Somnigroup International Inc. Reports First Quarter 2026 Results
Rhea-AI Summary
Somnigroup International (NYSE: SGI) reported Q1 2026 results: net sales $1.8015B (+12.3%), net income $104.2M vs. loss in prior year, EPS $0.49 and adjusted EPS $0.59 (+20% adjusted). Cash flow from operations was a record $246M. Company affirmed 2026 adjusted EPS guide of $3.00–$3.40, announced a $0.17 quarterly dividend and proposed acquisition of Leggett & Platt for ~$2.5B.
AI-generated analysis. Not financial advice.
Positive
- Net sales +12.3% to $1,801.5M for Q1 2026
- Adjusted EPS +20.4% to $0.59 in Q1 2026
- Record operating cash flow of $246M in Q1 2026
- Affirmed full‑year adjusted EPS guidance of $3.00–$3.40
- Proposed acquisition of Leggett & Platt valued at ~$2.5B
Negative
- Total debt $4.6B and consolidated indebtedness less netted cash $4.5B
- Mattress Firm adjusted gross margin declined 360 bps to 31.5%
- Tempur Sealy North America net sales down 20.2% to $563.5M
- Leverage ~3.07x consolidated indebtedness less netted cash to adjusted EBITDA
News Market Reaction – SGI
On the day this news was published, SGI declined 10.11%, reflecting a significant negative market reaction. Argus tracked a trough of -5.3% from its starting point during tracking. Our momentum scanner triggered 89 alerts that day, indicating high trading interest and price volatility. This price movement removed approximately $1.75B from the company's valuation, bringing the market cap to $15.57B at that time. Trading volume was above average at 1.8x the daily average, suggesting increased trading activity.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
SGI gained 5.53% while key peers were mixed: SN and MHK rose ~3%, PATK gained 1.52%, but WHR and HNI fell, with WHR also appearing in momentum scans sharply down. This pattern points to a stock-specific earnings reaction rather than a broad furniture sector move.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 17 | Q4/FY 2025 earnings | Positive | -8.6% | Strong Q4 and FY 2025 results, Mattress Firm-driven growth, dividend raised, 2026 EPS guide. |
| Aug 07 | Q2 2025 earnings | Positive | +0.4% | Q2 2025 sales up 52.5%, Mattress Firm contribution, guidance raised and dividend increase. |
| May 08 | Q1 2025 earnings | Negative | -1.0% | Q1 2025 sales growth but net loss from acquisition costs, leverage at 3.51x, guidance reset. |
| Feb 20 | Q4/FY 2024 earnings | Positive | -2.4% | Q4 2024 sales growth, higher adjusted EPS and dividend, 2025 EPS targets and long-term outlook. |
Recent earnings releases often saw negative or muted next-day moves despite generally positive fundamentals, with an average move of -2.87% on earnings headlines.
Over the past year, Somnigroup’s earnings reports highlighted growth driven by the Mattress Firm acquisition, rising dividends, and expanding guidance ranges. Yet, reactions were mixed: Q4 2024 and Q4 2025 results were strong but followed by declines of -2.35% and -8.6%. Earlier 2025 quarters showed robust sales growth and improved adjusted EPS with only modest price moves. Today’s Q1 2026 report continues the theme of integration-led growth and higher guidance within this pattern.
Historical Comparison
In the past four earnings reports, SGI’s average next-day move was -2.87%. Today’s +5.53% reaction to Q1 2026 results stands out as a notably stronger and opposite-direction response.
Earnings updates show a progression from pre-acquisition growth to integration-driven expansion, rising adjusted EPS, and increased dividends, with guidance for adjusted EPS moving from 2025 targets into a higher 2026 range.
Market Pulse Summary
The stock dropped -10.1% in the session following this news. A negative reaction despite strong Q1 2026 figures would have fit the pattern of prior earnings days, where the average move was -2.87% even as adjusted EPS and margins improved. Investors might have focused on leverage of 3.07x adjusted EBITDA, acquisition integration risks, or guidance ranges. Such a decline would have reflected sensitivity to execution and macro risk rather than headline revenue and EPS growth alone.
Key Terms
adjusted eps financial
ebitda financial
non-gaap financial measures financial
constant currency financial
schedule 13g regulatory
form s‑4 regulatory
performance restricted stock units financial
consolidated indebtedness financial
AI-generated analysis. Not financial advice.
- First Quarter 2026 Net Sales Increased
- EPS Growth of
- Record First Quarter Cash Flows from Operations of
FIRST QUARTER 2026 FINANCIAL SUMMARY
- Total net sales increased
12.3% to$1,801.5 million $1,604.7 million - Gross margin was
43.1% as compared to36.2% in the first quarter of 2025. Adjusted gross margin(1) was43.6% as compared to42.2% in the first quarter of 2025. - Operating income increased 1,
317.4% to$187.1 million $13.2 million 17.4% to$214.6 million $182.8 million - Net income increased
414.8% to$104.2 million $(33.1) million 28.4% to$124.5 million $97.0 million - Earnings per diluted share ("EPS") increased
388.2% to$0.49 $(0.17) 20.4% to$0.59 $0.49
KEY HIGHLIGHTS
(in millions, except percentages and per common share amounts) | Three Months Ended | % | |||
March 31, | March 31, | ||||
Net sales | $ 1,801.5 | $ 1,604.7 | 12.3 % | ||
Net income (loss) | $ 104.2 | $ (33.1) | 414.8 % | ||
Adjusted net income (1) | $ 124.5 | $ 97.0 | 28.4 % | ||
Earnings (loss) per share | $ 0.49 | $ (0.17) | 388.2 % | ||
Adjusted EPS (1) | $ 0.59 | $ 0.49 | 20.4 % | ||
Company Chairman and CEO Scott Thompson commented, "While navigating challenging market conditions, we delivered solid financial results this quarter, including a robust
Business Segment Highlights
The Company's business segments include Mattress Firm (acquired on February 5, 2025), Tempur Sealy North America and Tempur Sealy International. Corporate operating expenses are not included in any of the business segments and are presented separately as a reconciling item to consolidated results.
Mattress Firm net sales increased
Mattress Firm gross margin was
Mattress Firm operating margin was
Tempur Sealy North America net sales decreased
Tempur Sealy International net sales increased
International gross margin improved 140 basis points to
International operating margin improved 160 basis points to
Corporate operating expense decreased to
Consolidated Financial Position
Consolidated net income increased
The Company ended the first quarter of 2026 with total debt of
Financial Guidance
For the full year 2026, the Company currently expects adjusted EPS(1) to be between
The Company noted that its expectations are based on information available at the time of this release, and are subject to changing conditions and risks, many of which are outside the Company's control, including the possible imposition of new tariffs or retaliatory tariffs, a potential
(1) | This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below. |
Proposed Acquisition of Leggett & Platt
On April 13, 2026, the Company announced it has signed a definitive agreement to acquire Leggett & Platt, Incorporated ("Leggett & Platt"), a diversified component manufacturer, in an all-stock transaction valued at approximately
Dividend Declared
Today, the Company announced that its Board of Directors declared a quarterly cash dividend of
Conference Call Information
Somnigroup International Inc. will host a live conference call to discuss financial results today, May 7, 2026, at 8:00 a.m. Eastern Time. The call will be webcast and can be accessed on the Company's investor relations website at investor.somnigroup.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days.
Non-GAAP Financial Measures and Constant Currency Information
For additional information regarding EBITDA, adjusted EBITDA, adjusted EPS, adjusted net income, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash (all of which are non-GAAP financial measures), please refer to the reconciliations and other information included in the attached schedules. For information on the methodology used to present information on a constant currency basis, please refer to "Constant Currency Information" included in the attached schedules.
Forward-Looking Statements
This press release contains statements that may be characterized as "forward-looking," within the meaning of the federal securities laws. Such statements might include information concerning one or more of the Company's plans, guidance, objectives, goals, strategies and other information that is not historical information. When used in this release, the words "assumes," "estimates," "expects," "guidance," "anticipates," "might," "projects," "plans," "proposed," "targets," "intends," "believes," "will," "contemplates" and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company's expectations regarding the Mattress Firm acquisition and the pending Leggett & Platt acquisition, expectations regarding post-closing supply agreements, future performance, synergies, integration of acquired companies with our business, including the Mattress Firm acquisition and the pending Leggett & Platt acquisition, the Company's expected quarterly results, full year guidance and outperformance relative to the broader industry, the Company's quarterly cash dividend, the Company's expectations regarding geopolitical events (including the war in
Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from any that may be expressed herein as forward-looking statements. These potential risks include the ability to close the pending Leggett & Platt acquisition, which depends on the satisfaction of customary closing conditions, including approval by Leggett & Platt's shareholders and receipt of applicable regulatory approvals; the ability to successfully integrate Mattress Firm and Leggett & Platt into the Company's operations and realize synergies from the transactions; the possibility that the expected benefits of the Mattress Firm and Leggett & Platt acquisitions are not realized when expected or at all; general economic, financial and industry conditions, particularly conditions relating to the financial performance and related credit issues present in the retail sector, as well as consumer confidence and the availability of consumer financing; the impact of the macroeconomic environment in both the
About Somnigroup International Inc.
Somnigroup (NYSE: SGI) is the world's leading bedding company, dedicated to transforming how the world sleeps. With superior capabilities in design, manufacturing, distribution and retail, we deliver breakthrough sleep solutions and serve the evolving needs of consumers in more than 100 countries worldwide through our fully-owned businesses, Tempur Sealy, Mattress Firm and Dreams. Our portfolio includes the most highly recognized brands in the industry, including Tempur-Pedic®, Sealy®, Stearns & Foster®, and Sleepy's®, and our global omni-channel platform enables us to meet consumers wherever they shop, offering a personal connection and innovation to provide a unique retail experience and tailored solutions.
Investor Relations Contact:
Lauren Avritt
Investor Relations
Somnigroup International Inc.
Investor.relations@somnigroup.com
SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (Loss) (in millions, except percentages and per common share amounts) (unaudited) | |||||
Three Months Ended | |||||
March 31, | Chg % | ||||
2026 | 2025 | ||||
Net sales | $ 1,801.5 | $ 1,604.7 | 12.3 % | ||
Cost of sales | 1,024.6 | 1,024.2 | |||
Gross profit | 776.9 | 580.5 | 33.8 % | ||
Selling and marketing expenses | 428.5 | 362.6 | |||
General, administrative and other expenses | 166.9 | 209.5 | |||
Equity income in earnings of unconsolidated affiliates | (5.6) | (4.8) | |||
Operating income | 187.1 | 13.2 | 1,317.4 % | ||
Other expense, net: | |||||
Interest expense, net | 60.0 | 61.3 | |||
Other (income) expense, net | (10.2) | 1.2 | |||
Total other expense, net | 49.8 | 62.5 | |||
Income (loss) before income taxes | 137.3 | (49.3) | 378.5 % | ||
Income tax (provision) benefit | (33.4) | 16.5 | |||
Net income (loss) before non-controlling interest | 103.9 | (32.8) | 416.8 % | ||
Less: Net (loss) income attributable to non-controlling interest | (0.3) | 0.3 | |||
Net income (loss) attributable to Somnigroup International Inc. | $ 104.2 | $ (33.1) | 414.8 % | ||
Earnings (loss) per common share: | |||||
Basic | $ 0.50 | $ (0.17) | 394.1 % | ||
Diluted | $ 0.49 | $ (0.17) | 388.2 % | ||
Weighted average common shares outstanding: | |||||
Basic | 210.3 | 194.9 | |||
Diluted | 212.6 | 198.9 | |||
SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in millions) | |||
March 31, 2026 | December 31, 2025 | ||
ASSETS | (unaudited) | ||
Current Assets: | |||
Cash and cash equivalents | $ 110.8 | $ 134.9 | |
Accounts receivable, net | 339.1 | 358.5 | |
Inventories | 631.0 | 630.0 | |
Prepaid expenses and other current assets | 164.8 | 170.7 | |
Total Current Assets | 1,245.7 | 1,294.1 | |
Property, plant and equipment, net | 1,009.8 | 1,019.2 | |
Goodwill | 4,586.9 | 4,595.9 | |
Trade name and other intangible assets, net | 2,582.6 | 2,587.1 | |
Operating lease right-of-use assets | 1,876.4 | 1,878.8 | |
Deferred income taxes | 18.3 | 18.5 | |
Other non-current assets | 219.9 | 207.1 | |
Total Assets | $ 11,539.6 | $ 11,600.7 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable | $ 465.1 | $ 401.6 | |
Accrued expenses and other current liabilities | 610.1 | 636.5 | |
Short-term operating lease obligations | 400.7 | 399.6 | |
Current portion of long-term debt | 112.1 | 112.4 | |
Income taxes payable | 18.2 | 15.1 | |
Total Current Liabilities | 1,606.2 | 1,565.2 | |
Long-term debt, net | 4,436.4 | 4,573.3 | |
Long-term operating lease obligations | 1,585.3 | 1,589.8 | |
Deferred income taxes | 625.7 | 624.9 | |
Other non-current liabilities | 130.7 | 130.6 | |
Total Liabilities | 8,384.3 | 8,483.8 | |
Redeemable non-controlling interest | 7.9 | 8.9 | |
Total Stockholders' Equity | 3,147.4 | 3,108.0 | |
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | $ 11,539.6 | $ 11,600.7 | |
SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) | |||
Three Months Ended | |||
March 31, | |||
2026 | 2025 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) before non-controlling interest | $ 103.9 | $ (32.8) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 60.9 | 57.7 | |
Amortization of stock-based compensation | 11.6 | 8.4 | |
Amortization of deferred financing costs | 1.7 | 1.7 | |
Bad debt expense | 1.9 | 4.7 | |
Deferred income taxes | 1.7 | — | |
Dividends received from unconsolidated affiliates | 5.3 | 5.5 | |
Equity income in earnings of unconsolidated affiliates | (5.6) | (4.8) | |
Foreign currency adjustments and other | 2.6 | 0.8 | |
Changes in operating assets and liabilities, net of effect of business acquisitions | 62.5 | 65.2 | |
Net cash provided by operating activities | 246.5 | 106.4 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property, plant and equipment | (60.5) | (24.0) | |
Acquisitions, net of cash acquired | — | (2,835.0) | |
Purchases of investments | (0.3) | — | |
Other | 0.1 | 0.1 | |
Net cash used in investing activities | (60.7) | (2,858.9) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from borrowings under long-term debt obligations | 1,164.9 | 1,880.4 | |
Repayments of borrowings under long-term debt obligations | (1,299.3) | (663.1) | |
Proceeds from exercise of stock options | — | 1.0 | |
Treasury stock repurchased | (26.2) | (37.5) | |
Dividends paid | (36.7) | (32.9) | |
Repayments of finance lease obligations and other | (7.4) | (5.8) | |
Net cash (used in) provided by financing activities | (204.7) | 1,142.1 | |
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND | (5.2) | 11.8 | |
Decrease in cash, cash equivalents and restricted cash | (24.1) | (1,598.6) | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 134.9 | 1,709.7 | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ 110.8 | $ 111.1 | |
Summary of Channel Sales
The following table highlights net sales information, by channel and by business segment, for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31, | |||||||||||||||
(in millions) | Consolidated | Mattress Firm | Tempur Sealy North | Tempur Sealy International | |||||||||||
2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||
Direct (a) | $ 1,196.3 | $ 906.0 | $ 885.9 | $ 593.7 | $ 90.0 | $ 121.7 | $ 220.4 | $ 190.6 | |||||||
Wholesale (b) | 605.2 | 698.7 | — | — | 473.5 | 584.5 | 131.7 | 114.2 | |||||||
$ 1,801.5 | $ 1,604.7 | $ 885.9 | $ 593.7 | $ 563.5 | $ 706.2 | $ 352.1 | $ 304.8 | ||||||||
(a) | The Direct channel includes company-owned stores, online and call centers. |
(b) | The Wholesale channel includes all third party retailers, including third party distribution, hospitality and healthcare. |
SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(in millions, except percentages, ratios and per common share amounts)
The Company provides information regarding adjusted net income, EBITDA, adjusted EBITDA, adjusted EPS, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash, which are not recognized terms under GAAP and do not purport to be alternatives to net income, earnings per share, gross profit, gross margin, operating income (expense) and operating margin as a measure of operating performance, or an alternative to total debt as a measure of liquidity. The Company believes these non-GAAP financial measures provide investors with performance measures that better reflect the Company's underlying operations and trends, providing a perspective not immediately apparent from net income, gross profit, gross margin, operating income (expense) and operating margin. The adjustments management makes to derive the non-GAAP financial measures include adjustments to exclude items that may cause short-term fluctuations in the nearest GAAP financial measure, but which management does not consider to be the fundamental attributes or primary drivers of the Company's business.
The Company believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results from operations and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company's business, to evaluate its consolidated and business segment performance compared to prior periods and the marketplace, to establish operational goals and to provide continuity to investors for comparability purposes. Limitations associated with the use of these non-GAAP financial measures include that these measures do not present all of the amounts associated with the Company's results as determined in accordance with GAAP. These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable financial measures defined by GAAP. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. For more information about these non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure, please refer to the reconciliations on the following pages.
Constant Currency Information
In this press release the Company refers to, and in other press releases and other communications with investors the Company may refer to, net sales, earnings or other historical financial information on a "constant currency basis", which is a non-GAAP financial measure. These references to constant currency basis do not include operational impacts that could result from fluctuations in foreign currency rates. To provide information on a constant currency basis, the applicable financial results are adjusted based on a simple mathematical model that translates current period results in local currency using the comparable prior corresponding period's currency conversion rate. This approach is used for countries where the functional currency is the local country currency. This information is provided so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby facilitating period-to-period comparisons of business performance.
Adjusted Net Income and Adjusted EPS
A reconciliation of reported net income to adjusted net income and the calculation of adjusted EPS are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.
The following table sets forth the reconciliation of the Company's reported net income to adjusted net income and the calculation of adjusted EPS for the three months ended March 31, 2026 and 2025:
Three Months Ended | |||
(in millions, except per share amounts) | March 31, 2026 | March 31, 2025 | |
Net income (loss) | $ 104.2 | $ (33.1) | |
Business combination charges (1) | 13.9 | — | |
Legal and other charges (2) | 8.6 | — | |
Transaction costs (3) | 3.6 | 51.9 | |
Acquisition-related costs (4) | — | 114.2 | |
Transaction-related interest expense, net (5) | — | 6.8 | |
Supply chain transition costs (6) | — | 3.5 | |
Adjusted income tax provision (7) | (5.8) | (46.3) | |
Adjusted net income | $ 124.5 | $ 97.0 | |
Adjusted earnings per common share, diluted | $ 0.59 | $ 0.49 | |
Diluted shares outstanding | 212.6 | 198.9 | |
Please refer to Footnotes at the end of this release. |
Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income (Expense) and Adjusted Operating Margin
A reconciliation of gross profit and gross margin to adjusted gross profit and adjusted gross margin, respectively, and operating income (expense) and operating margin to adjusted operating income (expense) and adjusted operating margin, respectively, are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release.
The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended March 31, 2026.
1Q 2026 | |||||||||||||||||
(in millions, except percentages) | Consolidated | Margin | Mattress Firm | Margin | Tempur | Margin | Tempur | Margin | Corporate | ||||||||
Net sales | $ 1,801.5 | $ 885.9 | $ 563.5 | $ 352.1 | $ — | ||||||||||||
Gross profit | $ 776.9 | 43.1 % | $ 272.9 | 30.8 % | $ 326.4 | 57.9 % | $ 177.6 | 50.4 % | $ — | ||||||||
Adjustments: | |||||||||||||||||
Business combination | 8.7 | 6.5 | 2.2 | — | — | ||||||||||||
Total adjustments | 8.7 | 6.5 | 2.2 | — | — | ||||||||||||
Adjusted gross profit | $ 785.6 | 43.6 % | $ 279.4 | 31.5 % | $ 328.6 | 58.3 % | $ 177.6 | 50.4 % | $ — | ||||||||
Operating income (expense) | $ 187.1 | 10.4 % | $ 33.4 | 3.8 % | $ 131.7 | 23.4 % | $ 64.9 | 18.4 % | $ (42.9) | ||||||||
Adjustments: | |||||||||||||||||
Business combination | 15.3 | 9.8 | 2.9 | — | 2.6 | ||||||||||||
Legal and other charges (2) | 8.6 | — | 2.5 | — | 6.1 | ||||||||||||
Transaction costs (3) | 3.6 | — | — | — | 3.6 | ||||||||||||
Total adjustments | 27.5 | 9.8 | 5.4 | — | 12.3 | ||||||||||||
Adjusted operating income | $ 214.6 | 11.9 % | $ 43.2 | 4.9 % | $ 137.1 | 24.3 % | $ 64.9 | 18.4 % | $ (30.6) | ||||||||
The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended March 31, 2025:
1Q 2025 | |||||||||||||||||
(in millions, except percentages) | Consolidated | Margin | Mattress | Margin | Tempur | Margin | Tempur Sealy | Margin | Corporate | ||||||||
Net sales | $ 1,604.7 | $ 593.7 | $ 706.2 | $ 304.8 | $ — | ||||||||||||
Gross profit | $ 580.5 | 36.2 % | $ 191.2 | 32.2 % | $ 240.0 | 34.0 % | $ 149.3 | 49.0 % | $ — | ||||||||
Adjustments: | |||||||||||||||||
Acquisition-related costs (4) | 95.4 | 17.4 | 78.0 | — | — | ||||||||||||
Supply chain transition | 1.9 | — | 1.9 | — | — | ||||||||||||
Total adjustments | 97.3 | 17.4 | 79.9 | — | — | ||||||||||||
Adjusted gross profit | $ 677.8 | 42.2 % | $ 208.6 | 35.1 % | $ 319.9 | 45.3 % | $ 149.3 | 49.0 % | $ — | ||||||||
Operating income (expense) | $ 13.2 | 0.8 % | $ 6.8 | 1.1 % | $ 40.3 | 5.7 % | $ 51.1 | 16.8 % | $ (85.0) | ||||||||
Adjustments: | |||||||||||||||||
Acquisition-related costs (4) | 114.2 | 34.2 | 78.0 | — | 2.0 | ||||||||||||
Transaction costs (3) | 51.9 | 1.7 | — | — | 50.2 | ||||||||||||
Supply chain transition | 3.5 | — | 3.5 | — | — | ||||||||||||
Total adjustments | 169.6 | 35.9 | 81.5 | — | 52.2 | ||||||||||||
Adjusted operating income | $ 182.8 | 11.4 % | $ 42.7 | 7.2 % | $ 121.8 | 17.2 % | $ 51.1 | 16.8 % | $ (32.8) | ||||||||
EBITDA, Adjusted EBITDA and Consolidated Indebtedness less Netted Cash
The following reconciliations are provided below:
- Net income to EBITDA and adjusted EBITDA
- Ratio of consolidated indebtedness less netted cash to adjusted EBITDA
- Total debt, net to consolidated indebtedness less netted cash
Management believes that presenting these non-GAAP measures provides investors with useful information with respect to the Company's operating performance, cash flow generation and comparisons from period to period, as well as general information about the Company's leverage.
The Company's credit agreement (the "2023 Credit Agreement") provides the definition of adjusted EBITDA. Accordingly, the Company presents adjusted EBITDA to provide information regarding the Company's compliance with requirements under the 2023 Credit Agreement.
The following table sets forth the reconciliation of the Company's reported net income to the calculations of EBITDA and adjusted EBITDA for the three months ended March 31, 2026 and 2025:
Three Months Ended | |||
(in millions) | March 31, 2026 | March 31, 2025 | |
Net income (loss) | $ 104.2 | $ (33.1) | |
Interest expense, net | 60.0 | 54.5 | |
Transaction-related interest expense, net (5) | — | 6.8 | |
Income tax provision (benefit) | 33.4 | (16.5) | |
Depreciation and amortization | 73.1 | 66.6 | |
EBITDA | $ 270.7 | $ 78.3 | |
Adjustments: | |||
Business combination charges (1) | 13.9 | — | |
Legal and other charges (2) | 8.6 | — | |
Transaction costs (3) | 3.6 | 51.9 | |
Acquisition-related costs (4) | — | 114.2 | |
Supply chain transition costs (6) | — | 3.5 | |
Adjusted EBITDA | $ 296.8 | $ 247.9 | |
The following table sets forth the reconciliation of the Company's net income to the calculations of EBITDA and adjusted EBITDA for the trailing twelve months ended March 31, 2026:
Trailing Twelve Months Ended | |
(in millions) | March 31, 2026 |
Net income | $ 521.4 |
Interest expense, net | 266.6 |
Income tax provision | 145.6 |
Depreciation and amortization | 298.1 |
EBITDA | $ 1,231.7 |
Adjustments: | |
Business combination charges (1) | 67.7 |
Loss on disposal of business (8) | 13.9 |
Disposition-related costs (9) | 10.5 |
Legal and other charges (2) | 8.6 |
Supply chain transition costs (6) | 8.6 |
Transaction costs (3) | 7.7 |
Cloud-based computing arrangements impairment (10) | 6.2 |
Adjusted EBITDA | $ 1,354.9 |
Loss from unrestricted subsidiary (11) | (0.9) |
Future cost synergies to be realized from Mattress Firm acquisition (12) | 100.0 |
Adjusted EBITDA per credit facility | $ 1,454.0 |
Consolidated indebtedness less netted cash | $ 4,467.1 |
Ratio of consolidated indebtedness less netted cash to adjusted EBITDA per credit facility | 3.07 times |
Under the 2023 Credit Agreement, the definition of adjusted EBITDA per credit facility contains certain restrictions that limit adjustments to net income when calculating adjusted EBITDA. For the trailing twelve months ended March 31, 2026, the Company's adjustments to net income when calculating adjusted EBITDA did not exceed the allowable amount under the 2023 Credit Agreement.
The ratio of consolidated indebtedness less netted cash to adjusted EBITDA per credit facility is 3.07 times for the trailing twelve months ended March 31, 2026. The 2023 Credit Agreement requires the Company to maintain a ratio of consolidated indebtedness less netted cash to adjusted EBITDA of less than 5.00 times.
The following table sets forth the reconciliation of the Company's reported total debt to the calculation of consolidated indebtedness less netted cash as of March 31, 2026. "Consolidated Indebtedness" and "Netted Cash" are terms used in the 2023 Credit Agreement for purposes of certain financial covenants.
(in millions) | March 31, 2026 |
Total debt, net | $ 4,548.5 |
Plus: Deferred financing costs (13) | 29.4 |
Consolidated indebtedness | 4,577.9 |
Less: Netted cash (14) | 110.8 |
Consolidated indebtedness less netted cash | $ 4,467.1 |
Footnotes:
(1) | In the first quarter of 2026, the Company recorded
In the trailing twelve months ended March 31, 2026, the Company recognized |
(2) | In the first quarter and the trailing twelve months ended March 31, 2026, the Company recorded |
(3) | In the first quarter of 2026, the Company recorded
In the trailing twelve months ended March 31, 2026, the Company recorded |
(4) | In the first quarter of 2025, the Company recognized |
(5) | In the first quarter of 2025, the Company incurred |
(6) | In the first quarter of 2025, the Company recorded
In the trailing twelve months ended March 31, 2026, the Company recorded |
(7) | Adjusted income tax provision represents the tax effects associated with the aforementioned items and other non-recurring discrete items. |
(8) | In the trailing twelve months ended March 31, 2026, the Company recorded a |
(9) | In the trailing twelve months ended March 31, 2026, the Company recorded |
(10) | In the trailing twelve months ended March 31, 2026, the Company recorded |
(11) | A subsidiary in the Tempur Sealy North America business segment was accounted for as held for sale and designated as an unrestricted subsidiary under the 2023 Credit Agreement. Therefore, this subsidiary's financial results were excluded from the Company's adjusted financial measures for covenant compliance purposes. |
(12) | In the trailing twelve months ended March 31, 2026, the Company is permitted to include |
(13) | The Company presents deferred financing costs as a direct reduction from the carrying amount of the related debt in the Condensed Consolidated Balance Sheets. For purposes of determining total debt for financial covenant purposes, the Company has added these costs back to total debt, net as calculated per the Condensed Consolidated Balance Sheets. |
(14) | Netted cash includes cash and cash equivalents for domestic and foreign subsidiaries designated as restricted subsidiaries in the 2023 Credit Agreement. |
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SOURCE Somnigroup International