SOMNIGROUP INTERNATIONAL INC.
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 8, 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-Q
Period ended 2025-03-31; filed 2025-05-12.
0001206264-25-000116
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001206264-25-000168
ITEM 2. 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 122 previous paragraphs and 155 current paragraphs.
74 unchanged; 43 reworded; 23 added; 5 removed; 0 previous and 15 current paragraphs rearranged.
Tables are not compared: 20 previous and 27 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 (23)
Current report
•Operating income increased 3.8% to $179.9 million as compared to $173.3 million in the second quarter of 2024. Adjusted operating income, which is a non-GAAP financial measure, increased 24.3% to $224.4 million as compared to $180.6 million in the second quarter of 2024, primarily driven by the inclusion of Mattress Firm.
Current report
•Net income decreased 6.7% to $99.0 million as compared to $106.1 million in the second quarter of 2024. Adjusted net income, which is a non-GAAP financial measure, increased 1.3% to $113.1 million as compared to $111.7 million in the second quarter of 2024.
Current report
•Tempur Sealy North America net sales decreased $340.0 million, or 34.8%. Net sales in the Wholesale channel decreased $320.8 million, primarily driven by a 30.8% decline from the elimination of intercompany sales to Mattress Firm of $263.5 million, and a 6.7% decrease in sales of $57.3 million, primarily driven by a customer's acquisition which foreclosed distribution to this customer. Net sales in the Direct channel decreased $19.2 million, or 15.5%, primarily driven by a decrease in sales due to the divestiture of Sleep Outfitters.
Current report
•Tempur Sealy North America gross margin improved 1,430 basis points. The improvement in gross margin was primarily driven by the elimination of sales to Mattress Firm of 1,590 basis points and operational efficiencies of 60 basis points. These improvements were partially offset by expense deleverage of 130 basis points and product launch costs.
Current report
•Tempur Sealy International gross margin declined 40 basis points. The decline in gross margin was primarily driven by commodity cost inflation.
Current report
•Corporate operating expenses increased $14.3 million, or 36.8%. The increase in operating expenses was primarily driven by business combination charges related to the Mattress Firm Acquisition.
Current report
•Tempur Sealy North America operating income decreased $50.3 million and operating margin improved 200 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 1,430 basis points, partially offset by operating expense deleverage of 1,080 basis points. Additionally, we incurred a $9.8 million loss on disposal of business associated with the divestiture of Sleep Outfitters.
Current report
•Mattress Firm operating income was $63.2 million and operating margin was 6.7% for the three months ended June 30, 2025. Additionally, we incurred a $4.1 million loss on disposal of business associated with the divestiture of 73 retail stores.
Current report
SIX MONTHS ENDED JUNE 30, 2024
Current report
NET SALES
Current report
•Tempur Sealy North America net sales decreased $534.9 million, or 28.5%. Net sales in the Wholesale channel decreased $513.2 million, or 31.5%, primarily driven by a 24.2% decline from the elimination of intercompany sales to Mattress Firm of $393.6 million, and a 7.3% decrease in sales of $119.6 million, primarily driven by a customer's acquisition which foreclosed distribution to this customer. Net sales in the Direct channel decreased $21.7 million, or 8.8%, primarily driven by a decrease in sales from the divestiture of Sleep Outfitters.
Current report
GROSS PROFIT
Current report
OPERATING EXPENSES
Current report
Operating expenses increased $513.4 million, or 73.9%, and increased 600 basis points as a percentage of net sales. The primary drivers of changes in operating expenses by segment are explained below:
Current report
•Tempur Sealy North America operating expenses decreased $7.6 million, or 1.8%, and increased 820 basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreases in other selling and marketing and general, administrative and other expenses, partially offset by investments in advertising.
Current report
•Tempur Sealy International operating expenses increased $14.9 million, or 7.7%, and decreased 80 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in growth initiatives.
Current report
•Corporate operating expenses increased $51.6 million, or 59.6%. The increase in operating expenses was primarily driven by business combination charges related to the Mattress Firm Acquisition.
Current report
Research and development expenses were $15.9 million for the six months ended June 30, 2025 as compared to $15.8 million for the six months ended June 30, 2024, an increase of $0.1 million, or 0.6%.
Current report
OPERATING INCOME
Current report
•Tempur Sealy International operating income increased $14.3 million and operating margin improved 110 basis points. The improvement in operating margin was primarily driven by operating expense leverage of 80 basis points and the improvement in gross margin of 50 basis points, partially offset by Asia joint venture performance.
Current report
•Mattress Firm operating income was $70.0 million and operating margin was 4.5% for the stub period. Additionally, we incurred a $4.1 million loss on disposal of business associated with the divestiture of 73 retail stores.
Current report
INTEREST EXPENSE, NET
Current report
INCOME TAX PROVISION
Removed paragraphs (5)
Previous report
•Operating income was $13.2 million as compared to $131.5 million in the first quarter of 2024, primarily driven by costs during the quarter related to the Mattress Firm Acquisition. Adjusted operating income, which is a non-GAAP financial measure, was $182.8 million as compared to $149.4 million in the first quarter of 2024.
Previous report
•Net loss was $(33.1) million as compared to net income of $76.3 million in the first quarter of 2024, primarily driven by the acquisition of Mattress Firm. Adjusted net income, which is a non-GAAP financial measure, was $97.0 million as compared to $89.7 million in the first quarter of 2024.
Previous report
•Tempur Sealy North America net sales decreased $194.9 million, or 21.6%. Net sales in the Wholesale channel decreased $192.4 million, primarily driven by a 16.7% decline from the elimination of intercompany sales to Mattress Firm of $130.1 million and an 8.0% decline from continued macroeconomic pressures impacting U.S. consumer behavior of $62.3 million. Net sales in the Direct channel decreased $2.5 million, or 2.0%, as compared to the first quarter of 2024.
Previous report
•Corporate operating expenses increased $37.3 million, or 78.2%. The increase in operating expenses was primarily driven by transaction costs related to the Mattress Firm Acquisition.
Previous report
•Mattress Firm operating income was $6.8 million and operating margin was 1.1% for the stub period.
Reworded paragraphs (43)
Previous wording
In this discussion and analysis, we discuss and explain the consolidated financial condition and results of operations for the three months ended March 31, 2025, including the following topics:
Current wording
In this discussion and analysis, we discuss and explain the consolidated financial condition and results of operations for the three and six months ended June 30, 2025, including the following topics:
Previous wording
The global bedding industry was challenged in 2024 due to certain macroeconomic pressures on the consumer, and we expect these pressures to continue throughout 2025. Ongoing geopolitical conflicts, including trade disputes and the imposition of tariffs, may also introduce further uncertainty for the consumer. We have taken actions to mitigate the impact of the proposed tariffs, and we will implement pricing actions to mitigate the remaining impact. The majority of our products sold are also manufactured in the U.S. Accordingly, we believe the proposed tariffs will not have a material impact on our results of operations in 2025. 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.
Current wording
The global bedding industry was challenged in 2024 due to certain macroeconomic pressures on the consumer, and we expect these pressures to continue throughout 2025. Ongoing geopolitical conflicts, including trade disputes and the imposition of tariffs, may also introduce further uncertainty for the consumer. We have taken actions to mitigate the impact of proposed tariffs, and we implemented pricing actions to mitigate the remaining impact. The majority of our products sold are also manufactured in the U.S. Accordingly, we believe proposed tariffs will not have a material impact on our results of operations in 2025. However, the duration and extent of tariffs remain uncertain, and we are continuing to evaluate the potential future impacts of the imposition of tariffs. 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
On February 5, 2025, we completed the Mattress Firm Acquisition for an aggregate purchase price of approximately $5.2 billion, net of cash acquired of $0.3 billion. The aggregate purchase price consisted of $3.1 billion in cash and approximately 34.2 million shares of 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 wording
On February 5, 2025, we completed the Mattress Firm Acquisition for an aggregate purchase price of approximately $5.1 billion, net of cash acquired of $0.3 billion. The aggregate purchase price consisted of $3.1 billion in cash and approximately 34.2 million shares of 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.
Previous wording
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 wording
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, for the repayment of Mattress Firm's debt and for the payment of certain fees and expenses related to the merger.
Previous wording
Mattress Firm operates as a separate business segment. Mattress Firm's financial results for the period from February 5, 2025 through March 31, 2025 (the "stub period") are included in our consolidated financial statements in the first quarter of 2025.
Current wording
Mattress Firm operates as a separate business segment. Mattress Firm's financial results for the periods from April 1, 2025 through June 30, 2025 and February 5, 2025 through June 30, 2025 (the "stub period") are included in the Company's Condensed Consolidated Financial Statements for the three and six months ended June 30, 2025, respectively.
Previous wording
On May 1, 2025, we completed 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. We do not expect the divestiture to have a material impact on our results of operations.
Current wording
On May 1, 2025, we completed 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 MW SO Holdings Company, LLC ("Mattress Warehouse"). In the three months ended June 30, 2025, the Company recorded a $13.9 million loss on disposal of business associated with the divestiture, net of proceeds of $9.0 million. We do not expect the divestiture to have a material impact on our results of operations for the twelve months ended December 31, 2025.
Previous wording
•Total net sales increased 34.9% to $1,604.7 million as compared to $1,189.4 million in the first quarter of 2024, primarily driven by the inclusion of $593.7 million of Mattress Firm sales for the stub period, offset by the elimination of $130.1 million of sales from the Tempur Sealy North America segment to the Mattress Firm segment for the stub period.
Current wording
•Total net sales increased 52.5% to $1,880.8 million as compared to $1,233.6 million in the second quarter of 2024, primarily driven by the inclusion of $948.8 million of Mattress Firm sales for the quarter, offset by the elimination of $263.5 million of sales from the Tempur Sealy North America segment to the Mattress Firm segment.
Previous wording
•Gross margin was 36.2% as compared to 39.9% in the first quarter of 2024. Adjusted gross margin, which is a non-GAAP financial measure, was 42.2% as compared to 40.1% in the first quarter of 2024.
Current wording
•Gross margin was 44.0% as compared to 42.0% in the second quarter of 2024. Adjusted gross margin, which is a non-GAAP financial measure, was 44.2% as compared to 42.0% in the second quarter of 2024.
Previous wording
•Loss per diluted share was $(0.17) as compared to earnings per diluted share ("EPS") $0.43 in the first quarter of 2024. Adjusted EPS, which is a non-GAAP financial measure, was $0.49 as compared to $0.50 in the first quarter of 2024.
Current wording
•Earnings per diluted share ("EPS") decreased 21.7% to $0.47 as compared to $0.60 in the second quarter of 2024. Adjusted EPS, which is a non-GAAP financial measure, decreased 15.9% to $0.53 as compared to $0.63 in the second quarter of 2024.
Previous wording
The following table sets forth the various components of our Condensed Consolidated Statements of (Loss) Income and expresses each component as a percentage of net sales:
Current wording
The following table sets forth the various components of our Condensed Consolidated Statements of Income and expresses each component as a percentage of net sales:
Previous wording
Net sales increased 34.9%, and on a constant currency basis increased 35.8%. The change in net sales was driven by the following:
Current wording
Net sales increased 52.5%, and on a constant currency basis increased 51.7%. The change in net sales was driven by the following:
Previous wording
•Tempur Sealy International net sales increased $16.5 million, or 5.7%, primarily driven by the success of new product launches. On a constant currency basis, International net sales increased 7.7%. Net sales in the Wholesale channel increased 8.4% on a constant currency basis. Net sales in the Direct channel increased 7.3% on a constant currency basis.
Current wording
•Tempur Sealy International net sales increased $38.4 million, or 15.0%, primarily driven by the success of new product launches. On a constant currency basis, International net sales increased 10.0%. Net sales in the Wholesale channel increased 10.2% on a constant currency basis. Net sales in the Direct channel increased 9.8% on a constant currency basis.
Previous wording
Operating expenses increased $224.4 million, or 64.5%, and increased 650 basis points as a percentage of net sales. The primary drivers of changes in operating expenses by segment are explained below:
Current wording
Operating expenses increased $289.0 million, or 83.2%, and increased 560 basis points as a percentage of net sales. The primary drivers of changes in operating expenses by segment are explained below:
Previous wording
•Tempur Sealy North America operating expenses decreased $2.6 million, or 1.3%, and increased 580 basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreases in advertising and other selling and marketing expenses.
Current wording
•Tempur Sealy North America operating expenses decreased $5.0 million, or 2.3%, and increased 1,080 basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreases in other selling and marketing and general, administrative and other expenses, partially offset by investments in advertising.
Previous wording
•Tempur Sealy International operating expenses increased $5.3 million, or 5.4%, and decreased 10 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in growth initiatives.
Current wording
•Tempur Sealy International operating expenses increased $9.6 million, or 10.1%, and decreased 160 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in growth initiatives.
Previous wording
Research and development expenses for the three months ended March 31, 2025 were $8.1 million, consistent with the three months ended March 31, 2024.
Current wording
Research and development expenses for the three months ended June 30, 2025 were $7.8 million, compared to $7.7 million for the three months ended June 30, 2024.
Previous wording
•Tempur Sealy International operating income increased $6.3 million and operating margin improved 130 basis points. The improvement in operating margin was driven by the improvement in gross margin of 130 basis points.
Current wording
•Tempur Sealy International operating income increased $8.0 million and operating margin improved 110 basis points. The improvement in operating margin was driven by operating expense leverage of 160 basis points, partially offset by the decline in gross margin of 40 basis points and Asia joint venture performance.
Previous wording
•Corporate operating expenses increased $37.3 million, which negatively impacted our consolidated operating margin.
Current wording
•Corporate operating expenses increased $14.3 million, which negatively impacted our consolidated operating margin.
Previous wording
Interest expense, net, increased $27.0 million, or 78.7%. The increase in interest expense, net, was primarily driven by increased average levels of outstanding variable rate debt.
Current wording
Interest expense, net, increased $39.1 million, or 117.1%. The increase in interest expense, net, was primarily driven by increased average levels of outstanding variable rate debt.
Previous wording
•Mattress Firmnet sales were $593.7 million for the stub period.
Current wording
•Mattress Firmnet sales were $1,542.5 million for the stub period.
Previous wording
Gross margin declined 370 basis points. The primary drivers of changes in gross margin by segment are discussed below:
Current wording
Gross margin declined 50 basis points. The primary drivers of changes in gross margin by segment are discussed below:
Previous wording
•Tempur Sealy North America gross margin declined 340 basis points. The decline in gross margin was primarily driven by operating expense deleverage of 120 basis points and commodity cost inflation. Additionally, we incurred $78.0 million of one-time business combination accounting adjustments related to the Mattress Firm Acquisition, which contributed to the decline in gross margin. These declines were partially offset by the elimination of intercompany sales to Mattress Firm of 530 basis points, operational efficiencies of 120 basis points and favorable mix of 110 basis points.
Current wording
•Tempur Sealy North America gross margin improved 480 basis points. The improvement in gross margin was primarily driven by elimination of intercompany sales to Mattress Firm of 990 basis points, operational efficiencies of 90 basis points and favorable mix. These improvements were partially offset by expense deleverage of 130 basis points, commodity cost inflation and product launch costs. Additionally, we incurred $78.0 million of one-time business combination accounting adjustments related to the Mattress Firm Acquisition.
Previous wording
•Tempur Sealy International gross margin improved 130 basis points. The improvement in gross margin was primarily driven by decreased product launch costs.
Current wording
•Tempur Sealy International gross margin improved 50 basis points. The improvement in gross margin was primarily driven by decreased product launch costs.
Previous wording
•Mattress Firm gross margin was 32.2% for the stub period.
Current wording
•Mattress Firm gross margin was 34.3% for the stub period.
Previous wording
•Mattress Firm operating expenses were $184.4 million for the stub period.
Current wording
•Mattress Firm operating expenses were $454.5 million for the stub period.
Previous wording
Operating income decreased $118.3 million and operating margin declined 1,030 basis points. The primary drivers of changes in operating income and operating margin by segment are discussed below:
Current wording
Operating income decreased $111.7 million and operating margin declined 710 basis points. The primary drivers of changes in operating income and operating margin by segment are discussed below:
Previous wording
•Tempur Sealy North America operating income decreased $94.1 million and operating margin declined 920 basis points. The decline in operating margin was primarily driven by operating expense deleverage of 580 basis points and the decline in gross margin of 340 basis points.
Current wording
•Tempur Sealy North America operating income decreased $144.4 million and operating margin declined 400 basis points. The decline in operating margin was primarily driven by operating expense deleverage of 820 basis points, offset by the improvement in gross margin of 480 basis points. Additionally, we incurred a $9.8 million loss on disposal of business associated with the divestiture of Sleep Outfitters.
Previous wording
Our income tax provision decreased $37.2 million due to a decrease in income before income taxes. Our effective tax rate for the three months ended March 31, 2025 as compared to the prior year increased by 1,230 basis points. The effective tax rates as compared to the U.S. federal statutory rates for the three months ended March 31, 2025 and 2024 included the favorable impact of the deductibility of stock compensation in the U.S. and a net unfavorable impact of other discrete items.
Current wording
Our income tax provision decreased $68.0 million driven by a decrease in income before income taxes and certain discrete items, as discussed below. Our effective tax rate for the six months ended June 30, 2025 as compared to the prior year declined 4,790 basis points. The effective tax rate as compared to the U.S. federal statutory rate for the six months ended June 30, 2025 and 2024 included the net favorable impact of the deductibility of stock compensation in the U.S., which was offset by the unfavorable impact of discrete items.
Previous wording
Cash and cash equivalents were $111.1 million and $117.4 million as of March 31, 2025 and December 31, 2024, respectively. We had a working capital deficit of $268.9 million as of March 31, 2025, as compared to working capital of $105.1 million as of December 31, 2024. The reduction in our working capital to a deficit position in the first quarter of 2025 was primarily driven by a $251.2 million increase in our short-term operating lease obligations as a result of the Mattress Firm Acquisition, and we expect to operate with a working capital deficit in the future.
Current wording
Cash and cash equivalents were $98.1 million and $117.4 million as of June 30, 2025 and December 31, 2024, respectively. We had a working capital deficit of $294.5 million as of June 30, 2025, as compared to working capital of $105.1 million as of December 31, 2024. The reduction in our working capital to a deficit position in 2025 was primarily driven by a $250.5 million increase in our short-term operating lease obligations as a result of the Mattress Firm Acquisition, and we expect to operate with a working capital deficit in the future.
Previous wording
Cash provided by operating activities decreased $23.8 million in the three months ended March 31, 2025 as compared to the same period in 2024. The decrease in cash provided by operating activities was driven by a $109.6 million decrease in net income, offset by a $18.5 million increase in non-cash depreciation expense, primarily associated with our new Tempur manufacturing facility and a $65.1 million increase in cash provided by changes in operating assets and liabilities.
Current wording
Cash provided by operating activities increased $11.7 million in the six months ended June 30, 2025 as compared to the same period in 2024. The increase in cash provided by operating activities was driven by a $70.6 million increase in cash provided by changes in operating assets and liabilities and a $36.5 million increase in non-cash depreciation expense, primarily associated with our new Tempur manufacturing facility, offset by a $116.6 million decrease in net income.
Previous wording
Cash used in investing activities increased $2,827.7 million in the three months ended March 31, 2025 as compared to the same period in 2024. The increase in cash used in investing activities was primarily driven by the acquisition of Mattress Firm on February 5, 2025.
Current wording
Cash used in investing activities increased $2,818.4 million in the six months ended June 30, 2025 as compared to the same period in 2024. The increase in cash used in investing activities was primarily driven by the Mattress Firm Acquisition.
Previous wording
Cash provided by financing activities increased $1,220.0 million in the three months ended March 31, 2025 as compared to the same period in 2024. For the three months ended March 31, 2025, we had net borrowings of $1,217.3 million on our credit facilities as compared to net repayments of $3.7 million in the same period in 2024. We paid dividends to shareholders of $32.9 million and $24.9 million, during the three months ended March 31, 2025 and 2024, respectively. Additionally, we repurchased $37.5 million and $43.8 million of our common stock to satisfy tax withholding obligations upon the vesting of our long-term incentive plans during the three months ended March 31, 2025 and 2024, respectively.
Current wording
Cash provided by financing activities increased $1,135.2 million in the six months ended June 30, 2025 as compared to the same period in 2024. For the six months ended June 30, 2025, we had net borrowings of $1,098.5 million on our credit facilities as compared to net repayments of $93.7 million in the same period in 2024. We paid dividends to shareholders of $64.4 million and $47.5 million, during the six months ended June 30, 2025 and 2024, respectively. Additionally, we repurchased $132.4 million and $43.8 million of our common stock to satisfy tax withholding obligations upon the vesting of our long-term incentive plans during the six months ended June 30, 2025 and 2024, respectively. Proceeds from exercise of stock options increased $48.8 million as compared to the same period in 2024.
Previous wording
Capital expenditures totaled $24.0 million and $31.5 million for the three months ended March 31, 2025 and 2024, respectively. We currently expect our 2025 capital expenditures to be approximately $250 million, including $50 million of investments to refresh Mattress Firm stores.
Current wording
Capital expenditures totaled $60.7 million and $60.0 million for the six months ended June 30, 2025 and 2024, respectively. We currently expect our 2025 capital expenditures to be approximately $200 million, including $25 million of investments to refresh Mattress Firm stores.
Previous wording
Our total debt increased to $5,069.9 million as of March 31, 2025 from $3,844.5 million as of December 31, 2024. Total availability under our revolving senior secured credit facility was $708.3 million as of March 31, 2025. Refer to Note 5, "Debt" in the "Notes to Condensed Consolidated Financial Statements," under Part I, ITEM 1 for further discussion of our debt.
Current wording
Our total debt increased to $4,951.6 million as of June 30, 2025 from $3,844.5 million as of December 31, 2024. Total availability under our revolving senior secured credit facility was $707.7 million as of June 30, 2025. Refer to Note 5, "Debt" in the "Notes to Condensed Consolidated Financial Statements," under Part I, ITEM 1 for further discussion of our debt.
Previous wording
As of March 31, 2025, our ratio of consolidated indebtedness less netted cash to adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), which is a non-GAAP financial measure, in accordance with our 2023 Credit Agreement was 3.51 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 March 31, 2025, 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 June 30, 2025, our ratio of consolidated indebtedness less netted cash to adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), which is a non-GAAP financial measure, in accordance with our 2023 Credit Agreement was 3.56 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 June 30, 2025, 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. During the three months ended March 31, 2025, we did not repurchase shares under our share repurchase program. As of March 31, 2025, we had $774.5 million remaining under our share repurchase authorization.
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. During the six months ended June 30, 2025, we did not repurchase shares under our share repurchase program. As of June 30, 2025, we had $774.5 million remaining under our share repurchase authorization.
Previous wording
As of March 31, 2025, we had $819.4 million of liquidity, including $111.1 million of cash on hand and $708.3 million available under our 2023 Credit Agreement. In addition, we expect to generate cash flow from operations in the full year 2025. 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 June 30, 2025, we had $805.8 million of liquidity, including $98.1 million of cash on hand and $707.7 million available under our 2023 Credit Agreement. In addition, we expect to generate cash flow from operations in the full year 2025. 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
The Board of Directors declared a dividend of $0.15 per share for the second quarter of 2025. The dividend is payable on June 5, 2025 to shareholders of record as of May 22, 2025.
Current wording
The Board of Directors declared a dividend of $0.15 per share for the third quarter of 2025. The dividend is payable on September 5, 2025 to shareholders of record as of August 21, 2025.
Previous wording
As of March 31, 2025, we had $5,069.9 million in total debt outstanding and consolidated indebtedness less netted cash, which is a non-GAAP financial measure, of $4,958.8 million. Leverage based on the ratio of consolidated indebtedness less netted cash to adjusted EBITDA, which is a non-GAAP financial measure, was 3.51 times for the trailing twelve months ended March 31, 2025. We currently expect our target leverage ratio to return to 2.0 to 3.0 times in the first twelve months following the close of the transaction. Total cash interest payments related to our borrowings are expected to be between approximately $265 million to $275 million in 2025.
Current wording
As of June 30, 2025, we had $4,951.6 million in total debt outstanding and consolidated indebtedness less netted cash, which is a non-GAAP financial measure, of $4,853.5 million. Leverage based on the ratio of consolidated indebtedness less netted cash to adjusted EBITDA, which is a non-GAAP financial measure, was 3.56 times for the trailing twelve months ended June 30, 2025. We currently expect our target leverage ratio to return to 2.0 to 3.0 times in 2026. Total cash interest payments related to our borrowings are expected to be between approximately $260 million to $265 million in 2025.
Previous wording
A reconciliation of reported net (loss) income to adjusted net income and the calculation of adjusted EPS is provided below. We believe 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 below.
Current wording
A reconciliation of reported net income to adjusted net income and the calculation of adjusted EPS is provided below. We believe 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 below.
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Current report — wording carried from elsewhere
•Mattress Firmnet sales were $948.8 million for the three months ended June 30, 2025.
Current report — wording carried from elsewhere
Gross margin improved 200 basis points. The primary drivers of changes in gross margin by segment are discussed below:
Current report — wording carried from elsewhere
•Mattress Firm gross margin was 35.6% for the three months ended June 30, 2025.
Current report — wording carried from elsewhere
•Mattress Firm operating expenses were $270.1 million for the three months ended June 30, 2025.
Current report — wording carried from elsewhere
Operating income increased $6.6 million and operating margin declined 440 basis points. The primary drivers of changes in operating income and operating margin by segment are discussed below:
Current report — wording carried from elsewhere
Our income tax provision decreased $30.8 million driven by certain discrete items, as discussed below, and a decrease in income before income taxes. Our effective tax rate for the three months ended June 30, 2025 as compared to the prior year declined by 2,110 basis points. The effective tax rate as compared to the U.S. federal statutory rate for the three months ended June 30, 2025 included the favorable impact of the deductibility of stock compensation in the U.S. and a net unfavorable impact of other discrete items. The effective tax rate as compared to the U.S. federal statutory rate for the three months ended June 30, 2024 included a net favorable impact of other discrete items.
Current report — wording carried from elsewhere
SIX MONTHS ENDED JUNE 30, 2025 COMPARED TO THE
Current report — wording carried from elsewhere
The following table sets forth the various components of our Condensed Consolidated Statements of Income and expresses each component as a percentage of net sales:
Current report — wording carried from elsewhere
Net sales increased 43.9%, and on a constant currency basis increased 44.0%. The change in net sales was driven by the following:
Current report — wording carried from elsewhere
•Tempur Sealy International net sales increased $54.9 million, or 10.1%, primarily driven by the success of new product launches. On a constant currency basis, International net sales increased $47.8 million, or 8.8%. Net sales in the Wholesale channel increased 9.3% on a constant currency basis. Net sales in the Direct channel increased 8.5% on a constant currency basis.
Current report — wording carried from elsewhere
Costs associated with net sales are recorded in cost of sales and include the costs of producing, shipping, warehousing, receiving and inspecting goods during the period, as well as depreciation and amortization of long-lived assets used in the manufacturing process. Cost of sales also includes retail store occupancy costs such as rent, common area maintenance charges, real estate and other asset-based taxes, general maintenance, utilities, depreciation and certain insurance expenses.
Current report — wording carried from elsewhere
Selling and marketing expenses include advertising and media production associated with the promotion of our brands, other marketing materials such as catalogs, brochures, videos, product samples, direct customer mailings and point of purchase materials and sales force compensation. We also include in selling and marketing expense certain new product development costs, including market research and new product testing.
Current report — wording carried from elsewhere
General, administrative and other expenses include salaries and related expenses, IT, professional fees, depreciation and amortization of long-lived assets not used in the manufacturing process, expenses for administrative functions and research and development costs.
Current report — wording carried from elsewhere
•Corporate operating expenses increased $51.6 million, which negatively impacted our consolidated operating margin.
Current report — wording carried from elsewhere
Interest expense, net, increased $66.1 million, or 97.6%. The increase in interest expense, net, was primarily driven by increased average levels of outstanding variable rate debt.