SOMNIGROUP INTERNATIONAL INC.

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, 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.

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, including Mattress Firm's financial results for the period February 5, 2025 through December 31, 2025 (the "stub period"). 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, 2024 and 2023, 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 28, 2025.

Previous wording

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 wording

We are the world's largest 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 over 100 countries worldwide through our fully-owned businesses, Tempur Sealy, Mattress Firm and Dreams.

Previous 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.

Current wording

We operate in three segments: Mattress Firm, Tempur Sealy North America and Tempur Sealy International. These segments are strategic business units that are managed separately. Our Mattress Firm segment consists of retail stores and distribution centers located in the U.S. Our Tempur Sealy North America segment consists of manufacturing, distribution and retail subsidiaries and licensees located in the U.S., Canada and Mexico (other than Mattress Firm retail and distribution locations). Our Tempur Sealy 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.

Previous 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.

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.

Previous wording

Our distribution model operates through an omni-channel strategy. We distribute through two channels in each operating business segment: Wholesale and Direct. Our Wholesale channel consists of third-party retailers, including third-party distribution, hospitality and healthcare. Our Direct channel includes company-owned stores, online and call centers.

Current wording

As of December 31, 2025, Somnigroup operated 2,852 company-owned stores, including 2,174 Mattress Firm stores, Tempur Sealy owned stores, Dreams stores and joint venture stores. Our distribution model operates through an omni-channel strategy. The Mattress Firm segment sells products through one channel: Direct. The Tempur Sealy North America and Tempur Sealy International segments sell products through two channels: Direct and Wholesale. The Direct channel includes product sales through company-owned stores, e-commerce and call centers. The Wholesale channel includes all product sales to third-party retailers, including third-party distribution, hospitality and healthcare.

Previous wording

We believe the bedding industry is structured for sustained growth, driven by product innovation, sleep technology advancements, consumer confidence, housing formations and population growth. The industry is no longer engaged in uneconomical retail store expansion, startups have shifted from uneconomical strategies to becoming profitable and legacy retailers and manufacturers have become skilled in producing profitable online sales.

Current wording

We believe the bedding industry is structured for sustained growth, driven by product innovation, sleep technology advancements, consumer confidence, housing formations and population growth. In our opinion, the industry is no longer engaged in uneconomical retail store expansion, startups have shifted from uneconomical strategies to becoming profitable and legacy retailers and manufacturers have become skilled in producing profitable online sales.

Previous 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.

Current wording

The global bedding industry was challenged in 2025 due to certain macroeconomic pressures on the consumer. Ongoing geopolitical conflicts, including trade disputes and the imposition of tariffs, along with the potential for U.S. government shutdowns, 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 in the U.S. are also manufactured in the U.S. Accordingly, we believe proposed tariffs will not have a material impact on our results of operations in 2026. 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 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 wording

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 $3.1 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.

Previous wording

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 wording

On May 1, 2025, we completed the previously announced divestiture of 73 Mattress Firm retail locations and our Sleep Outfitters subsidiary, which included 103 specialty mattress retail locations and seven distribution centers to MW SO Holdings Company, LLC ("Mattress Warehouse"). In the year ended December 31, 2025, we recorded a $13.9 million loss on disposal of business associated with the divestiture, net of proceeds of $9.0 million, which did not have a material impact on our results of operations.

Previous wording

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 wording

In 2025, we launched 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.

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 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.

Current wording

Our wholesale distribution is comprised of a diverse group of strong retail partners with more than 20,000 doors, primarily concentrated in the U.S. 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 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

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.

Current wording

In addition to offering a portfolio of some of the most highly recognized brands in the industry, we also offer non-branded products through our OEM business. These offerings include 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. We 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. 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.

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, over 60% of our global sales are direct-to-consumer and no customer represents 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

•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.

Current wording

•Gross margin was 42.6% as compared to 41.1% in 2024. Adjusted gross margin, which is a non-GAAP financial measure, was 44.4% as compared to 41.9% in 2024.

Previous 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.

Current wording

•Operating income increased 19.0% to $754.9 million as compared to $634.2 million in 2024. Adjusted operating income, which is a non-GAAP financial measure, increased 41.2% to $1,018.7 million as compared to $721.3 million in 2024. Both were primarily driven by the inclusion of Mattress Firm and realized sales and cost synergies.

Previous 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.

Current wording

•Net income decreased 0.1% to $384.1 million as compared to $384.3 million in 2024. Adjusted net income, which is a non-GAAP financial measure, increased 24.2% to $565.3 million as compared to $455.1 million in 2024.

Previous 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.

Current wording

•Earnings per diluted share ("EPS") decreased 14.8% to $1.84 as compared to $2.16 in 2024. Adjusted EPS, which is a non-GAAP financial measure, increased 5.9% to $2.70 as compared to $2.55 in 2024.

Previous wording

Net sales increased 0.1% (including on a constant currency basis). The change in net sales was driven by the following:

Current wording

Net sales increased 51.6%, and on a constant currency basis increased 51.1%. The change in net sales was driven by the following:

Previous 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.

Current wording

•Tempur Sealy International net sales increased $127.9 million, or 11.2%, primarily driven by expanded distribution. On a constant currency basis, International net sales increased 8.3%. Net sales in the Direct channel increased 8.8% on a constant currency basis. Net sales in the Wholesale channel increased 7.6% on a constant currency basis.

Previous wording

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.

Current wording

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.

Previous wording

Our gross margin is primarily impacted by the relative amount of net sales contributed by our premium or value products. Our value products have a significantly lower gross margin than our premium products. If sales of our value priced products increase relative to sales of our premium products, our gross margins will be negatively impacted in both our North America and International segments.

Current wording

Our gross margin is primarily impacted by the relative amount of net sales contributed by our premium or value products. Our value products have a significantly lower gross margin than our premium products. If sales of our value priced products increase relative to sales of our premium products, our gross margins will be negatively impacted across all segments.

Previous wording

Our gross margin is also impacted by fixed cost leverage based on manufacturing unit volumes; the cost of raw materials; operational efficiencies due to the utilization in our manufacturing facilities; product, brand, channel and geographic mix; foreign exchange fluctuations; volume incentives offered to certain retail accounts; participation in our retail cooperative advertising programs; and costs associated with new product introductions. Future changes in raw material prices could have a significant impact on our gross margin. Our margins are also impacted by the growth in our Wholesale channel as sales in our Wholesale channel are at wholesale prices whereas sales in our Direct channel are at retail prices.

Current wording

Our gross margin is also impacted by fixed cost leverage based on manufacturing unit volumes; the cost of raw materials; operational efficiencies due to the utilization in our manufacturing facilities; product, brand, channel and country mix; foreign exchange fluctuations; volume incentives offered to certain retail accounts; participation in our retail cooperative advertising programs; vendor incentives earned on supply agreements; retail store fixed cost leverage based on unit volumes and costs associated with new product introductions. Future changes in raw material prices could have a significant impact on our gross margin. Our margins are also impacted by the growth in our Wholesale channel as sales in our Wholesale channel are at wholesale prices whereas sales in our Direct channel are at retail prices.

Previous wording

Gross margin improved 100 basis points. The principal factors impacting gross margin for each segment are discussed below:

Current wording

Gross margin improved 150 basis points. The principal factors impacting gross margin for each segment are discussed below:

Previous wording

•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 wording

•Tempur Sealy North America gross margin improved 1,250 basis points. The improvement in gross margin was primarily driven by the elimination of sales to Mattress Firm of 1,360 basis points and operational efficiencies of 100 basis points. These improvements were partially offset by expense deleverage of 70 basis points. Additionally, we incurred $78.0 million of one-time business combination accounting adjustments related to the Mattress Firm Acquisition.

Previous 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.

Current wording

•Tempur Sealy International gross margin improved 30 basis points. The improvement in gross margin was primarily driven by operational efficiencies.

Previous 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:

Current wording

Operating expenses increased $1,021.4 million, or 72.3%, and increased 400 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 $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.

Current wording

•Tempur Sealy North America operating expenses decreased $33.9 million, or 4.0%, and increased 780 basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreases in bad debt expense related to retailer bankruptcies and other selling and marketing, partially offset by investments in advertising.

Previous 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.

Current wording

•Tempur Sealy International operating expenses increased $40.9 million, or 10.6%, and decreased 10 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in growth initiatives. Additionally, we recorded a $6.2 million impairment charge related to certain cloud-based computing arrangements.

Previous 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%.

Current wording

Research and development expenses for the year ended December 31, 2025 were $32.9 million as compared to $30.8 million for the year ended December 31, 2024, an increase of $2.1 million, or 6.8%.

Previous wording

Operating income increased $27.0 million and operating margin improved 60 basis points. The increase was driven by the following:

Current wording

Operating income increased $120.7 million and operating margin declined 280 basis points. The increase was driven by the following:

Previous 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.

Current wording

•Tempur Sealy North America operating income decreased $58.8 million and operating margin improved 430 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 1,250 basis points, partially offset by operating expense deleverage of 780 basis points. Additionally, we incurred a $9.8 million loss on disposal of business associated with the divestiture of Sleep Outfitters.

Previous 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.

Current wording

•Tempur Sealy International operating income increased $26.3 million and operating margin improved 30 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 30 basis points and operating expense leverage of 10 basis points, partially offset by Asia joint venture performance.

Previous 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.

Current wording

Interest expense, net, increased $133.1 million, or 98.7%. The increase in interest expense, net, was primarily driven by increased average levels of outstanding variable rate debt as a result of the Mattress Firm Acquisition.

Previous wording

Income tax provision includes income taxes associated with taxes currently payable and deferred taxes, and includes the impact of net operating losses for certain of our foreign operations.

Current wording

Income tax provision includes income taxes associated with taxes currently payable and deferred taxes, and includes the impact of net operating losses for certain of our domestic and foreign operations.

Previous 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.

Current wording

Our income tax provision decreased $22.9 million due to a decrease in income before income taxes. Our 2025 effective tax rate decreased 360 basis points as compared to 2024. The 2025 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, including the impact of the Mattress Firm Acquisition. The 2024 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 other discrete items.

Previous 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.

Current wording

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 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.

Current wording

Cash used in investing activities increased $2,927.6 million in 2025 as compared to 2024. The increase in cash used in investing activities was driven by cash used to partially fund the Mattress Firm Acquisition.

Previous 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.

Current wording

Cash provided by financing activities decreased $460.5 million in 2025 as compared to 2024. In 2025, we had net borrowings of $849.8 million as compared to net borrowings of $1,246.4 in 2024 in order to fund the Mattress Firm Acquisition. We repurchased shares of our common stock to satisfy tax withholding obligations upon the vesting of our long-term incentive plans for $132.4 million in 2025 as compared to $43.8 million in 2024. Additionally, we paid dividends to shareholders of $127.4 million in 2025 as compared to $92.7 million in 2024. Proceeds from exercise of stock options increased $49.0 million in 2025 as compared to 2024.

Previous 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.

Current wording

Capital expenditures were $166.9 million and $97.3 million for the years ended December 31, 2025 and 2024, respectively. We currently expect our 2026 capital expenditures to be approximately $250 million, including $75 million of one-time investments to refresh Mattress Firm stores.

Previous 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.

Current wording

Our total debt increased to $4,717.3 million as of December 31, 2025 from $3,844.5 million as of December 31, 2024. Total availability under our revolving senior secured credit facility was $638.7 million as of December 31, 2025. Refer to Note 6, "Debt" in our Condensed Consolidated Financial Statements included in Part II, ITEM 8 for further discussion of our debt.