Somnigroup International Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total net sales increased 10.8% to $2,350.8 million for the third quarter of 2026, compared to $2,122.6 million in the third quarter of 2025, primarily driven by the inclusion of $372.6 million in Leggett & Platt net sales for the stub period (August 26, 2026 through September 30, 2026).
• GAAP net income decreased 7.8% to $163.5 million, while GAAP diluted EPS decreased 10.8% to $0.74, compared to $177.4 million and $0.83 respectively in the prior year quarter.
• Adjusted net income increased 13.7% to a record $228.9 million, and Adjusted diluted EPS increased 9.5% to a record $1.04, compared to $201.4 million and $0.95 respectively in the prior year quarter.
• Gross margin was 42.0% compared to 44.9% in the prior year quarter; Adjusted gross margin was 43.0% compared to 45.6%.
• Operating income decreased 5.5% to $297.4 million; Adjusted operating income increased 6.0% to a record $364.2 million.
• Cash flows from operations were $349 million for the quarter.
• Consolidated indebtedness less netted cash was $5.0 billion as of September 30, 2026.
• Leverage ratio (consolidated indebtedness less netted cash to adjusted EBITDA) was 2.69 times for the trailing twelve months ended September 30, 2026, compared to 3.28 times for the same period in 2025.

Guidance and Future Outlook:

• The Company revised its full-year 2026 adjusted EPS guidance to a range of $2.85 to $2.95, representing an approximate 7% increase from 2025 adjusted EPS at the mid-point.
• Guidance is subject to risks including potential new or retaliatory tariffs, global and geo-political events (including wars in Ukraine and the Middle East), trade policy changes, and macroeconomic uncertainty.
• The Company noted it is unable to reconcile forward-looking adjusted EPS to GAAP EPS without unreasonable effort due to uncertainty regarding the type and extent of future impacting items.

Business Segments and Product Lines:

• Mattress Firm: Net sales decreased 5.8% to $1,008.3 million, driven by softer online sales; same-store sales were down slightly. Adjusted gross margin declined 100 basis points to 34.6%, while adjusted operating margin improved 20 basis points to 9.6%.
• Leggett & Platt: Reported net sales of $372.6 million for the stub period, split between $271.3 million in wholesale bedding/furnishings and $101.3 million in specialized products. Adjusted gross margin was 21.9% and adjusted operating margin was 11.0%.
• Tempur Sealy North America: Net sales decreased 5.8% to $693.1 million. Adjusted gross margin improved 690 basis points to 65.5%, and adjusted operating margin improved 450 basis points to 34.0%, driven by tariff refunds and synergies from the Mattress Firm acquisition, partially offset by inflation.
• Tempur Sealy International: Net sales decreased 12.3% to $276.8 million, primarily due to a 34.7% decline at Dreams following new ERP system implementation and operational disruption. Excluding Dreams, International sales grew high single digits. Adjusted gross margin declined 360 basis points to 45.5%, and adjusted operating margin declined 870 basis points to 9.4%.
• Corporate: Operating expenses increased to $74.2 million, primarily driven by Leggett & Platt acquisition costs; Adjusted operating expenses were $34.6 million.

Market and Competitive Landscape:

• The Company operates in three channels: Direct bedding, Wholesale bedding and furnishings, and Specialized products.
• Direct bedding sales totaled $1,279.8 million, Wholesale bedding and furnishings totaled $969.7 million, and Specialized products totaled $101.3 million for the quarter.
• The Company highlighted upcoming product launches to support retail partners and reinforce global leadership.

Risks and Challenges:

• Integration risks associated with the Mattress Firm and Leggett & Platt acquisitions, including the potential failure to realize expected synergies.
• Macroeconomic headwinds affecting consumer confidence and availability of consumer financing.
• Operational disruption at Dreams due to ERP system implementation.
• Potential impacts from geopolitical events, tariffs, and trade policy changes on pricing, sales, and supply chains.

Management Commentary and Tone:

• Chairman and CEO Scott Thompson stated the Company delivered strong GAAP EPS and record adjusted EPS despite a challenging macroeconomic environment, reflecting business resilience.
• Management noted the Leggett & Platt acquisition improved leverage, enhanced the supply chain, and accelerated product development.
• The tone emphasized confidence in the Company's competitive position and long-term value creation foundation.

Other Key Points:

• The Company completed the acquisition of Leggett & Platt, Incorporated on August 26, 2026.
• The Board of Directors declared a quarterly cash dividend of $0.17 per share, payable on December 7, 2026 to shareholders of record on November 23, 2026.
• Total debt ended the quarter at $5.6 billion.
• The Company hosts a conference call on November 9, 2026, at 8:00 a.m. Eastern Time.