice gross profit improvement, let's call it about 100 basis points, on a year-over-year perspective. And the principal drivers of that is a couple of things. One is productivity through the plants, and on top of that would be the synergies that we've identified. And as noted in the prepared material, we've taken that number up about 25 basis points, sorry, $25 million on a year-over-year basis. There is a bit of a headwind, associated with, let's call it, commodities, that would offset from a gross profit standpoint.

When you think about from a profitability standpoint is we're going to continue to support those brands, we called out about $720 million of advertising to continue to support from a launch standpoint, what's embedded in there is is very nice gross profit improvement, let's call. It about 100 basis points.

Synergies, you know, the main, or the main drivers? And I mean, and if the, if the industry turns, uh, in 26, which we did not, uh, embed in our our guidance, uh,

our guidance range range would be like,

On a year over year perspective, and the principal drivers of that is couple of things one is productivity through the plants.

Scott Thompson: You know, to wrap around the perspective of $515, what we're excited about is the ability to take it up in light of an industry in 2025 that did not achieve what we thought it would be when the original $485 was put out there. So we did have some wins, as Scott said, competitive positioning, revenue synergies, cost synergies, et cetera, that allowed us to take the number to $515. And then at the conference in New York, here in a few weeks, we'll give you more detail in the build-up to that $515, I think, which will give you more confidence that that raise was appropriate.

Scott L. Thompson: You know, to wrap around the perspective of $515, what we're excited about is the ability to take it up in light of an industry in 2025 that did not achieve what we thought it would be when the original $485 was put out there. So we did have some wins, as Scott said, competitive positioning, revenue synergies, cost synergies, et cetera, that allowed us to take the number to $515. And then at the conference in New York, here in a few weeks, we'll give you more detail in the build-up to that $515, I think, which will give you more confidence that that raise was appropriate.

And on top of that would be the synergies that we've identified and as noted in the prepared material. We've taken that number up about 25 basis points, sorry, $25 million on a year over year basis. There is a bit of a headwind associated with let's call. It commodities that would offset from a gross profit standpoint, but if you add all those pieces up big.

Scott Thompson: But if you add all those pieces up, I think fundamentally, the foundation being industry market share gains, and margin expansion, it gets you to in and around the midpoint. Operator, next question?

Fundamentally the foundation being industry market share gains and margin expansion. It gets you to in and around the midpoint.

To wrap around the the perspective of 515, what we're excited about is the ability to take it up in light of an industry. In 2025 that did not, uh, uh, achieve what we thought it would be when the original 485 was put out there. So we did have some winds that Scott said, competitive positioning Revenue, synergies cost, synergies, Etc. That allowed us to take the number to 515 and then at at the conference in New York. Uh here in a few weeks, we we'll give you more detail in the build-up uh to to that 515 to to I think we will give you more confidence. Um that that raise was appropriate.

Operator next question.

Operator: The next question is from Wade Jedd Rossitch from Magnus America. Your line is now open.

The next question is from Amit Jed Jed <unk> from Robert from Morgan. Your line is now open.

Thank you. The next question is from Peter Keith from Piper Sandler. Your line is now open.

Operator: Thank you. The next question is from Peter Keith, from Piper Sandler. Your line is now open.

Victoria Piskaroff: Hi, you have Victoria Piskaroff on for Wade Jedd Rossitch. Thanks for taking our question. I was wondering if you could talk a little bit more about the elasticity of demand and, how did price increases impact your volume?

Hi, you have to try to Pittsburgh offer we've got research. Thanks.

Peter Keith: Hi, thanks. Good morning, everyone, and congrats to Aubrey and to Lauren. I wanted to just ask about the lack of product launches in the first half. With the gross margin guide of 100 basis points, could we see a little bit of excess gross margin expansion in the first half with no product launches and then the opposite of that in the second half? And then, Scott, also, product launches usually are a big sales driver, so you're anticipating gaining market share, Tempur North America. I guess, can you walk us through the rationale on that? Because product launches usually are a nice sales accelerant.

Your question.

Wondering if you could talk a little bit more about the lawsuit elasticity of demand and how did price increases the impact of volume.

Okay.

Scott Thompson: Yeah. You know, we took quite a bit of price over the last couple of years, and I can't really see any significant impact from a volume standpoint. This is an industry that has always been very efficient in passing actual cost commodity cost increases through the channel, and it looks like it's could continue to do that.

Hi, thanks. Good morning everyone. Um, and congrats to uh Audrey and to Lauren. Um, I wanted to just ask about the the lack of product launches in the first half with the gross margin guide of 100 basis points. Could we see a little bit of excess gross margin expansion in the first half with no product launches, and then, then the opposite of that, and the, in the second half,

Yes, yes.

We took quite a bit of price over the last couple of years.

And I can't really see any significant impact from a volume standpoint.

and then Scott also um product launches usually are a big sales driver so you're you're anticipating gaining market, share temper, North America

This is an industry that has always been very efficient in passing actual cost commodity cost increases through the channel.

I guess, can you walk us through the the rationale on that? Because product launches, usually are a nice sales accelerator.

Scott Thompson: Yeah, a lot, lot in that question, and I'll start with it, and Bhaskar, you can, you can clean me up. You know, when we do a product launch, yeah, you do get more sales, but those sales are obviously much lower profit margin, closer to break even, so it's kind of a mixed bag. If you look what's in the marketplace, we've got great products in the marketplace. Sealy Posturepedic launch, the Tempur stuff. We do have a small launch later in the year, Stearns & Foster. But from a competitive standpoint, we feel very good about our launches. So I think we're well positioned to continue to take share of what we've got in the market, backed with advertising. You wanna talk to the gross margin?

Scott L. Thompson: Yeah, a lot, lot in that question, and I'll start with it, and Bhaskar, you can, you can clean me up. You know, when we do a product launch, yeah, you do get more sales, but those sales are obviously much lower profit margin, closer to break even, so it's kind of a mixed bag. If you look what's in the marketplace, we've got great products in the marketplace. Sealy Posturepedic launch, the Tempur stuff. We do have a small launch later in the year, Stearns & Foster. But from a competitive standpoint, we feel very good about our launches. So I think we're well positioned to continue to take share of what we've got in the market, backed with advertising. You wanna talk to the gross margin?

And it looks like it's.

It could continue to do that.

Operator: Thank you. The next question is from Dan Silberstein from UBS. Your line is now open.

Thank you. The next question is from Dan <unk> from UBS. Your line is now open.

Thank you and good morning, I appreciate you taking our question maybe.

Maybe just to build on Bobby's question, if we kind of expand that out to the 2028 target.

Is the raise there just the additional synergies or has anything else changed on kind of the outlook on the pace of an industry recovery or some knee group's growth against that industry. Thank you.

Yeah, a lot a lot in that question and I'll start with it in Bhaskar. And you can, you can clean me up, you know, we do a product launch. Yeah, you do get more sales but those sales are already started, much lower profit margin close to closer more than 4 Break Even, uh, so it's kind of a mixed bag. If, if you look what's in the marketplace, but we've got great products in the marketplace, uh, and see. Postropaky.

You bet.

Scott Thompson: Great, great question. Some of it is synergies and success that we've achieved in synergies, plus what we see going into the funnel, from, from a synergy standpoint, primarily in the area of logistics.

Great question some of it is synergies and success.

Bhaskar Rao: Absolutely, Peter, good question. So when I think about the full year, if I were to step back, on the sales and let's call it the EBIT or the fall-through line, it is effectively a push, but there is some first half, back half phasing. So think about it as a, as a sales headwind in the first half, call it about $20 million or so, and effectively reversing in the back half. And from a margin standpoint, you are correct, there is the if you look at it in isolation, the gross profit will be impacted more so in the first half of the year versus the back half of the year. However, we are also, again, as we announced the synergy opportunity and the productivity is that as the year progresses, those things will progress as well.

That we've achieved in synergies plus what we see going into the funnel.

From a synergy standpoint, primarily in the area of logistics.

Daniel Silverstein: Mm-hmm.

Scott Thompson: and advertising. The other probably big driver would be when we look at our relative competitive position, and it's a little early in the reporting quarter to have, you know, all the numbers and have the industry fully analyzed. But we think we took a major step forward from a competitiveness and everywhere we look. I'd highlight that we're growing in all of our geos, and those are in markets that we believe had a tough Q4. So again, I guess it's confidence in our competitive position, and synergies are the main drivers. I mean, and if the industry turns in 2026, which we did not embed in our guidance, our guidance range would be light.

And advertising the other probably big driver would be when we look at our relative competitive position and it's a little early in the reporting quarter to have all the numbers now the industry fully analyzed.

But we think we took a major step forward from a competitiveness.

And everywhere, we look I'd highlight that we're growing in all of our Geos and those are in markets that we believe had a tough tough fourth quarter. So again, I guess its confidence in our competitive position.

When I think about the full year, if I would have stepped back on the sales and let's call it, the ebit or the fall through line, it is effectively a push but there is some first half back, half phasing. So think about it as a as a sales headwind in the first half, call it about 20 million or so and effectively reversing in the back half and from a margin standpoint, you are correct. There is the, if you look at it in isolation the gross profit will be impacted more. So, in the first half of the Year versus the back half of the year, however, uh, we are also again, as we announced the the Synergy opportunity and the productivity is, is that, that as the year progresses is, those things will progress as well. But fundamentally when you look at the full 4 models in and of itself, yes, first half back half impact net full year basically. Nothing

Bhaskar Rao: But fundamentally, when you look at the full floor models in and of itself, yes, first half, back half impact. Net full year, basically nothing.

And synergies.

The main the main drivers.

And if the if the industry turns.

Thank you, your next question is from Brad Thomas from keyan Capital markets your line of so open.

Operator: Thank you. Your next question is from Brad Thomas, from KeyBanc Capital Markets. Your line is now open.

In 2006, which we did not embed in our guidance.

Brad Thomas: Hi, good morning. Thank you for taking the question. The question is about the changes at Mattress Firm from a consumer and an operational perspective. Scott, it does feel, seem like even with same store sales having slowed a bit in the Q4, that that's more a function of the industry and that Mattress Firm is still really outperforming. But I was hoping you could just comment a little bit on, you know, how you measure that the new lineup is resonating with the consumer, and then how we should think about kind of the pace of change that we're putting in place. And then maybe just finally, any more details you could share on the timing of Purple, Kingsdown, some of the other changes that you're doing here this year. Thank you.

Our guidance range range would be light.

Bhaskar Rao: Now, to wrap around the perspective of $515, what we're excited about is the ability to take it up in light of an industry in 2025 that did not achieve what we thought it would be when the original $485 was put out there. So we did have some wins, as Scott said, competitive positioning, revenue synergies, cost synergies, etc., that allowed us to take the number to $515.

Now to wrap around the perspective of $5 15, what we're excited about is the ability to take it up in light of an industry in 2025 that did not.

Achieved what we thought it would be when the original 480 <unk> was put out there. So we did have some wins as Scott said competitive positioning revenue synergies cost synergies et cetera that allowed us to take the number to 515 and then at the conference in New York here in a few weeks.

Hi, good morning thank you for taking the question. Um the question is about the changes that Mattress Firm from a consumer and an operational perspective. Um it's got it does feel seem like even with same store sales having slowed a bit in the fourth quarter that that's more a function of the industry and that Mattress Firm is still really outperforming but I was hoping you could just comment a little bit on, you know how you measure the the new lineup is resonating with the consumer and then how we should think about kind of the pace of change that we're putting in place.

Scott Thompson: And then at the conference in New York here in a few weeks, we'll give you more detail in the buildup to that 5:15, I think, which will give you more confidence that that raise was appropriate.

And then maybe just finally um any more details that you could share on the timing of purple Kings down uh some of the other changes that you're doing here this year. Thank you.

We'll give you more detail in the buildup.

To that $5 15.

Do I think we'll give you more confidence.

Scott Thompson: Sure. So I mean, to summarize the question, Scott, can you tell me everything you know about Mattress Firm? Just kidding. Look, from everything we see, Mattress Firm continues to take share, both in Q4 and start of Q1. So I would say that's evidence of resonating with customers. As far as performance, you're seeing share growth, and we'll call it the family brands, the Tempur Sealy brands, particularly Tempur. You're seeing growth in Kingsdown, which is doing a great job for us. And you're seeing growth in Purple, and there's a test going on in Kingsdown, considering expanding it, and then the new Purple high-end bed will be hitting the floor at Mattress Firm, I think, late Q1.

Scott L. Thompson: Sure. So I mean, to summarize the question, Scott, can you tell me everything you know about Mattress Firm? Just kidding. Look, from everything we see, Mattress Firm continues to take share, both in Q4 and start of Q1. So I would say that's evidence of resonating with customers. As far as performance, you're seeing share growth, and we'll call it the family brands, the Tempur Sealy brands, particularly Tempur. You're seeing growth in Kingsdown, which is doing a great job for us. And you're seeing growth in Purple, and there's a test going on in Kingsdown, considering expanding it, and then the new Purple high-end bed will be hitting the floor at Mattress Firm, I think, late Q1.

The debt raise was appropriate.

Operator: Thank you. The next question is from Peter Keith, from Piper Sandler. Your line is now open.

Thank you. The next question is from Peter Keith from Piper Sandler Your line is now open.

Alright, Thanks, good morning, everyone.

And congrats to Audrey and to Lauren I.

I wanted to just ask about the lack of product launches in the first half with the gross margin guide of 100 basis points could we see a little bit of excess gross margin expansion in the first half with no product launches and then the opposite of that in the second half.

And then Scott also product launches usually are a big sales driver, so youre anticipating gaining our market share Tempur North America.

I guess can you walk us through the rationale on that because product launches usually are a nice sales accelerate.

Scott Thompson: Yeah, a lot, a lot in that question, and I'll start with it, and Bhaskar, you can, you can clean me up. You know, when you do a product launch, yeah, you do get more sales... but those sales are obviously much lower profit margin, closer to breakeven. So it's kind of a mixed bag. If you look what's in the marketplace, we've got great products in the marketplace. Sealy Posturepedic launched the Tempur stuff. We do have a small launch later in the year, Stearns & Foster. But from a competitive standpoint, we feel very good about our launches. So I think we're well positioned to continue to take share of what we've got in the market, backed with advertising. You wanna talk to the gross margin?

Scott Thompson: Yeah, a lot, a lot in that question, and I'll start with it, and Bhaskar, you can, you can clean me up. You know, when you do a product launch, yeah, you do get more sales but those sales are obviously much lower profit margin, closer to breakeven. So it's kind of a mixed bag. If you look what's in the marketplace, we've got great products in the marketplace. Sealy Posturepedic launched the Tempur stuff. We do have a small launch later in the year, Stearns & Foster. But from a competitive standpoint, we feel very good about our launches. So I think we're well positioned to continue to take share of what we've got in the market, backed with advertising. You wanna talk to the gross margin?

Yeah, a lot in that question and I'll start with Boston Clean me up when you do a product launch yes, you do get more sales, but those sales are obviously much lower profit margin closely closer more than breakeven.

Scott Thompson: You know, we get a lot of feedback from our RSAs, and I think the merchandising changes have been well received, both in store and with consumers. And Nectar is doing well. Brad, I forgot to mention Nectar has been doing well on the floor. So, you know, overall, I couldn't be happier with our merchandising changes, both the way they've been executed, the pace they've been executed, and how the market has received them.

Scott L. Thompson: You know, we get a lot of feedback from our RSAs, and I think the merchandising changes have been well received, both in store and with consumers. And Nectar is doing well. Brad, I forgot to mention Nectar has been doing well on the floor. So, you know, overall, I couldn't be happier with our merchandising changes, both the way they've been executed, the pace they've been executed, and how the market has received them.

So it's kind of a mixed bag. If you look what's in the marketplace, we've got great products in the marketplace.

Brands particularly, uh temporary you're seeing growth in King's down uh which is doing a great job uh for us and you're seeing growth in in purple and there's uh some there's a test going on in Kingstown, uh, considering expanding it. And then the new purple uh, high in bed will be hitting the floor at mattress room. I think late late for first quarter, uh, you know, we get a lot of feedback from our RSA and I think we the merchandising changes have been well received both in store uh and with consumers

<unk> launched a temporary step we do have a small launch later in the year Stearns <unk> Foster.

But from a competitive standpoint, we feel very good about our the launches. So I think we're well positioned to continue to take share and what we've got in the market back with average advertising.

And all we should and we and nectar's doing well for, I forgot to mention nectar has been, uh, has been doing well on the floor. So, you know, overall I I couldn't be happier with our our merchandising changes both the the way they've been executed. The pace they've been executed and and how the market uh that has received

You want to take the gross margin Peter Good question. So when I think about the full year, if I were to step back on the sales and let's call. It the EBIT or the fall through line. It is effectively a bush, but there is some first half back half phasing so think about it as a as a sales headwind in the first half call it about $20 million or so and effectively.

Bhaskar Rao: Absolutely, Peter, good question. So when I think about the full year, if I were to step back, on the sales and let's call it the EBIT or the fall-through line, it is effectively a push, but there is some first half, back half phasing. So think about it as a sales headwind in the first half, call it about $20 million or so, and effectively reversing in the back half. And from a margin standpoint, you are correct. There is the... If you look at it in isolation, the gross profit will be impacted more so in the first half of the year versus the back half of the year. However, we are also, again, as we announced the synergy opportunity and the productivity is that as the year progresses, those things will progress as well.

Bhaskar Rao: Absolutely, Peter, good question. So when I think about the full year, if I were to step back, on the sales and let's call it the EBIT or the fall-through line, it is effectively a push, but there is some first half, back half phasing. So think about it as a sales headwind in the first half, call it about $20 million or so, and effectively reversing in the back half. And from a margin standpoint, you are correct. There is the. If you look at it in isolation, the gross profit will be impacted more so in the first half of the year versus the back half of the year. However, we are also, again, as we announced the synergy opportunity and the productivity is that as the year progresses, those things will progress as well.

It. Thank you. Your next question is from Jeff from Stevens. Your line is not open.

Operator: Thank you. Your next question is from Jack Nick from Stevens. Your line is now open.

Jeff Lick: Good morning. Thanks for taking my question. Aubrey and Lauren, congrats on the new roles, and, Scott, nice to reconnect with you. It's been a long time. Question is, Scott, I was wondering, you know, now that you've had Mattress Firm, you know, pretty much for an entire year, you know, you had mentioned on your prepared remarks about, some marketing step up from some of your partners. Just curious, you know, how you're seeing, you know, I know this is a little sensitive, but just owning Mattress Firm, the, you know, the competitive dynamics or the strategic dynamics, any thoughts there on how that, kind of meshes with your original expectations when you bought it?

Reversing in the back half and from a margin standpoint, you are correct. There is the if you look at it in isolation that gross profit will be impacted more so in the first half of the year versus the back half of the year. However.

We are also again as we announced at the synergy opportunity and our productivity is is that that as the year progresses as those things will progress as well, but fundamentally when you look at the pro forma model in and of itself, yes, first half back half impact net full year basically nothing.

Bhaskar Rao: But fundamentally, when you look at the full floor models in and of itself, yes, first half, back half impact. Net full year, basically nothing.

Uh, good morning. Thanks for taking my question, Aubrey and Lauren congrats on the new roles and Scott nice to reconnect with you. It's been a long time. Um, question has got, I was wondering, you know, now that you've had Mattress Firm, you know, pretty much for an entire year. You know, you had mentioned on your prep remarks about some marketing step up from some of your partners just curious. You know how you're seeing, um, you know, I know this is a little sensitive, but just owning Mattress Firm that, you know, the competitive Dynamics or the Strategic Dynamics, any, any thoughts there on how that, uh, kind of meshes with your original expectations, when you bought it,

Yeah, um, I've got a couple of things, great question and, and good to hear from you.

Scott Thompson: Yeah, I've got a couple of things. Great question, and good to hear from you. I guess starting with the advertising, you know, we completely changed the advertising message and the approach. It's built in a way that there's a Mattress Firm message, and then you can kind of plug in a brand and product into the ad and get a one-two punch. Obviously, we're doing that with the family brands, the Tempur, Sealy, Stearns, and Foster, but we're also doing it with other brands, well, third-party brands. That's been effective. In fact, it's been so effective that other manufacturers are giving us incremental support, incremental outside of, we'll call it, normal support, to take some positions in those ads.

Scott L. Thompson: Yeah, I've got a couple of things. Great question, and good to hear from you. I guess starting with the advertising, you know, we completely changed the advertising message and the approach. It's built in a way that there's a Mattress Firm message, and then you can kind of plug in a brand and product into the ad and get a one-two punch. Obviously, we're doing that with the family brands, the Tempur, Sealy, Stearns, and Foster, but we're also doing it with other brands, well, third-party brands. That's been effective. In fact, it's been so effective that other manufacturers are giving us incremental support, incremental outside of, we'll call it, normal support, to take some positions in those ads.

Operator: Thank you. Your next question is from Brad Thomas, from KeyBanc Capital Markets. Your line is now open.

Thank you. Our next question is from Brad Thomas from Keybanc Capital markets. Your line is now open.

Brad Thomas: Hi, good morning. Thank you for taking the question. The question is about the changes at Mattress Firm from a consumer and an operational perspective. Scott, it does seem like even with same-store sales having slowed a bit in Q4, that that's more a function of the industry and that Mattress Firm is still really outperforming. But I was hoping you could just comment a little bit on, you know, how you measure that the new lineup is resonating with the consumer, and then how we should think about kind of the pace of change that we're putting in place. And then maybe just finally, any more details you could share on the timing of Purple, Kingsdown, some of the other changes that you're doing here this year. Thank you.

Hi, Good morning, Thank you for taking the question.

<unk> is about the changes at mattress firm from a consumer and an operational perspective, Scott. It does feel seem like even with same store sales, having slowed a bit in the fourth quarter that thats more a function of the industry in that mattress firm is still really outperforming but I was hoping you could just comment a little bit on how you measure that.

Um, I guess starting starting with the advertising. Uh, you know, we completely changed the, the advertising message and the approach, um, it's kind of it's built in in a way that, uh, there's a mattress for a message and then you can kind of plug in a brand and product, uh, into into the ad, uh, and get a, you know, a 1 2 punch. Obviously, we're doing that with the family Brands. The tempered celery, STS and Foster. But we're also doing it with with other brands.

New lineup is resonating with the consumer and then how we should think about kind of the pace of change that we're putting in place and then maybe just finally any more details you can share on the timing of purple kings down some of the other changes that youre doing here. This year. Thank you.

Um, about third-party Brands and, uh, that's been effective. In fact, it's been, uh, so effective that, uh, other manufacturers are giving us, uh, incremental support incremental, outside of, we'll call it normal support, uh, to take some positions in Those ads because there's

Scott Thompson: Sure. So, I mean, to summarize the question, Scott, can you tell me everything you know about Mattress Firm? Just kidding. Look, from everything we see, Mattress Firm continues to take share, both in Q4 and start of Q1. So I would say that's evidence of resonating with customers. As far as performance, you're seeing share growth, and we'll call it the family brands, the Tempur Sealy brands, particularly Tempur, you're seeing growth in Kingsdown, which is doing a great job for us, and you're seeing growth in Purple, and there's a test going on in Kingsdown, considering expanding it, and then the new Purple high-end bed will be hitting the floor at Mattress Firm, I think, late Q1.

Sure. So I mean to summarize the question Scott can you tell me everything you know about mattress firm.

Scott Thompson: Because they're seeing when they do, it drives traffic not only on the Mattress Firm floor, but it also drives their brand at other third-party retailers. So it's become a very effective way for them to get to market. And so couldn't be happier with the way that program has worked, and I think the third-party manufacturers who participated in it are happy with that too. As it relates to, I'll call it, channel dynamics or those kind of things, we have a term called other other, because it's a short way to say, how are the other retailers doing in the US that are not Mattress Firm, and how are the sales of Tempur Sealy products? We call it other other. If you look at other other, our other other...

Scott L. Thompson: Because they're seeing when they do, it drives traffic not only on the Mattress Firm floor, but it also drives their brand at other third-party retailers. So it's become a very effective way for them to get to market. And so couldn't be happier with the way that program has worked, and I think the third-party manufacturers who participated in it are happy with that too. As it relates to, I'll call it, channel dynamics or those kind of things, we have a term called other other, because it's a short way to say, how are the other retailers doing in the US that are not Mattress Firm, and how are the sales of Tempur Sealy products? We call it other other. If you look at other other, our other other...

Just kidding look from everything we see.

Mattress firm continues to take share.

Both in the fourth quarter and started the first quarter.

So I would say thats evidence of resonating with customers.

Far as performance Youre seeing share growth and we will call. It the family brands to Tempur Sealy brands, particularly temporary youre seeing growth in kings down.

<unk>, which is doing a great job for us.

And you're seeing growth in purple and Theres, some theres a test going on in Kings down.

Considering expanding it and then new purple.

Scott Thompson: sales. We think that they are outperforming the general market, so we think we're taking share in the other area too. And so I'm not seeing any significant channel conflict. I think everybody understands that the advertising we're doing is helping drive product, not just at our retail stores, but throughout the industry, and it's on good support. It's probably gone better than I probably initially thought. Wasn't too worried about it, but you got to work through it. So no, I think, I think the Mattress Firm acquisition, you know, if you take the price, you take the performance, you take the synergies that have been realized, I think, we would say that it's, it's been very good, from our standpoint.

Scott L. Thompson: sales. We think that they are outperforming the general market, so we think we're taking share in the other area too. And so I'm not seeing any significant channel conflict. I think everybody understands that the advertising we're doing is helping drive product, not just at our retail stores, but throughout the industry, and it's on good support. It's probably gone better than I probably initially thought. Wasn't too worried about it, but you got to work through it. So no, I think, I think the Mattress Firm acquisition, you know, if you take the price, you take the performance, you take the synergies that have been realized, I think, we would say that it's, it's been very good, from our standpoint.

Seeing when they do it, it drives traffic. Not only on the Mattress Firm floor, but it also drives their brand at other third-party retailer, so it's become a very, it's a very effective way for them to get to Market, um, and so couldn't be happier with the way that program has worked. And I I think, um, I think the third party manufacturers who participated in it. Uh, are are happy with that too. Uh, as it relates to, I call it Channel Dynamics or are those kind of things? We have, we have a term called other other, uh, because it's a short way to say, how are the other retailers doing in the US that are not Mattress Firm, and how are the sales of temporary products? We call it other other and if you look at other other, um, our other other sales, um, we think that they are outperforming the General market. So we think we're taking share in the other other area too. And so I'm not seeing

Hi in bed will be hitting the floor at mattress firm I think late late first quarter.

Scott Thompson: You know, we get a lot of feedback from our RSAs, and I, I think with the merchandising changes have been well received, both in store and with consumers. And also, Nectar is doing well. Forgot to mention Nectar, has been doing well on the floor. So, you know, overall, I, I couldn't be happier with our, our merchandising changes, both the, the way they've been executed, the pace they've been executed, and how the market has received them.

We get a lot of feedback from our assays.

And I think the merchandising changes have been well received both in store.

seeing any significant Channel conflict. Um, I think everybody understands that the advertising we're doing is helping Drive product not just at our retail stores but throughout the industry uh, and found good support. It's probably gone better than I probably initially. Uh,

And with consumers.

And I'll, let Michelle and nectar is doing well forget to mention nectar is Ben.

Thought wouldn't be worried about it, but you got to work work through it. So, no, I think, um,

Been doing elements for so overall I couldnt be happier with our merchandising changes both.

The way they executed the pace they've been executed.

And how the market that has received.

I think the Mattress Firm acquisition uh you know you could take the price, you take the performance, you take the synergies that have been realized, um I think uh we would say that it's it's been very good from our standpoint.

Thanks very much for taking the question, best of luck.

Operator: Thank you. Your next question is from Jeff Lack from Stevens. Your line is now open.

Thank you. Our next question is from Jeff <unk> from Stephens. Your line is now open.

Jeff Lick: Thanks very much for taking the question. Best of luck.

Jeff Lick: Good morning. Thanks for taking my question. Aubrey and Lauren, congrats on the new roles, and, Scott, nice to reconnect with you. It's been a long time. Question is, Scott, I was wondering, you know, now that you've had Mattress Firm, you know, pretty much for an entire year, you know, you had mentioned on your remarks about, some marketing step up from some of your partners. Just curious, you know, how you're seeing, you know, I know this is a little sensitive, but just owning Mattress Firm, the, you know, the competitive dynamics or the strategic dynamics, any thoughts there on how that, kind of meshes with your original expectations when you bought it?

Good morning, Thanks for taking my question, Aubrey and Loren Congrats on the new roles and more Scott makes the reconnect with you it's been a long time.

Thank you. Your next question is from Bobby Griffin from Raymond James, Airline, is that open?

Hey guys. Thank

Operator: Thank you. Your next question is from Bobby Griffin from Raymond James. Your line is now open.

Questions. Scott I was wondering now that you've had mattress firm.

Bobby Griffin: Hey, guys. Thanks for letting me back in the queue. Scott, I just, you know, we spent a lot of time on North America, but honestly, international just continues to be a bright spot there with robust kind of constant currency growth on top of a really good quarter last year. I understand you guys did a lot of work on the product portfolio, but help us understand, like, how much is new door growth versus how much is throughput or slot velocity? And then when we think about the opportunity international, like, do you still see a robust amount of new door potential, or is it more just continuing the velocity? Just help us think about the sustainability of what is turning into a nice bright spot in the story.

Pretty much for an entire year you had mentioned on your prepared remarks about some marketing step up from some of your partners just curious.

Youre seeing.

So a little sensitive, but just honing mattress firm that the competitive dynamics of the strategic dynamics or any thoughts there on how that.

Meshes with your original expectations when you bought it.

Scott Thompson: Yeah, a couple things. Great question, and good to hear from you. I guess starting with the advertising, you know, we completely changed the advertising message and the approach. It's kind of built in a way that there's a Mattress Firm message, and then you can kind of plug in a brand and product into the ad and get a one-two punch. Obviously, we're doing that with the family brands, the Tempur, Sealy, Stearns & Foster, but we're also doing it with other brands, well, third-party brands. And that's been effective. In fact, it's been so effective that other manufacturers are giving us incremental support, incremental outside of, we'll call it, normal support, to take some positions in those ads.

Yes, I've got a couple of things great question and good to hear from you.

How much is throughput or slot velocity? And then when we think about the opportunity International like do you still see a robust amount of new door potential? Or is it more discontinuing the velocity just help us? Think about the sustainability of of what is turning into a nice bright spot in the story?

I guess, starting with starting with the advertising.

We completely changed the advertising message and the approach.

Scott Thompson: Yeah, I mean, great call out. International has been growing for a couple of years, very strong, again, in not a great market, which is particularly impressive. As you know, from an international standpoint, we don't have a large balance of share internationally, so it is a long-term growth trajectory that we feel very, very bullish on. Bhaskar, do you know the split between new distribution and velocity? Because we're getting both internationally.

Scott L. Thompson: Yeah, I mean, great call out. International has been growing for a couple of years, very strong, again, in not a great market, which is particularly impressive. As you know, from an international standpoint, we don't have a large balance of share internationally, so it is a long-term growth trajectory that we feel very, very bullish on. Bhaskar, do you know the split between new distribution and velocity? Because we're getting both internationally.

It's kind of it's built in a way that theres a mattress firm message.

And then you can kind of plug in brand and product.

Into the AD and get a one two punch obviously, we're doing that with the family brands. The temporary Sealy Stearns <unk> Foster, but we're also doing it with other brands.

While third party brands and that's been effective in fact, it's been so effective that.

Other manufacturers are giving us incremental support incremental outside of we'll call it normal support.

Bhaskar Rao: Absolutely. So when you think about the growth over the last couple of years, it's been principally it's existing distribution. And what existing distribution looks like is perhaps a few more slots in stores that we're in, but really improving the velocity per slot on where we're at. And really what that does is that we have to prove, we have to prove ourselves in the international market. As Scott said, we have relatively low share relative to the US. Also a very difficult execution. The borders, they're not states, they're countries, so it is a it's a tougher slug. So the key there is making sure you have the right product, advertise ahead of that to educate the retailers and the consumers. Therefore, you get the incremental slots within the store, prove yourself in those stores, and then get into new distribution.

To take some positions in those ads because they are seeing when they do it drives traffic not only on the mattress firm floor, but it also drives their brand in other third party retailers. So it's become a very it's a very effective way for them to get to market.

Scott Thompson: Because they're seeing when they do, it drives traffic not only on the Mattress Firm floor, but it also drives their brand at other third-party retailers. So it's become a very effective way for them to get to market. And so couldn't be happier with the way that program has worked, and I think the third-party manufacturers who participated in it are happy with that, too. As it relates to, I'll call it, channel dynamics or those kind of things, we have a term called other, other, because it's a short way to say, how are the other retailers doing in the US that are not Mattress Firm, and how are the sales of Tempur Sealy products? We call it other, other.

Yeah, I mean great call out uh International has been growing for a couple of years, very strong again, and not a great Market which is is particularly impressive. As as, you know, from an international standpoint, we don't have a large balance to share internationally. So it is a long-term growth trajectory that we we very, very bullish on, uh, Bosa. Do you know that the split between new distribution and velocity because we're getting both, uh, internationally. Absolutely. So, when you think about the growth over the last couple of years, it's been principally at, uh, its existing distribution and what existing distribution looks like is perhaps a few more slots and, and, and stores that we're in. But really improving the velocity per slot on where we're at. And really, what that does is that we have to prove, we have to prove ourselves in the international market. As Scott said, we have relatively low share relative to the US. Also, a very difficult execution, the borders. Uh, they're

So couldnt be happier with the way that program has worked.

Inc.

I think third party manufacturers, who participated in it.

Are happy with that too.

As it relates to I'll call. It channel dynamics or are those kind of things we have a term called other other.

We put as the short way to say how are the other retailers doing in the U S that are not mattress firm and how are the sales of Tempur Sealy products. We've got other other and if you look at other other.

Bhaskar Rao: So when I think about the next leg of growth internationally, continue to do what we're doing, but also expand the distribution outside of our historic footprint.

States their country. So it is a it's a it's a tougher slug. So the key there is making sure you have the right product advertised ahead of that to educate the retailers and the consumers, therefore you get the incremental slots within the store, prove yourself in those stores and then get into new distribution. So when I think about the next leg of growth internationally continue to do what we're doing but also expand the distribution outside of our historic footprint.

Scott Thompson: And if you look at other sales, we think that they are outperforming the general market. So we think we're taking share in the other area too. And so I'm not seeing any significant channel conflict. I think everybody understands that the advertising we're doing is helping drive product, not just at our retail stores, but throughout the industry, and found good support. It's probably gone better than I probably initially thought. Wasn't too worried about it, but you gotta work through it. So no, I think the Mattress Firm acquisition, you know, if you take the price, you take the performance, you take the synergies that have been realized, I think we would say that it's been very good from our standpoint.

Our other other sales.

Operator: Thank you. There are no further questions at this time. I will now hand the call back over to Scott Thompson for the closing remarks.

Thank you. There are no further questions at this time. I will know how to call back over to Scott Thompson, or the closing remarks.

We think that they are outperforming the general market. So we think we're taking share in the other other area too.

Thank you, operator.

Scott Thompson: Thank you, operator. To our 20,000 associates 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 company's leadership and its board of directors. This ends the call today, operator. Thank you.

Scott L. Thompson: Thank you, operator. To our 20,000 associates 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 company's leadership and its board of directors. This ends the call today, operator. Thank you.

So I'm not seeing any significant channel conflict.

I think everybody understands that the advertising we're doing is helping drive product not just at our retail stores, but throughout the industry.

To our 2 20,000 Associates 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 company's leadership and its border directors.

It sounds good support it has probably gone better than I, probably initially.

This ends the call today. Operator. Thank you.

Thought wasn't too worried about it but you got to work work through it so no I think.

Thank you. Ladies and gentlemen, the conference has

I think the mattress firm acquisition.

Operator: Thank you, ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Now ended, thank you all for joining. You may now disconnect your lines.

You could take the price you take the performance you take the synergies that have been realized.

I think we.

We would say that it's it's been very good.

From our standpoint.

[Company Representative] (Somnigroup International Inc.): Thanks very much for taking the question. Best of luck.

Jeff Lick: Thanks very much for taking the question. Best of luck.

Thanks, very much for taking my question and best of luck.

Yeah.

Operator: Thank you. Your next question is from Bobby Griffin from Raymond James. Your line is now open.

Thank you. Our next question is from Bobby Griffin from Raymond James Your line is now open.

Hey, guys. Thanks for let me back in the queue.

Scott I just spent a lot of time in North America, but honestly international because it continues to be a bright spot there with robust kind of constant currency growth on top of a really good quarter last year I understand you guys did a lot of work on the product portfolio, but help us understand like how much is new door growth versus how much is throughput our slot velocity and then when we think about.

<unk> opportunity internationally do you still see a robust amount of new door potential or is it more just continuing the velocity just help us think about the sustainability of what is turning into a nice bright spot in the story.

Scott Thompson: Yeah, I mean, great call out. International has been growing for a couple of years, very strong, again, in not a great market, which is particularly impressive. As you know, from an international standpoint, we don't have a large balance of share internationally, so it is a long-term growth trajectory that we are very, very bullish on. Oscar, do you know the split between new distribution and velocity? Because we're getting both internationally.

Yes.

<unk> call out.

International has been growing for a couple of years very strong again and not a great market, which is particularly impressive as you know from an international standpoint, we don't have a large balance of share internationally. So it is a long term growth trajectory that we are very very <unk>.

Bullish on.

Bob could you know the split between new distribution and velocity because we're getting both.

Bhaskar Rao: Absolutely. So when you think about the growth over the last couple of years, it's been principally at the existing distribution. And what existing distribution looks like is perhaps a few more slots in stores that we're in, but really improving the velocity per slot on where we're at. And really what that does is that we have to prove, we have to prove ourselves in the international market. As Scott said, we have relatively low share relative to the US. Also a very difficult execution. The borders, they're not states, they're countries, so it is a tougher slug. So the key there is making sure you have the right product, advertise ahead of that to educate the retailers and the consumers; therefore, you get the incremental slots within store, prove yourself in those stores, and then get into new distribution.

Internationally, absolutely. So when you think about the growth over the last couple of years, it's been principally at <unk>.

Existing distribution and what existing distribution looks like is perhaps a few more slots and in stores that were in but really improving the velocity per slot on where we're at and really what that does is that we have to prove we have to prove ourselves in the international market as Scott said, we have relatively low share relative to the U S. Also a very dip.

<unk> execution the borders they're not state of the country. So it is.

Tougher slug. So the key there is making sure you have the right product advertise ahead of that to educate the retailers and the consumers. Therefore, you get the incremental slots within store prove yourself in those stores and then get into new distribution. So when I think about the next leg of growth internationally continue to do what we're doing but also expand the distribution outside.

Bhaskar Rao: So when I think about the next leg of growth internationally, continue to do what we're doing, but also expand the distribution outside of our historic footprint.

<unk> of our historic footprint.

Operator: Thank you. There are no further questions at this time. I will now hand the call back over to Scott Thompson for the closing remarks.

Thank you there are no further questions at this time I will now hand, the call back over to Scott Thompson for any closing remarks.

Scott Thompson: Thank you, operator. To our 220,000 associates 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 company's leadership and its board of directors. This ends the call today, operator. Thank you.

Thank you operator.

Two our two.

20000 associates 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 Companys leadership and its board of directors.

This ends the call today operator, thank you.

Okay.

Operator: Thank you, ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Thank you ladies and gentlemen, the conference has now ended.

Thank you all for joining you may now disconnect your lines.

Q4 2025 Somnigroup International Inc Earnings Call

Request a DemoDemo

SGI

Somnigroup

Earnings