SOMNIGROUP INTERNATIONAL INC
For the period ended Dec 31, 2024. Filed Feb 28, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 28, 2025
SGI$64.17-5.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-16.
0001206264-24-000050
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-28.
0001206264-25-000058
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 146 previous paragraphs and 145 current paragraphs.
84 unchanged; 50 reworded; 11 added; 12 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
We are the world's largest bedding company, dedicated to enriching people's lives through the power of a good night's sleep. 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.
Current report
Acquisition of Mattress Firm
Current report
On February 5, 2025, we completed the acquisition of Mattress Firm for an aggregate purchase price of approximately $5.1 billion, net of cash acquired of $0.3 billion. The aggregate purchase price consisted of $2.8 billion in cash and approximately 34.2 million shares of our common stock valued at $65.65 per share, which represents the simple average of the opening and closing price per share of our common stock on the NYSE on the trading day immediately prior to the date of acquisition, with the value of any fractional shares paid in cash.
Current report
In connection with the consummation of the merger, we borrowed $625.0 million on the Delayed Draw Term A Loan and $679.5 million of revolving commitments under our senior credit facility. In addition, approximately $1,592.0 million of proceeds in respect of the Term B Loan were released from escrow. The proceeds of this financing were collectively used to fund a portion of the cash consideration, the repayment of Mattress Firm's debt and the payment of certain fees and expenses related to the merger.
Current report
We incurred $47.8 million and $49.0 million of transaction expenses related to the acquisition in 2024 and 2023, respectively, and $9.8 million of transaction related interest expense, net of interest income, related to the Term B Loan drawn and held in escrow.
Current report
We expect to complete the previously announced divestiture of 73 Mattress Firm retail locations and our Sleep Outfitters subsidiary, which includes 103 specialty mattress retail locations and seven distribution centers, to Mattress Warehouse in the second quarter of 2025.
Current report
In 2025, we will launch an all-new collection of Sealy Posturepedic® products in North America. This reinvention of the Sealy Posturepedic® brand is strategically aimed at reigniting growth in the mid-to-entry level market, which has experienced outsized pressures relative to other price points in recent years. The new collection incorporates innovative technologies, including our proprietary PrecisionFit™ coils which were expertly designed to provide superior support.
Current report
•North America gross margin improved 50 basis points. The improvement in gross margin was primarily driven by favorable commodity costs of 100 basis points and operational efficiencies. These improvements were offset by the unfavorable mix of new OEM distribution of 50 basis points.
Current report
Operating income increased $27.0 million and operating margin improved 60 basis points. The increase was driven by the following:
Current report
On October 24, 2024, we entered into an Amendment No. 2 ("Amendment No. 2") and an Amendment No. 3 ("Amendment No. 3") to the 2023 Credit Agreement. Amendment No. 2 extended the termination date for $605 million of the Delayed Draw Term A Loan commitments until October 24, 2025, among other changes. Amendment No. 3 provided for an incremental Term B Loan in the aggregate principal amount of $1.6 billion which will mature on October 24, 2031. The proceeds of the Term B Loan were funded into escrow on the closing of Amendment No. 3 and will mature on October 24, 2031. The proceeds of the Term B Loan were used to pay fees and expenses in connection with Amendment No. 3 and were released for the closing of the Mattress Firm acquisition.
Current report
On February 5, 2025, upon the consummation of the Mattress Firm acquisition, we borrowed $625.0 million of our Delayed Draw Term A Loan commitments and $679.5 million of revolving commitments under the 2023 Credit Agreement. In addition, approximately $1,592.0 million of proceeds in respect of the Term B Loan were released from escrow. The proceeds of this financing were collectively used to fund a portion of the cash consideration for the acquisition, the repayment of Mattress Firm's debt and the payment of certain fees and expenses related to the acquisition.
Removed paragraphs (12)
Previous report
We are committed to improving the sleep of more people, every night, all around the world. As a leading designer, manufacturer, distributor and retailer of bedding products worldwide, we know how crucial a good night of sleep is to overall health and wellness. Utilizing over a century of knowledge and industry-leading innovation, we deliver award-winning products that provide breakthrough sleep solutions to consumers in over 100 countries.
Previous report
Definitive Agreement with Mattress Firm.
Previous report
On May 9, 2023, Tempur Sealy International and Mattress Firm entered into the Merger Agreement for a pending business acquisition in which Tempur Sealy International, through a wholly-owned subsidiary, will acquire Mattress Firm in a transaction valued at approximately $4.0 billion. The transaction is expected to be funded by approximately $2.7 billion of cash consideration and the issuance of 34.2 million shares of the Company's common stock, resulting in a total stock consideration value of $1.3 billion based on a closing share price of $37.62 as of May 8, 2023.
Previous report
We expect the transaction to close in the second half of 2024, subject to the satisfaction of customary closing conditions, including applicable regulatory approvals. Following the close of the transaction, Mattress Firm is expected to operate as a separate business unit.
Previous report
In 2024, we are launching a new portfolio of Tempur-Pedic® Adapt mattresses in our North America segment. This next-generation technology sets the standard for support, pressure relief, and motion cancellation with Tempur material precisely responding to your body's weight, shape, and temperature in a way no other mattress does. This collection was designed to complement the Tempur-Pedic® Breeze collection and Tempur-Ergo® Smart Bases launched in 2023 and finishes the complete reset of our core Tempur lineup.
Previous report
In our International segment in 2024, we plan to complete the rollout of the new line of Tempur® products in over 90 markets through our wholly-owned subsidiaries and third-party distributors. This new line of products will broaden Tempur®'s price range, with the super-premium price point ceiling maintained and the floor expanded into the premium category to expand our global addressable market.
Previous report
Cybersecurity Event
Previous report
On July 31, 2023, we disclosed a cybersecurity event identified on July 23, 2023 affecting certain of our data and IT systems. Upon discovery of the event, we activated our incident response and business continuity plans designed to contain the incident. This included proactively shutting down certain of our IT systems, resulting in the temporary interruption of our operations. We engaged legal counsel, a cybersecurity forensic firm and other incident response professionals to advise on the matter. We also notified law enforcement authorities.
Previous report
We incurred $14.3 million of costs in connection with this event, primarily consisting of $10.1 million of manufacturing and network disruption costs incurred to ensure business continuity and $4.2 million primarily related to professional fees incurred for incident response, containment measures and stabilization of the Company's information systems. Following the forensic investigation, we concluded there was no material impact to our financial results for the year ended 2023. Our cybersecurity insurance policy provides coverage for certain losses not to exceed $5.0 million over the annual term of the policy, and we have not yet submitted a claim for this incident.
Previous report
•North America gross margin improved 160 basis points. The improvement in gross margin was primarily driven by normalizing commodity costs of 220 basis points and pricing actions of 120 basis points. These improvements were offset by product launch costs of 50 basis points, expense deleverage of 50 basis points and operational headwinds. Additionally, in 2023, we incurred $10.2 million of operational start-up costs related to capacity expansion of our manufacturing and distribution facilities in the U.S. and $10.1 million of costs associated with the cybersecurity event identified on July 23, 2023, which partially offset the improvement in gross margin.
Previous report
Operating income decreased $73.4 million and operating margin declined 150 basis points. The decrease was driven by the following:
Previous report
On October 10, 2023, we entered into the 2023 Credit Agreement, which provides for a $1.15 billion revolving credit facility, a $500.0 million term loan facility and an incremental facility for additional borrowings. Refer to Note 6, "Debt" in our Consolidated Financial Statements included in Part II, ITEM 8 for further discussion of the accordion feature of the 2023 Credit Agreement. We used the proceeds under these facilities to refinance outstanding borrowings under the 2019 Credit Agreement and terminated the existing revolving credit commitments. As of October 10, 2023, the terms of the 2023 Credit Agreement replaced the terms of the 2019 Credit Agreement.
Reworded paragraphs (50)
Previous wording
The following discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes thereto included elsewhere in this Report. Unless otherwise noted, all of the financial information in this Report is consolidated financial information for the Company. The forward-looking statements in this discussion regarding the mattress and pillow industries, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are subject to numerous risks and uncertainties. See "Special Note Regarding Forward-Looking Statements" and Part I, ITEM 1A of this Report. Our actual results may differ materially from those contained in any forward-looking statements. For results of operations comparisons relating to years ending December 31, 2022 and 2021, refer to our annual report on Form 10-K, Part II, ITEM 7: Management's Discussion and Analysis of Financial Condition and Results of Operations filed with the Securities and Exchange Commission on February 17, 2023.
Current wording
The following discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes thereto included elsewhere in this Report. Unless otherwise noted, all of the financial information in this Report is consolidated financial information for the Company, excluding Mattress Firm unless otherwise noted. The forward-looking statements in this discussion regarding the mattress and pillow industries, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are subject to numerous risks and uncertainties. See "Special Note Regarding Forward-Looking Statements" and Part I, ITEM 1A of this Report. Our actual results may differ materially from those contained in any forward-looking statements. For results of operations comparisons relating to years ending December 31, 2023 and 2022, refer to our annual report on Form 10-K, Part II, ITEM 7: Management's Discussion and Analysis of Financial Condition and Results of Operations filed with the Securities and Exchange Commission on February 16, 2024.
Previous wording
We operate in two segments: North America and International. These segments are strategic business units that are managed separately based on geography. Our North America segment consists of manufacturing and distribution subsidiaries and licensees located in the U.S., Canada and Mexico. Our International segment consists of manufacturing and distribution subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America (other than Mexico). Corporate operating expenses are not included in either of the segments and are presented separately as a reconciling item to consolidated results. We evaluate segment performance based on net sales, gross profit and operating income. For additional information refer to Note 15, "Business Segment Information," included in Part II, ITEM 8 "Financial Statements and Supplementary Data", of this Report.
Current wording
In 2024, we operated in two segments: North America and International. These segments are strategic business units that are managed separately based on geography. Our North America segment consists of manufacturing, distribution and retail subsidiaries and licensees located in the U.S., Canada and Mexico. Our International segment consists of manufacturing, distribution and retail subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America (other than Mexico). Corporate operating expenses are not included in any of the segments and are presented separately as a reconciling item to consolidated results. We evaluate segment performance based on net sales, gross profit and operating income. For additional information refer to Note 15, "Business Segment Information," included in Part II, ITEM 8 "Financial Statements and Supplementary Data," of this Report. Following the acquisition of Mattress Firm and beginning in the first quarter of 2025, we will operate in three segments: Tempur Sealy North America, Tempur Sealy International and Mattress Firm.
Previous wording
Our highly recognized brands include Tempur-Pedic®, Sealy® and Stearns & Foster® and our non-branded offerings consist of value-focused private label and OEM products. Our products allow for complementary merchandising strategies and are sold through third-party retailers, our more than 750 company-owned and joint venture operated retail stores worldwide and our e-commerce channel.
Current wording
Our portfolio includes the most highly recognized brands in the industry, including Tempur-Pedic®, Sealy® and Stearns & Foster®, 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. Our products allow for complementary merchandising strategies and are sold through third-party retailers, our company-owned and joint venture operated retail stores worldwide and our e-commerce channel.
Previous wording
In 2024, we expect a continuation of the current macroeconomic environment, which includes the impact of inflation and interest rate pressures on the consumer. The global bedding industry was challenged in 2023 due to these macroeconomic pressures on the consumer. Ongoing geopolitical conflicts may introduce further uncertainty for the consumer. However, we expect consumer confidence to stabilize in 2024.
Current wording
In 2025, we expect the current macroeconomic environment to stabilize throughout the year. The global bedding industry was challenged in 2024 due to certain macroeconomic pressures on the consumer. Ongoing geopolitical conflicts may introduce further uncertainty for the consumer. We expect to outperform the bedding industry as a result of our investments in new product launches and continued investments in innovation, quality, advertising and customer service.
Previous wording
We have a diversified group of strong retail partners and a rapidly growing direct business. The largest pillar of our omni-channel distribution strategy is our distribution across tens of thousands of third-party retail doors. This broad footprint ensures that consumers can easily find and experience our products in person. While we are well represented at third-party retailers in the U.S. today, there are opportunities to both increase the presence of our brands with existing retail partners and to sell into certain key retailers that do not have our products on their floors today.
Current wording
We have a diversified group of strong retail partners and a rapidly growing direct business. The largest pillar of our omni-channel distribution strategy is our wholesale distribution across tens of thousands of third-party retail doors. This broad footprint ensures that consumers can easily find and experience our products in person. While we are well represented at third-party retailers in the U.S. today, there are opportunities to both increase the presence of our brands with existing retail partners and to sell into certain key retailers that do not have our products on their floors today. We also have significant opportunity to expand our third-party retail distribution in our international business.
Previous wording
We expanded our presence into the OEM market in 2020 by offering non-branded products, including mattresses, pillows and other bedding products and components at a wide range of price points. The addition of non-branded offerings expands our capabilities to service third-party retailers and creates opportunity to capture manufacturing profits from bedding brands outside our own. We made significant progress growing our OEM business in 2023 and continue to target obtaining a meaningful share of the OEM market in the long-term.
Current wording
In addition to the sale of our branded products through third-party retailers, we also offer non-branded products through our OEM business, including mattresses, pillows and other bedding products and components, at a wide range of price points. Our non-branded offerings complement our suite of branded products, expanding our capability to service third-party retailers and creating opportunity to capture manufacturing profits from bedding brands outside our own. In the fourth quarter of 2024, we lost a significant portion of our OEM business as a result of a customer's acquisition which foreclosed on our OEM product sales to this customer. In 2025, we expect this distribution loss to have an unfavorable impact on our results. We continue to target obtaining a meaningful share of the OEM market in the long-term.
Previous wording
We have been focused on building our direct channel, both online and company-owned retail stores. The development of our online business has been particularly important as consumers have grown more comfortable shopping for bedding products online. The direct channel growth rate has surpassed the wholesale growth rate over the last few years, and we anticipate the direct channel to continue to grow as a percentage of net sales in future years.
Current wording
We have been focused on building our direct channel, both online and company-owned retail stores. The development of our online business has been particularly important as consumers have grown more comfortable shopping for bedding products online. Following the acquisition of Mattress Firm, we expect over 60% of our global sales will be direct-to-consumer and no customer will represent more than 5% of global sales. Our expanded direct channel distribution complements our wholesale business, and we believe this balanced approach enhances the overall global sales potential and profitability of Somnigroup.
Previous wording
We currently operate over 750 retail stores globally through our wholly-owned and joint venture operations, led by over 200 Tempur-Pedic and Sleep Outfitters retail stores in the U.S. and over 200 Dreams locations in the U.K. We believe these retail stores complement our existing third-party retail partners by increasing our products' brand awareness in the local markets.
Current wording
We currently operate over 2,800 retail stores globally through our wholly-owned and joint venture operations, led by over 2,200 Mattress Firm and retail stores in the U.S. and over 200 Dreams locations in the U.K. We believe these retail stores complement our existing third-party retail partners by increasing our products' brand awareness in the local markets.
Previous wording
•Total net sales increased 0.1% to $4,925.4 million as compared to $4,921.2 million in 2022.
Current wording
•Total net sales increased 0.1% to $4,930.9 million as compared to $4,925.4 million in 2023, with a decrease of 1.7% in the North America business segment and an increase of 6.7% in the International business segment. On a constant currency basis, which is a non-GAAP financial measure, total net sales increased 0.1%, with a decrease of 1.5% in the North America business segment and an increase of 5.8% in the International business segment.
Previous wording
•Gross margin was 43.2% as compared to 41.6% in 2022. Adjusted gross margin, which is a non-GAAP financial measure, was 43.7% as compared to 42.0% in 2022.
Current wording
•Gross margin was 44.2% as compared to 43.2% in 2023. Adjusted gross margin, which is a non-GAAP financial measure, was 45.0% as compared to 43.7% in 2023.
Previous wording
•Operating income decreased 10.8% to $607.2 million as compared to $680.6 million in 2022. Adjusted operating income, which is a non-GAAP financial measure, decreased 2.4% to $695.1 million as compared to $712.0 million in 2022.
Current wording
•Operating income increased 4.4% to $634.2 million as compared to $607.2 million in 2023. Adjusted operating income, which is a non-GAAP financial measure, increased 3.8% to $721.3 million as compared to $695.1 million in 2023.
Previous wording
•Net income decreased 19.2% to $368.1 million as compared to $455.7 million in 2022. Adjusted net income, which is a non-GAAP financial measure, decreased 9.0% to $425.6 million as compared to $467.9 million in 2022.
Current wording
•Net income increased 4.4% to $384.3 million as compared to $368.1 million in 2023. Adjusted net income, which is a non-GAAP financial measure, increased 6.9% to $455.1 million as compared to $425.6 million in 2023.
Previous wording
•EPS decreased 17.8% to $2.08 as compared to $2.53 in 2022. Adjusted EPS, which is a non-GAAP financial measure, decreased 7.7% to $2.40 as compared to $2.60 in 2022.
Current wording
•Earnings per diluted share ("EPS") increased 3.8% to $2.16 as compared to $2.08 in 2023. Adjusted EPS, which is a non-GAAP financial measure, increased 6.3% to $2.55 as compared to $2.40 in 2023.
Previous wording
•North America net sales decreased $30.6 million, or 0.8%. Net sales in the Wholesale channel decreased $41.9 million, or 1.2%, primarily driven by macroeconomic pressures impacting U.S. consumer behavior. Net sales in our Direct channel increased $11.3 million, or 2.3%.
Current wording
•North America net sales decreased $66.6 million, or 1.7%. Net sales in the Wholesale channel decreased $73.0 million, or 2.2%, primarily driven by continued macroeconomic pressures impacting U.S. consumer behavior. Net sales in our Direct channel increased $6.4 million, or 1.3%.
Previous wording
•International net sales increased $34.8 million, or 3.4%, primarily driven by the success of new Tempur® product introductions. On a constant currency basis, our International net sales increased 3.7%. Net sales in the Wholesale channel increased 4.4% on a constant currency basis. Net sales in the Direct channel increased 3.4% on a constant currency basis.
Current wording
•International net sales increased $72.1 million, or 6.7%, primarily driven by the success of new product launches. On a constant currency basis, our International net sales increased 5.8%. Net sales in the Wholesale channel increased 7.8% on a constant currency basis. Net sales in the Direct channel increased 4.6% on a constant currency basis.
Previous wording
Gross margin improved 160 basis points. The principal factors impacting gross margin for each segment are discussed below.
Current wording
Gross margin improved 100 basis points. The principal factors impacting gross margin for each segment are discussed below:
Previous wording
•International gross margin improved 100 basis points. The improvement in gross margin was primarily driven by favorable mix of 80 basis points and pricing actions of 60 basis points. These improvements were offset by product launch costs of 60 basis points.
Current wording
•International gross margin improved 160 basis points. The improvement in gross margin was primarily driven by operational efficiencies of 80 basis points and favorable commodity costs of 30 basis points.
Previous wording
Operating expenses increased $154.4 million, or 11.1%, and increased 320 basis points as a percentage of net sales. The primary drivers of changes in operating expenses by segment are discussed below.
Current wording
Operating expenses increased $20.3 million, or 1.3%, and increased 30 basis points as a percentage of net sales. The primary drivers of changes in operating expenses by segment are discussed below:
Previous wording
•North America operating expenses increased $49.5 million, or 5.9%, and increased 150 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in advertising and growth initiatives.
Current wording
•North America operating expenses increased $24.3 million, or 2.7%, and increased 100 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by incremental bad debt expense related to retailer bankruptcies and investments in growth initiatives, partially offset by decreases in advertising.
Previous wording
•International operating expenses increased $47.1 million, or 11.9% and increased 310 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in growth initiatives and product launch costs.
Current wording
•International operating expenses increased $30.0 million, or 6.8%, and was flat as a percentage of net sales. The increase in operating expenses was primarily driven by investments in growth initiatives.
Previous wording
•Corporate operating expenses increased $57.8 million, or 38.8%. The increase in operating expenses was primarily driven by $49.0 million of transaction costs related to the pending acquisition of Mattress Firm and a fair value remeasurement of $11.0 million related to a strategic investment in a product innovation initiative.
Current wording
•Corporate operating expenses decreased $34.0 million, or 16.4%. The decrease in operating expenses was primarily driven by decreased variable compensation expense and a one-time fair value remeasurement of $11.0 million related to a strategic investment in a product innovation initiative which was recorded in the prior year.
Previous wording
Research and development expenses for the year ended December 31, 2023 were $30.6 million compared to $29.2 million for the year ended December 31, 2022, an increase of $1.4 million, or 4.8%.
Current wording
Research and development expenses for the year ended December 31, 2024 were $30.8 million as compared to $30.6 million for the year ended December 31, 2023, an increase of $0.2 million, or 0.7%.
Previous wording
•International operating income decreased $16.3 million and operating margin declined 210 basis points. The decline in operating margin was primarily driven by operating expense deleverage of 330 basis points, offset by the improvement in gross margin of 100 basis points.
Current wording
•North America operating income decreased $31.0 million and operating margin declined 50 basis points. The decline in operating margin was primarily driven by operating expense deleverage of 100 basis points, partially offset by the improvement in gross margin of 50 basis points.
Previous wording
•North America operating income increased $0.7 million and operating margin improved 20 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 160 basis points, offset by operating expense deleverage of 160 basis points.
Current wording
•International operating income increased $24.0 million and operating margin improved 110 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 160 basis points, partially offset by Asia joint venture performance of 50 basis points and operating expense deleverage.
Previous wording
•Corporate operating expenses increased $57.8 million, which negatively impacted our consolidated operating margin.
Current wording
•Corporate operating expenses decreased $34.0 million, which positively impacted our consolidated operating margin.
Previous wording
Interest expense, net, increased $26.9 million, or 26.1%. The increase in interest expense, net, was primarily driven by higher interest rates on our variable rate debt.
Current wording
Interest expense, net, increased $4.9 million, or 3.8%. The increase in interest expense, net, was primarily driven by the incremental Term B Loan interest expense, net of $8.4 million, partially offset by reduced average levels of outstanding variable rate debt.
Previous wording
Our income tax provision decreased $15.6 million due to a decrease in income before income taxes and the favorable impact of discrete items. Our 2023 effective tax rate increased 120 basis points as compared to 2022. The 2023 effective tax rate as compared to the U.S. federal statutory tax rate included a net favorable impact of discrete items, primarily related to excess tax benefits from the vesting of certain stock awards under our incentive stock compensation plan and a benefit related to the final settlement of the Danish Tax Matter. The 2022 effective tax rate, as compared to the U.S. federal statutory tax rate, also included the impact of net favorable discrete items related to our incentive stock compensation plan and the Danish Tax Matter.
Current wording
Our income tax provision increased $15.2 million due to an increase in income before income taxes. Our 2024 effective tax rate increased 170 basis points as compared to 2023. The 2024 effective tax rate as compared to the U.S. federal statutory tax rate included a net favorable impact of discrete items, primarily related to excess tax benefits from the vesting of certain stock awards under our incentive stock compensation plan and other discrete items. The 2023 effective tax rate, as compared to the U.S. federal statutory tax rate, also included a net favorable impact of discrete items, primarily related to excess tax benefits from the vesting of certain stock awards under our incentive stock compensation plan and a benefit related to the settlement of the Danish Tax Matter.
Previous wording
As of December 31, 2023, we had net working capital of $195.0 million, including cash and cash equivalents of $74.9 million, as compared to working capital of $214.0 million, including cash and cash equivalents of $69.4 million, as of December 31, 2022. The amount of cash and cash equivalents held by subsidiaries outside of the U.S. and not readily convertible into the U.S. Dollar or other major foreign currencies is not material to our overall liquidity or financial position.
Current wording
As of December 31, 2024, we had net working capital of $105.1 million, including cash and cash equivalents of $117.4 million, as compared to working capital of $195.0 million, including cash and cash equivalents of $74.9 million, as of December 31, 2023. The amount of cash and cash equivalents held by subsidiaries outside of the U.S. and not readily convertible into the U.S. Dollar or other major foreign currencies is not material to our overall liquidity or financial position.
Previous wording
Cash provided by operating activities from continuing operations increased $191.5 million in 2023 as compared to 2022. The increase in cash provided by operating activities was driven by a $260.1 million increase in cash provided by changes in operating assets and liabilities, primarily due to decreases in inventory, prepaid expenses and other assets, and income taxes receivable, which were offset by increases in accrued expenses and other liabilities. The changes in operating assets and liabilities were primarily offset by a decrease in net income of $87.1 million.
Current wording
Cash provided by operating activities increased $96.2 million in 2024 as compared to 2023. The increase in cash provided by operating activities was driven by a $66.3 million increase in cash provided by changes in operating assets and liabilities, primarily due to increases in cash provided by accounts payable and income taxes receivable and payable, which were offset by decreases in cash provided by inventory and prepaid expenses and other assets. Cash provided by operating activities also increased as a result of additional non-cash depreciation and amortization of $29.8 million, primarily associated with our new Tempur manufacturing facility.
Previous wording
Cash used in investing activities from continuing operations decreased $127.5 million in 2023 as compared to 2022. The decrease in cash used in investing activities was driven by decreased capital expenditures related to our manufacturing capacity expansion projects nearing completion in 2023.
Current wording
Cash used in investing activities decreased $91.1 million in 2024 as compared to 2023. The decrease in cash used in investing activities was driven by decreased capital expenditures related to our manufacturing capacity expansion projects in 2023.
Previous wording
Cash used in financing activities from continuing operations increased $105.2 million in 2023 as compared to 2022. In 2023, we had net repayments of $250.8 million as compared to net borrowings of $474.5 million in 2022 from our credit facilities. Additionally, we repurchased shares of our common stock for $36.0 million in 2023 as compared to $667.4 million in 2022.
Current wording
Cash provided by financing activities increased $1,461.7 million in 2024 as compared to 2023. In 2024, we had net borrowings of $1,246.4 million as compared to net repayments of $250.8 million in 2023 from our credit facilities, including $1,592.0 million of proceeds from the Term B Loan. The proceeds from the Term B Loan were funded into escrow and were released upon the closing of the Mattress Firm acquisition. Additionally, we repurchased shares of our common stock to satisfy tax withholding obligations upon the vesting of our long-term incentive plans for $43.8 million in 2024 as compared to $36.0 million in 2023.
Previous wording
Capital expenditures were $185.4 million and $306.5 million for the year ended December 31, 2023 and 2022, respectively. We currently expect our 2024 capital expenditures to decrease to approximately $150 million, which includes maintenance capital expenditures of $110 million.
Current wording
Capital expenditures were $97.3 million and $185.4 million for the year ended December 31, 2024 and 2023, respectively. We currently expect our 2025 capital expenditures to be approximately $250 million, including $50 million of investments to refresh Mattress Firm stores.
Previous wording
Our total debt decreased to $2,593.6 million as of December 31, 2023 from $2,830.8 million as of December 31, 2022. Total availability under our revolving senior secured credit facility was $966.4 million as of December 31, 2023.
Current wording
Our total debt increased to $3,844.5 million as of December 31, 2024 from $2,593.6 million as of December 31, 2023. Total availability under our revolving senior secured credit facility was $1,189.2 million as of December 31, 2024.
Previous wording
On February 6, 2024, we and certain other parties thereto entered into an amendment to the 2023 Credit Agreement which provides for a $625.0 million delayed draw term loan and a $40.0 million increase in availability on the existing incremental revolving loan. Once drawn, the instruments will have the same terms and conditions as our existing term loans and revolving loans, respectively, under the 2023 Credit Agreement. This amendment was executed in connection with our financing strategy for the pending acquisition of Mattress Firm expected to close in the second half of 2024.
Current wording
On February 6, 2024, we entered into an Amendment No. 1 ("Amendment No. 1") to the 2023 Credit Agreement which provided for a $625.0 million Delayed Draw Term A Loan commitment and a $40.0 million increase in availability on the existing revolving loan. This amendment was executed in connection with the Company's financing strategy for the Mattress Firm acquisition.
Previous wording
As of December 31, 2023, our ratio of consolidated indebtedness less netted cash to adjusted EBITDA, which is a non-GAAP financial measure defined in the 2023 Credit Agreement, was 2.87 times. This ratio is within the terms of the financial covenants for the maximum consolidated total net leverage ratio as set forth in the 2023 Credit Agreement, which limits this ratio to 5.00 times. As of December 31, 2023, we were in compliance with all of the financial covenants in our debt agreements, and we do not anticipate material issues under any debt agreements based on current facts and circumstances.
Current wording
As of December 31, 2024, our ratio of consolidated indebtedness less netted cash to adjusted EBITDA, which is a non-GAAP financial measure defined in the 2023 Credit Agreement, was 2.31 times. This ratio is within the terms of the financial covenants for the maximum consolidated total net leverage ratio as set forth in the 2023 Credit Agreement, which limits this ratio to 5.00 times. As of December 31, 2024, we were in compliance with all of the financial covenants in our debt agreements, and we do not anticipate material issues under any debt agreements based on current facts and circumstances.
Previous wording
Our Board of Directors authorized a share repurchase program in 2016 pursuant to which we were authorized to repurchase shares of our common stock, and the Board of Directors has authorized increases to this authorization from time to time. For the year ended December 31, 2023, we repurchased 0.1 million shares under our share repurchase program for approximately $5.0 million and had approximately $774.5 million remaining under our share repurchase program.
Current wording
Our Board of Directors authorized a share repurchase program in 2016 pursuant to which we were authorized to repurchase shares of our common stock, and the Board of Directors has authorized increases to this authorization from time to time. For the year ended December 31, 2024, we did not repurchase shares under our share repurchase program and had approximately $774.5 million remaining under our share repurchase program.
Previous wording
In 2024, we will manage our share repurchase program based on current and expected cash flows, share price and alternative investment opportunities. As a result of the pending Mattress Firm acquisition, we have temporarily suspended our repurchase of shares in advance of closing the transaction. For a complete description of our share repurchase program, please refer to ITEM 5 under Part II, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities," of this Report.
Current wording
We manage our share repurchase program based on current and expected cash flows, share price and alternative investment opportunities. While the Mattress Firm acquisition was pending, we temporarily suspended our repurchase of shares. In 2025, we expect minimal share repurchases as we focus on debt repayment to reduce leverage to our target ratio of 2.0 to 3.0 times. For a complete description of our share repurchase program, please refer to ITEM 5 under Part II, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities," of this Report.
Previous wording
As of December 31, 2023, we had $1,041.3 million of liquidity, including $74.9 million of cash on hand and $966.4 million available under our revolving senior secured credit facility. We believe that cash flow from operations, availability under our existing credit facilities and arrangements, current cash balances and the ability to obtain other financing, if necessary, will provide adequate cash funds for our foreseeable working capital needs, necessary capital expenditures, debt service obligations and dividend payments.
Current wording
As of December 31, 2024, we had $1,306.6 million of liquidity, including $117.4 million of cash on hand and $1,189.2 million available under our revolving senior secured credit facility. To fund the Mattress Firm acquisition on February 5, 2025, we subsequently borrowed $679.5 million on our revolving senior secured credit facility. We believe that cash flow from operations, availability under our existing credit facilities and arrangements, current cash balances and the ability to obtain other financing, if necessary, will provide adequate cash funds for our foreseeable working capital needs, necessary capital expenditures, debt service obligations and dividend payments.
Previous wording
Our capital allocation strategy follows a balanced approach focused on supporting the business, returning shareholder value through strategic acquisition opportunities that enhance our global competitiveness, as well as quarterly dividends and opportunistic share repurchases.
Current wording
Our capital allocation strategy follows a balanced approach focused on supporting the business and returning shareholder value through strategic acquisition opportunities that enhance our global competitiveness, as well as quarterly dividends and opportunistic share repurchases.
Previous wording
The Board of Directors declared a dividend of $0.13 per share for the first quarter of 2024. The dividend is payable on March 7, 2024 to shareholders of record as of February 22, 2024.
Current wording
The Board of Directors declared a dividend of $0.15 per share for the first quarter of 2025. The dividend is payable on March 20, 2025 to shareholders of record as of March 6, 2025.
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