Somnigroup International Inc. Reports Second Quarter 2026 Results
Rhea-AI Summary
Somnigroup International (NYSE: SGI) reported second quarter 2026 net sales of $1.82 billion, down 3.0% year over year, while EPS rose 10.6% to $0.52 and adjusted EPS increased 9.4% to $0.58. Gross margin expanded to 44.8%, with adjusted gross margin at 45.1%.
Operating income grew 12.1% to $201.7 million and net income increased 12.0% to $110.9 million. The company highlighted record second-quarter cash flows from operations of $236 million and reduced leverage to 2.99x adjusted EBITDA, with consolidated indebtedness less netted cash of about $4.3 billion.
By segment, Mattress Firm net sales declined 2.8% and margins contracted, North America net sales fell 5.7% but adjusted gross margin improved 680 basis points to 61.8%, and International net sales grew 2.0% with margin pressure. For full-year 2026, Somnigroup now expects adjusted EPS of $2.85–$3.15, about 11% above 2025 at the midpoint. The company also reiterated its proposed all-stock acquisition of Leggett & Platt valued at approximately $2.5 billion including debt, and declared a quarterly dividend of $0.17 per share.
Positive
- EPS up 10.6% to $0.52; adjusted EPS up 9.4% to $0.58 year over year
- Gross margin expansion to 44.8%; adjusted gross margin up to 45.1%
- Record Q2 operating cash flow of $236 million
- Leverage reduced to 2.99x adjusted EBITDA from 3.56x a year earlier
- 2026 adjusted EPS guidance of $2.85–$3.15, about 11% above 2025 at midpoint
- North America adjusted gross margin improved 680 bps to 61.8%
Negative
- Net sales declined 3.0% to $1.82 billion year over year
- Mattress Firm gross margin fell to 33.3%; adjusted gross margin down 240 bps
- International gross margin declined 80 bps to 47.4%; operating margin down 120 bps
- Total debt remains high at $4.4 billion as of June 30, 2026
- Corporate adjusted operating expense increased to $41.0 million from $34.4 million
News Explained
The Leggett & Platt deal remains unclosed and stock-based, while the company reports $4.4 billion of total debt.
Somnigroup says its acquisition of Leggett & Platt is governed by a signed definitive agreement but remains unclosed; the disclosed consideration is an all-stock transaction, so completion—not a cash purchase—remains the relevant structural change for existing holders.
The company expects closing by the end of the third quarter of
At
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| May 07 | Q1 2026 earnings | Positive | -10.1% | Sales growth, positive net income, higher adjusted EPS, and maintained guidance preceded a negative reaction. |
| May 07 | Q1 2026 earnings | Negative | -10.1% | Leggett & Platt reported lower sales and EPS while withdrawing full-year guidance. |
| Feb 17 | Q4 2025 earnings | Positive | -8.6% | Quarterly growth, higher EPS, dividend increase, and 2026 guidance preceded a negative reaction. |
| Aug 07 | Q2 2025 earnings | Positive | +0.4% | Acquisition-driven sales growth, improved gross margin, and raised guidance accompanied a positive reaction. |
| May 08 | Q1 2025 earnings | Negative | -1.0% | The company reported a net loss despite higher sales and adjusted net income. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Tag-matched earnings events carried a negative average move of -5.87%, with SGI diverging negatively from positive quarterly results in two prior events.
Key Terms
same store sales financial
adjusted ebitda financial
constant currency basis financial
non-gaap financial measure financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
- EPS Growth of
- Second Quarter Gross Margins Expand
- Record Second Quarter Cash Flows from Operations of
SECOND QUARTER 2026 FINANCIAL SUMMARY
- Total net sales decreased
3.0% to$1,823.5 million $1,880.8 million - Gross margin was
44.8% as compared to44.0% in the second quarter of 2025. Adjusted gross margin(1) was45.1% as compared to44.2% in the second quarter of 2025. - Operating income increased
12.1% to$201.7 million $179.9 million 3.5% to$216.6 million $224.4 million - Net income increased
12.0% to$110.9 million $99.0 million 8.4% to$122.6 million $113.1 million - Earnings per diluted share ("EPS") increased
10.6% to$0.52 $0.47 9.4% to$0.58 $0.53 - Leverage based on the ratio of consolidated indebtedness less netted cash(1) to adjusted EBITDA(1) was 2.99 times for the trailing twelve months ended June 30, 2026 compared to 3.56 times for the trailing twelve months ended June 30, 2025.
KEY HIGHLIGHTS
(in millions, except percentages and per common share amounts) | Three Months Ended | % | |||
June 30, 2026 | June 30, 2025 | ||||
Net sales | $ 1,823.5 | $ 1,880.8 | (3.0) % | ||
Net income | $ 110.9 | $ 99.0 | 12.0 % | ||
Adjusted net income (1) | $ 122.6 | $ 113.1 | 8.4 % | ||
EPS | $ 0.52 | $ 0.47 | 10.6 % | ||
Adjusted EPS (1) | $ 0.58 | $ 0.53 | 9.4 % | ||
Company Chairman and CEO Scott Thompson commented, "Our second-quarter performance demonstrates our global team's ability to execute in a dynamic environment. We delivered solid results while continuing to fully invest in our iconic brands, advancing our international growth strategy, preparing for the North American launch of our new Stearns & Foster collection and strengthening our multiple distribution platforms. The progress we are making across the business reinforces our confidence in our long-term strategy and our ability to create sustainable value."
Business Segment Highlights
The Company's business segments include Mattress Firm, 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 decreased
Mattress Firm gross margin was
Mattress Firm operating margin was
Tempur Sealy North America net sales to Mattress Firm increased
Tempur Sealy International net sales increased
International gross margin declined 80 basis points to
International operating margin declined 120 basis points to
Corporate operating expense decreased to
Consolidated Financial Position
Consolidated net income increased
The Company ended the second quarter of 2026 with total debt of
Financial Guidance
For the full year 2026, the Company revised its expectations for adjusted EPS(1) to a range of
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, uncertainties arising from global and geo-political events (including the war in
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, August 6, 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
(1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below. |
SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (in millions, except percentages and per common share amounts) (unaudited) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | Chg % | June 30, | Chg % | ||||||||
2026 | 2025 | 2026 | 2025 | ||||||||
Net sales | $ 1,823.5 | $ 1,880.8 | (3.0) % | $ 3,625.0 | $ 3,485.5 | 4.0 % | |||||
Cost of sales | 1,006.3 | 1,053.6 | 2,030.9 | 2,077.8 | |||||||
Gross profit | 817.2 | 827.2 | (1.2) % | 1,594.1 | 1,407.7 | 13.2 % | |||||
Selling and marketing expenses | 453.5 | 460.5 | 882.0 | 823.1 | |||||||
General, administrative and other expenses | 165.1 | 175.9 | 332.0 | 385.4 | |||||||
Loss on disposal of business | — | 13.9 | — | 13.9 | |||||||
Equity income in earnings of unconsolidated affiliates | (3.1) | (3.0) | (8.7) | (7.8) | |||||||
Operating income | 201.7 | 179.9 | 12.1 % | 388.8 | 193.1 | 101.3 % | |||||
Other expense, net: | |||||||||||
Interest expense, net | 59.0 | 72.5 | 119.0 | 133.8 | |||||||
Other (income) expense, net | (5.1) | 4.7 | (15.3) | 5.9 | |||||||
Total other expense, net | 53.9 | 77.2 | 103.7 | 139.7 | |||||||
Income before income taxes | 147.8 | 102.7 | 43.9 % | 285.1 | 53.4 | 433.9 % | |||||
Income tax (provision) benefit | (37.2) | (3.2) | (70.6) | 13.3 | |||||||
Net income before non-controlling interest | 110.6 | 99.5 | 11.2 % | 214.5 | 66.7 | 221.6 % | |||||
Less: Net (loss) income attributable to non-controlling | (0.3) | 0.5 | (0.6) | 0.8 | |||||||
Net income attributable to Somnigroup International Inc. | $ 110.9 | $ 99.0 | 12.0 % | $ 215.1 | $ 65.9 | 226.4 % | |||||
Earnings per common share: | |||||||||||
Basic | $ 0.53 | $ 0.47 | 12.8 % | $ 1.02 | $ 0.33 | 209.1 % | |||||
Diluted | $ 0.52 | $ 0.47 | 10.6 % | $ 1.01 | $ 0.32 | 215.6 % | |||||
Weighted average common shares outstanding: | |||||||||||
Basic | 210.4 | 209.2 | 210.4 | 202.1 | |||||||
Diluted | 212.5 | 212.4 | 212.6 | 205.7 | |||||||
SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in millions) | |||
June 30, 2026 | December 31, 2025 | ||
ASSETS | (unaudited) | ||
Current Assets: | |||
Cash and cash equivalents | $ 112.0 | $ 134.9 | |
Accounts receivable, net | 361.4 | 358.5 | |
Inventories | 649.8 | 630.0 | |
Prepaid expenses and other current assets | 165.8 | 170.7 | |
Total Current Assets | 1,289.0 | 1,294.1 | |
Property, plant and equipment, net | 1,009.7 | 1,019.2 | |
Goodwill | 4,584.5 | 4,595.9 | |
Trade name and other intangible assets, net | 2,580.1 | 2,587.1 | |
Operating lease right-of-use assets | 1,893.5 | 1,878.8 | |
Deferred income taxes | 21.6 | 18.5 | |
Other non-current assets | 232.6 | 207.1 | |
Total Assets | $ 11,611.0 | $ 11,600.7 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities: | |||
Accounts payable | $ 522.2 | $ 401.6 | |
Accrued expenses and other current liabilities | 646.3 | 636.5 | |
Short-term operating lease obligations | 405.2 | 399.6 | |
Current portion of long-term debt | 115.7 | 112.4 | |
Income taxes payable | 33.6 | 15.1 | |
Total Current Liabilities | 1,723.0 | 1,565.2 | |
Long-term debt, net | 4,292.8 | 4,573.3 | |
Long-term operating lease obligations | 1,598.4 | 1,589.8 | |
Deferred income taxes | 626.5 | 624.9 | |
Other non-current liabilities | 133.3 | 130.6 | |
Total Liabilities | 8,374.0 | 8,483.8 | |
Redeemable non-controlling interest | 7.6 | 8.9 | |
Total Stockholders' Equity | 3,229.4 | 3,108.0 | |
Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity | $ 11,611.0 | $ 11,600.7 | |
SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) | |||
Six Months Ended | |||
June 30, | |||
2026 | 2025 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income before non-controlling interest | $ 214.5 | $ 66.7 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 123.3 | 116.2 | |
Amortization of stock-based compensation | 22.6 | 18.5 | |
Amortization of deferred financing costs | 3.3 | 3.4 | |
Bad debt expense | 1.3 | 4.3 | |
Deferred income taxes | (0.6) | 1.1 | |
Dividends received from unconsolidated affiliates | 6.6 | 6.7 | |
Equity income in earnings of unconsolidated affiliates | (8.7) | (7.8) | |
Loss on disposal of business | — | 13.9 | |
Foreign currency adjustments and other | 3.8 | 4.4 | |
Changes in operating assets and liabilities, net of effect of business acquisitions | 116.7 | 65.1 | |
Net cash provided by operating activities | 482.8 | 292.5 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property, plant and equipment | (115.2) | (60.7) | |
Acquisitions, net of cash acquired | — | (2,824.5) | |
Purchases of investments | (0.3) | — | |
Other | 0.4 | 7.1 | |
Net cash used in investing activities | (115.1) | (2,878.1) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from borrowings under long-term debt obligations | 1,779.7 | 2,677.1 | |
Repayments of borrowings under long-term debt obligations | (2,051.8) | (1,578.6) | |
Proceeds from exercise of stock options | — | 49.1 | |
Treasury stock repurchased | (26.2) | (132.4) | |
Dividends paid | (72.5) | (64.4) | |
Repayments of finance lease obligations and other | (13.2) | (10.6) | |
Net cash (used in) provided by financing activities | (384.0) | 940.2 | |
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND | (6.6) | 33.8 | |
Decrease in cash, cash equivalents and restricted cash | (22.9) | (1,611.6) | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 134.9 | 1,709.7 | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ 112.0 | $ 98.1 | |
Summary of Channel Sales
The following table highlights net sales information, by channel and by business segment, for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30, | |||||||||||||||
(in millions) | Consolidated | Mattress Firm | Tempur Sealy | Tempur Sealy International | |||||||||||
2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||
Direct (a) | $ 1,202.3 | $ 1,238.1 | $ 922.2 | $ 948.8 | $ 97.4 | $ 104.4 | $ 182.7 | $ 184.9 | |||||||
Wholesale (b) | 621.2 | 642.7 | — | — | 504.4 | 534.0 | 116.8 | 108.7 | |||||||
$ 1,823.5 | $ 1,880.8 | $ 922.2 | $ 948.8 | $ 601.8 | $ 638.4 | $ 299.5 | $ 293.6 | ||||||||
(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 June 30, 2026 and 2025:
Three Months Ended | |||
(in millions, except per share amounts) | June 30, 2026 | June 30, 2025 | |
Net income | $ 110.9 | $ 99.0 | |
Transaction costs (1) | 8.3 | 4.9 | |
Business combination charges (2) | 7.4 | 17.6 | |
Loss on disposal of business (3) | — | 13.9 | |
Disposition-related costs (4) | — | 9.2 | |
Supply chain transition costs (5) | — | 1.3 | |
Adjusted income tax provision (6) | (4.0) | (32.8) | |
Adjusted net income | $ 122.6 | $ 113.1 | |
Adjusted earnings per common share, diluted | $ 0.58 | $ 0.53 | |
Diluted shares outstanding | 212.5 | 212.4 | |
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 June 30, 2026.
2Q 2026 | |||||||||||||||||
(in millions, except | Consolidated | Margin | Mattress | Margin | Tempur | Margin | Tempur Sealy | Margin | Corporate | ||||||||
Net sales | $ 1,823.5 | $ 922.2 | $ 601.8 | $ 299.5 | $ — | ||||||||||||
Gross profit | $ 817.2 | 44.8 % | $ 307.5 | 33.3 % | $ 367.8 | 61.1 % | $ 141.9 | 47.4 % | $ — | ||||||||
Adjustments: | |||||||||||||||||
Business combination | 4.3 | — | 4.3 | — | — | ||||||||||||
Total adjustments | 4.3 | — | 4.3 | — | — | ||||||||||||
Adjusted gross profit | $ 821.5 | 45.1 % | $ 307.5 | 33.3 % | $ 372.1 | 61.8 % | $ 141.9 | 47.4 % | $ — | ||||||||
Operating income (expense) | $ 201.7 | 11.1 % | $ 59.4 | 6.4 % | $ 155.9 | 25.9 % | $ 37.2 | 12.4 % | $ (50.8) | ||||||||
Adjustments: | |||||||||||||||||
Transaction costs (1) | 8.3 | — | — | — | 8.3 | ||||||||||||
Business combination | 6.6 | 0.5 | 4.6 | — | 1.5 | ||||||||||||
Total adjustments | 14.9 | 0.5 | 4.6 | — | 9.8 | ||||||||||||
Adjusted operating income | $ 216.6 | 11.9 % | $ 59.9 | 6.5 % | $ 160.5 | 26.7 % | $ 37.2 | 12.4 % | $ (41.0) | ||||||||
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 June 30, 2025:
2Q 2025 | |||||||||||||||||
(in millions, except | Consolidated | Margin | Mattress | Margin | Tempur | Margin | Tempur | Margin | Corporate | ||||||||
Net sales | $ 1,880.8 | $ 948.8 | $ 638.4 | $ 293.6 | $ — | ||||||||||||
Gross profit | $ 827.2 | 44.0 % | $ 337.4 | 35.6 % | $ 348.2 | 54.5 % | $ 141.6 | 48.2 % | $ — | ||||||||
Adjustments: | |||||||||||||||||
Disposition-related costs (4) | 3.7 | 1.4 | 2.3 | — | — | ||||||||||||
Supply chain transition costs | 0.7 | — | 0.7 | — | — | ||||||||||||
Total adjustments | 4.4 | 1.4 | 3.0 | — | — | ||||||||||||
Adjusted gross profit | $ 831.6 | 44.2 % | $ 338.8 | 35.7 % | $ 351.2 | 55.0 % | $ 141.6 | 48.2 % | $ — | ||||||||
Operating income (expense) | $ 179.9 | 9.6 % | $ 63.2 | 6.7 % | $ 130.1 | 20.4 % | $ 39.8 | 13.6 % | $ (53.2) | ||||||||
Adjustments: | |||||||||||||||||
Business combination | 17.6 | 2.2 | — | — | 15.4 | ||||||||||||
Loss on disposal of business | 13.9 | 4.1 | 9.8 | — | — | ||||||||||||
Disposition-related costs (4) | 7.4 | 2.9 | 4.5 | — | — | ||||||||||||
Transaction costs (1) | 4.9 | 1.5 | — | — | 3.4 | ||||||||||||
Supply chain transition costs | 0.7 | — | 0.7 | — | — | ||||||||||||
Total adjustments | 44.5 | 10.7 | 15.0 | — | 18.8 | ||||||||||||
Adjusted operating income | $ 224.4 | 11.9 % | $ 73.9 | 7.8 % | $ 145.1 | 22.7 % | $ 39.8 | 13.6 % | $ (34.4) | ||||||||
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 June 30, 2026 and 2025:
Three Months Ended | |||
(in millions) | June 30, 2026 | June 30, 2025 | |
Net income | $ 110.9 | $ 99.0 | |
Interest expense, net | 59.0 | 72.5 | |
Income tax provision | 37.2 | 3.2 | |
Depreciation and amortization | 73.7 | 69.1 | |
EBITDA | $ 280.8 | $ 243.8 | |
Adjustments: | |||
Transaction costs (1) | 8.3 | 4.9 | |
Business combination charges (2) | 7.4 | 17.6 | |
Loss on disposal of business (3) | — | 13.9 | |
Disposition-related costs (4) | — | 9.2 | |
Supply chain transition costs (5) | — | 1.3 | |
Adjusted EBITDA | $ 296.5 | $ 290.7 | |
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 June 30, 2026:
Trailing Twelve Months Ended | |
(in millions) | June 30, 2026 |
Net income | $ 533.3 |
Interest expense, net | 253.1 |
Income tax provision | 179.6 |
Depreciation and amortization | 302.7 |
EBITDA | $ 1,268.7 |
Adjustments: | |
Business combination charges (2) | 57.5 |
Transaction costs (1) | 11.1 |
Legal and other charges (7) | 8.6 |
Supply chain transition costs (5) | 7.3 |
Cloud-based computing arrangements impairment (8) | 6.2 |
Disposition-related costs (4) | 1.3 |
Adjusted EBITDA | $ 1,360.7 |
Future cost synergies to be realized from Mattress Firm acquisition (9) | 85.0 |
Adjusted EBITDA per credit facility | $ 1,445.7 |
Consolidated indebtedness less netted cash | $ 4,324.3 |
Ratio of consolidated indebtedness less netted cash to adjusted EBITDA per credit facility | 2.99 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 June 30, 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 2.99 times for the trailing twelve months ended June 30, 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 June 30, 2026. "Consolidated Indebtedness" and "Netted Cash" are terms used in the 2023 Credit Agreement for purposes of certain financial covenants.
(in millions) | June 30, 2026 |
Total debt, net | $ 4,408.5 |
Plus: Deferred financing costs (10) | 27.8 |
Consolidated indebtedness | 4,436.3 |
Less: Netted cash (11) | 112.0 |
Consolidated indebtedness less netted cash | $ 4,324.3 |
Footnotes:
(1) | In the second quarter of 2026, the Company recorded
In the trailing twelve months ended June 30, 2026, the Company recognized |
(2) | In the second quarter of 2026, the Company recorded
In the trailing twelve months ended June 30, 2026, the Company recognized |
(3) | In the second quarter of 2025, the Company recorded a |
(4) | In the second quarter of 2025, the Company recorded
In the trailing twelve months ended June 30, 2026, the Company recognized |
(5) | In the second quarter of 2025, the Company recorded
In the trailing twelve months ended June 30, 2026, the Company recognized |
(6) | Adjusted income tax provision represents the tax effects associated with the aforementioned items and other non-recurring discrete items. |
(7) | In the trailing twelve months ended June 30, 2026, the Company recorded |
(8) | In the trailing twelve months ended June 30, 2026, the Company recorded |
(9) | In the trailing twelve months ended June 30, 2026, the Company is permitted to include |
(10) | 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. |
(11) | 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