SOMNIGROUP INTERNATIONAL INC.
For the period ended Jun 30, 2026. Filed Aug 7, 2026.
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, 2026 · Filed Aug 7, 2026
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 2026-03-31; filed 2026-05-08.
0001206264-26-000067
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0001206264-26-000113
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 120 previous paragraphs and 156 current paragraphs.
69 unchanged; 45 reworded; 31 added; 6 removed; 0 previous and 11 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 (31)
Current report
•Total net sales decreased 3.0% to $1,823.5 million as compared to $1,880.8 million in the second quarter of 2025.
Current report
•Gross margin was 44.8% as compared to 44.0% in the second quarter of 2025. Adjusted gross margin, which is a non-GAAP financial measure, was 45.1% as compared to 44.2% in the second quarter of 2025.
Current report
•Net income increased 12.0% to $110.9 million as compared to $99.0 million in the second quarter of 2025. Adjusted net income, which is a non-GAAP financial measure, increased 8.4% to $122.6 million as compared to $113.1 million in the second quarter of 2025.
Current report
•Mattress Firmnet sales decreased $26.6 million, or 2.8%, primarily driven by store closures. Mattress Firm same store sales increased slightly as compared to the second quarter of 2025. All Mattress Firm sales are reported through the Direct channel.
Current report
•Tempur Sealy North America net sales decreased $36.6 million, or 5.7%, primarily driven by market conditions. Net sales to Mattress Firm increased 11.6% to $294.0 million as compared to $263.5 million in the second quarter of 2025. These sales are eliminated on a reported basis. Net sales in the Wholesale channel decreased $29.6 million, or 5.5%. Net sales in the Direct channel decreased $7.0 million, or 6.7%, primarily driven by a decrease in sales from the divestiture of Sleep Outfitters in the second quarter of 2025.
Current report
•Tempur Sealy International net sales increased $5.9 million, or 2.0%. On a constant currency basis, International net sales increased 1.3%. Net sales in the Direct channel decreased 1.6% on a constant currency basis. Net sales in the Wholesale channel increased 6.2% on a constant currency basis.
Current report
•Mattress Firm gross margin declined 230 basis points. The decline in gross margin was primarily driven by product mix of 100 basis points, consumer financing costs of 70 basis points and investments in Mattress Firm's stores of 60 basis points.
Current report
•Tempur Sealy North America gross margin improved 660 basis points. The improvement in gross margin was primarily driven by the achievement of synergies from the Mattress Firm Acquisition of 480 basis points, operational efficiencies of 210 basis points and favorable mix of 110 basis points. These improvements were partially offset by commodity cost inflation before pricing actions of 110 basis points.
Current report
•Tempur Sealy International gross margin declined 80 basis points. The decline in gross margin was primarily driven by commodity cost inflation before pricing actions of 100 basis points, partially offset by operational efficiencies.
Current report
•Mattress Firm operating expenses decreased $22.0 million, or 8.1%, and decreased 160 basis points as a percentage of net sales. The decrease was primarily driven by decreases in general, administrative and other expenses and advertising expenses, partially offset by increases in other selling and marketing.
Current report
•Tempur Sealy North America operating expenses increased $3.6 million, or 1.7%, and increased 260 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in advertising, partially offset by decreases in general, administrative and other expenses and other selling and marketing.
Current report
•Tempur Sealy International operating expenses increased $2.6 million, or 2.5%, and increased 20 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 decreased $2.0 million, or 3.8%. The decrease in operating expenses was primarily driven by decreased business combination charges related to the Mattress Firm Acquisition.
Current report
OPERATING INCOME
Current report
•Mattress Firm operating income decreased $3.8 million and operating margin declined 30 basis points. The decline in operating margin was primarily driven by the decline in gross margin of 230 basis points, partially offset by operating expense leverage of 160 basis points. Additionally, in 2025, we incurred a $4.1 million loss on disposal of business associated with the divestiture of 73 retail stores, which were not incurred in 2026.
Current report
•Tempur Sealy North America operating income increased $25.8 million and operating margin improved 550 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 660 basis points, partially offset by operating expense deleverage of 260 basis points. Additionally, in 2025, we incurred a $9.8 million loss on disposal of business associated with the divestiture of Sleep Outfitters, which were not incurred in 2026.
Current report
•Tempur Sealy International operating income decreased $2.6 million and operating margin declined 120 basis points. The decline in operating margin was primarily driven by decline in gross margin of 80 basis points and operating expense deleverage of 20 basis points.
Current report
SIX MONTHS ENDED JUNE 30, 2025
Current report
NET SALES
Current report
GROSS PROFIT
Current report
•Tempur Sealy North America gross margin improved 1,590 basis points. The improvement in gross margin was primarily driven by the achievement of synergies from the Mattress Firm Acquisition of 480 basis points, elimination of intercompany sales to Mattress Firm of 290 basis points, operational efficiencies of 190 basis points and favorable mix. These improvements were partially offset by commodity cost inflation before pricing actions. Additionally, in
Current report
OPERATING EXPENSES
Current report
Operating expenses increased $5.5 million, or 0.5%, and decreased 120 basis points as a percentage of net sales. The primary drivers of changes in operating expenses by segment are explained below:
Current report
Research and development expenses were $18.7 million for the six months ended June 30, 2026 as compared to $15.9 million for the six months ended June 30, 2025, an increase of $2.8 million, or 17.6%.
Current report
OPERATING INCOME
Current report
•Tempur Sealy North America operating income increased $117.2 million and operating margin improved 1,200 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 1,590 basis points, offset by operating expense deleverage of 460 basis points. Additionally, in 2025, we incurred a $9.8 million loss on disposal of business associated with the divestiture of Sleep Outfitters, which was not incurred in 2026.
Current report
INTEREST EXPENSE, NET
Current report
INCOME TAX PROVISION
Current report
On July 27, 2026, we entered into an Amendment No. 5 to the 2023 Credit Agreement ("Amendment No. 5"), which provides for (i) a term loan A of $1,200.0 million (the "Term A Loans") and (ii) an incremental revolving commitment of $510.0 million. The proceeds of the Term A Loans were used to refinance the amounts outstanding under the term loan facility and the Delayed Draw Term A Loan under the 2023 Credit Agreement. Our commitments under the revolving credit facility were $1,700.0 million after giving effect to Amendment No. 5.
Current report
Amendment No. 5 was executed in connection with the pending acquisition of Leggett & Platt and extended the maturity dates of the Term A Loans and the revolving credit facility to July 27, 2031. Borrowings under the Term A Loans and the revolving credit facility will generally bear interest at either (i) a base rate plus an applicable margin of 0.125% to 0.875%, (ii) a term SOFR rate plus an applicable margin of 1.125% to 1.875% or (iii) a daily simple SOFR rate plus an applicable margin of 1.125% to 1.875%. For the Term A Loans and the revolving credit facility the applicable margin is determined by a pricing grid based on the consolidated total net leverage ratio.
Current report
In connection with Amendment No. 5, we prepaid $700.0 million of the outstanding Term B Loan with the remaining proceeds from the Term A Loans and revolving credit facility.
Removed paragraphs (6)
Previous report
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 report
•Total net sales increased 12.3% to $1,801.5 million as compared to $1,604.7 million in the first quarter of 2025, primarily driven by the inclusion of Mattress Firm sales for a full quarter as compared to the first quarter of 2025, which included Mattress Firm for the stub period.
Previous report
•Gross margin was 43.1% as compared to 36.2% in the first quarter of 2025. Adjusted gross margin(1) was 43.6% as compared to 42.2% in the first quarter of 2025.
Previous report
•Net income increased 414.8% to $104.2 million as compared to net loss of $(33.1) million in the first quarter of 2025. Adjusted net income(1) increased 28.4% to $124.5 million as compared to $97.0 million in the first quarter of 2025.
Previous report
OPERATING INCOME (LOSS)
Previous report
•Tempur Sealy North America operating income increased $91.4 million and operating margin improved 1,770 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 2,390 basis points, partially offset by operating expense deleverage of 630 basis points.
Reworded paragraphs (45)
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, 2026, 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, 2026, including the following topics:
Previous wording
As of March 31, 2026, we operated 2,839 company-owned stores, including 2,161 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 operating business segments sell products through two channels: Direct and Wholesale. Our Direct channel includes product sales through company-owned stores, online and call centers. Our Wholesale channel includes all product sales to third-party retailers, including third-party distribution, hospitality and healthcare.
Current wording
As of June 30, 2026, we operated 2,842 company-owned stores, including 2,155 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 operating business segments sell products through two channels: Direct and Wholesale. Our Direct channel includes product sales through company-owned stores, online and call centers. Our Wholesale channel includes all product sales to third-party retailers, including third-party distribution, hospitality and healthcare.
Previous wording
Over the last decade, consumers have made the connection between a good night's sleep and overall health and wellness. As consumers make this connection, they are willing to invest more in their bedding purchases, which positions us well for long-term growth.
Current wording
Over the last decade, consumers have made the connection between a good night's sleep and overall health and wellness. As consumers make this connection, they are willing to invest more in their bedding purchases. We believe the bedding industry is structured for sustained long-term growth, driven by product innovation, sleep technology advancements, consumer confidence, housing formations and population growth. Due to our dedication to product innovation and other competitive advantages, we believe Somnigroup is well-positioned to take advantage of the industry’s long-term growth potential.
Previous wording
The global bedding industry was challenged in 2025 due to certain macroeconomic pressures on the consumer, which continued during the first quarter of 2026. Ongoing geopolitical conflicts, including trade disputes and the imposition of tariffs, along with the 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.
Current wording
The global bedding industry was challenged in 2025 due to certain macroeconomic pressures on the consumer, which continued during the first half of 2026. Ongoing geopolitical conflicts, including trade disputes and the imposition of tariffs, along with the 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
The transaction is currently anticipated to close by year-end 2026, subject to the satisfaction of customary closing conditions, including approval by Leggett & Platt’s shareholders and receipt of applicable regulatory approvals. The transaction does not require Somnigroup International shareholder approval. Following the close of the transaction, Leggett & Platt is expected to operate as a separate business unit within Somnigroup and to maintain its offices in Carthage, Missouri.
Current wording
The transaction is currently anticipated to close by the end of the third quarter of 2026, subject to the satisfaction of customary closing conditions, including approval by Leggett & Platt’s shareholders and receipt of applicable regulatory approvals. The transaction does not require Somnigroup International shareholder approval. Following the close of the transaction, Leggett & Platt is expected to operate as a separate business unit within Somnigroup and to maintain its offices in Carthage, Missouri.
Previous wording
Mattress Firm operates as a separate business segment. Mattress Firm's financial results for the period February 5, 2025 through March 31, 2025 (the "stub period") are included in our Condensed Consolidated Financial Statements for the three months ended March 31, 2025.
Current wording
Mattress Firm operates as a separate business segment. Mattress Firm's financial results for the period April 1, 2025 through June 30, 2025 and February 5, 2025 through June 30, 2025 (the "stub period") are included in our Condensed Consolidated Financial Statements for the three and six months ended June 30, 2025, respectively.
Previous wording
•Operating income increased 1,317.4% to $187.1 million as compared to $13.2 million in the first quarter of 2025. Adjusted operating income(1) increased 17.4% to $214.6 million as compared to $182.8 million in the first quarter of 2025. Both were primarily driven by the inclusion of Mattress Firm and realized sales and cost synergies.
Current wording
•Operating income increased 12.1% to $201.7 million as compared to $179.9 million in the second quarter of 2025. Adjusted operating income, which is a non-GAAP financial measure, decreased 3.5% to $216.6 million as compared to $224.4 million in the second quarter of 2025. Both were primarily driven by realized sales and cost synergies.
Previous wording
•Earnings per diluted share ("EPS") increased 388.2% to $0.49 as compared to loss per diluted share of $(0.17) in the first quarter of 2025. Adjusted EPS(1) increased 20.4% to $0.59 as compared to $0.49 in the first quarter of 2025.
Current wording
•Earnings per diluted share ("EPS") increased 10.6% to $0.52 as compared to $0.47 in the second quarter of 2025. Adjusted EPS, which is a non-GAAP financial measure, increased 9.4% to $0.58 as compared to $0.53 in the second quarter of 2025.
Previous wording
The following table sets forth the various components of our Condensed Consolidated Statements of Income (Loss) 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
Our gross margin is primarily impacted by the relative amount of net sales contributed by our premium or value products. Our premium products have higher gross margins than our value products. An increase in sales of our premium priced products can positively impact gross margins, while an increase in sales of our value priced products can negatively impact gross margins across all segments. Our margins are also impacted by the relative amount of net sales contributed by each channel. Sales in our Direct channel have higher gross margins than sales in our Wholesale channel.
Current wording
Our gross margin is primarily impacted by the relative amount of net sales contributed by our premium or value products. Our premium products have higher gross margins than our value products. An increase in sales of our premium priced products can positively impact gross margins, while an increase in sales of our value priced products can negatively impact gross margins across all segments. Our margins are also impacted by the relative amount of net sales contributed by each channel.
Previous wording
Gross margin improved 690 basis points. The primary drivers of changes in gross margin by segment are discussed below:
Current wording
Gross margin improved 80 basis points. The primary drivers of changes in gross margin by segment are discussed below:
Previous wording
Operating expenses increased $23.3 million, or 4.1%, and decreased 260 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 decreased $17.8 million, or 2.8%, and increased 10 basis points as a percentage of net sales. The primary drivers of changes in operating expenses by segment are explained below:
Previous wording
Research and development expenses for the three months ended March 31, 2026 were $8.5 million, compared to $8.1 million for the three months ended March 31, 2025, an increase of $0.4 million, or 4.9%.
Current wording
Research and development expenses for the three months ended June 30, 2026 were $10.2 million, compared to $7.8 million for the three months ended June 30, 2025, an increase of $2.4 million, or 30.8%.
Previous wording
Operating income increased $173.9 million and operating margin improved 960 basis points. The primary drivers of changes in operating income and operating margin by segment are discussed below:
Current wording
Operating income increased $21.8 million and operating margin improved 150 basis points. The primary drivers of changes in operating income and operating margin by segment are discussed below:
Previous wording
•Corporate operating loss decreased $42.1 million, which positively impacted our consolidated operating margin.
Current wording
•Corporate operating loss decreased $2.4 million, which positively impacted our consolidated operating margin.
Previous wording
Interest expense, net, decreased $1.3 million, or 2.1%. The decrease in interest expense, net, was primarily driven by lower interest rates on outstanding variable rate debt.
Current wording
Interest expense, net, decreased $13.5 million, or 18.6%. The decrease in interest expense, net, was primarily driven by lower interest rates on outstanding variable rate debt.
Previous wording
Net sales increased 12.3%, and on a constant currency basis increased 10.4%. The change in net sales was driven by the following:
Current wording
Net sales increased 4.0%, and on a constant currency basis increased 3.0%. The change in net sales was driven by the following:
Previous wording
•Mattress Firmnet sales increased $292.2 million, or 49.2%, primarily driven by the inclusion of net sales for a full quarter as compared to the first quarter of 2025, which included Mattress Firm for the stub period. All Mattress Firm sales are reported through the direct channel.
Current wording
•Mattress Firmnet sales increased $265.6 million, or 17.2%, primarily driven by the inclusion of net sales for a full quarter in the first quarter of 2026 as compared to the first quarter of 2025, which included Mattress Firm for the stub period. All Mattress Firm sales are reported through the Direct channel.
Previous wording
•Tempur Sealy North America net sales decreased $142.7 million, or 20.2%, net sales in the Wholesale channel decreased $111.0 million, primarily driven by the accounting elimination of sales to Mattress Firm for a full quarter in 2026 as compared to the first quarter of 2025, which eliminated sales to Mattress Firm for the stub period. Net sales in the Direct channel decreased $31.7 million, or 26.0%, primarily driven by a decrease in sales from the divestiture of Sleep Outfitters in the second quarter of 2025.
Current wording
•Tempur Sealy North America net sales decreased $179.3 million, or 13.3%. Net sales in the Wholesale channel decreased $140.6 million, or 12.6%, primarily driven by the accounting elimination of sales to Mattress Firm for a full quarter in the first quarter of 2026 as compared to the first quarter of 2025, which eliminated sales to Mattress Firm for the stub period. Net sales in the Direct channel decreased $38.7 million, or 17.1%, primarily driven by a decrease in sales from the divestiture of Sleep Outfitters.
Previous wording
•Tempur Sealy International net sales increased $47.3 million, or 15.5%, primarily driven by strong performance in key markets. On a constant currency basis, International net sales increased 7.2%. Net sales in the Direct channel increased 7.5% on a constant currency basis. Net sales in the Wholesale channel increased 6.7% on a constant currency basis.
Current wording
•Tempur Sealy International net sales increased $53.2 million, or 8.9%, primarily driven by strong performance in key markets. On a constant currency basis, International net sales increased $25.7 million, or 4.3%. Net sales in the Direct channel increased 3.0% on a constant currency basis. Net sales in the Wholesale channel increased 6.5% on a constant currency basis.
Previous wording
•Mattress Firm gross margin declined 140 basis points. The decline in gross margin was primarily driven by investments in promotional expenses of 110 basis points, product mix of 100 basis points and fixed cost deleverage of 90 basis points. Additionally, in 2025, we incurred $17.4 million of one-time business combination accounting adjustments related to the Mattress Firm Acquisition, which were not incurred in 2026.
Current wording
•Mattress Firm gross margin declined 220 basis points. The decline in gross margin was primarily driven by product mix of 100 basis points, consumer financing costs of 90 basis points and investments in Mattress Firm's stores of 80 basis points. Additionally, in 2025, we incurred $17.4 million of one-time business combination accounting adjustments related to the Mattress Firm Acquisition, which were not incurred in 2026.
Previous wording
•Tempur Sealy North America gross margin improved 2,390 basis points. The improvement in gross margin was primarily driven by the achievement of synergies of 620 basis points, the elimination of sales to Mattress Firm of 450 basis points, lower product launch costs and operational efficiencies. Additionally, in 2025, we incurred $78.0 million of one-time business combination accounting adjustments related to the Mattress Firm Acquisition, which were not incurred in 2026.
Current wording
2025, we incurred $78.0 million of one-time business combination accounting adjustments related to the Mattress Firm Acquisition, which were not incurred in 2026.
Previous wording
•Tempur Sealy International gross margin improved 140 basis points. The improvement in gross margin was primarily driven by favorable mix of 70 basis points and operational efficiencies.
Current wording
•Tempur Sealy International gross margin improved 40 basis points. The improvement in gross margin was primarily driven by operational efficiencies.
Previous wording
•Mattress Firm operating expenses increased $55.1 million, or 29.9%, and decreased 410 basis points as a percentage of net sales. The increase was primarily driven by the inclusion of operating expenses for a full quarter as compared to the first quarter of 2025, which included operating expenses for the stub period.
Current wording
•Mattress Firm operating expenses increased $33.1 million, or 7.3%, and decreased 250 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by the inclusion of operating expenses for a full quarter in the first quarter of 2026 as compared to the first quarter of 2025, which included operating expenses for the stub period.
Previous wording
•Tempur Sealy North America operating expenses decreased $5.0 million, or 2.5%, and increased 630 basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreases in general, administrative and other expenses and other selling and marketing, partially offset by investments in advertising.
Current wording
•Tempur Sealy North America operating expenses decreased $1.4 million, or 0.3%, and increased 460 basis points as a percentage of net sales. The decrease in operating expenses was primarily driven by decreases in general, administrative and other expenses and other selling and marketing, partially offset by investments in advertising.
Previous wording
•Tempur Sealy International operating expenses increased $14.8 million, or 14.4%, and decreased 30 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 $17.4 million, or 8.4%, and decreased 10 basis points as a percentage of net sales. The increase in operating expenses was primarily driven by investments in growth initiatives.
Previous wording
•Corporate operating expenses decreased $41.6 million, or 48.9%. The decrease in operating expenses was primarily driven by decreased transaction costs related to the Mattress Firm Acquisition.
Current wording
•Corporate operating expenses decreased $43.6 million, or 31.5%. The decrease in operating expenses was primarily driven by decreased transaction costs related to the Mattress Firm Acquisition in 2025, which were not incurred in 2026.
Previous wording
•Mattress Firm operating income increased $26.6 million and operating margin improved 270 basis points. The improvement in operating margin was primarily driven by operating expense leverage of 410 basis points, offset by the decline in gross margin of 140 basis points.
Current wording
•Mattress Firm operating income increased $22.8 million and operating margin improved 60 basis points. The improvement in operating margin was primarily driven by operating expense leverage of 250 basis points, offset by the decline in gross margin of 220 basis points. Additionally, in 2025, we incurred a $4.1 million loss on disposal of business associated with the divestiture of 73 retail stores, which was not incurred in 2026.
Previous wording
•Tempur Sealy International operating income increased $13.8 million and operating margin improved 160 basis points. The improvement in operating margin was driven by improvement in gross margin of 140 basis points and operating expense leverage.
Current wording
•Tempur Sealy International operating income increased $11.2 million and operating margin improved 50 basis points. The improvement in operating margin was primarily driven by the improvement in gross margin of 40 basis points and operating expense leverage of 10 basis points.
Previous wording
Our income tax provision increased $49.9 million due to an increase in income before income taxes. Our effective tax rate for the first quarter of 2026 as compared to the prior year declined by 920 basis points. The effective tax rates as compared to the U.S. federal statutory rate for the first quarter of 2026 and 2025 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 increased $83.9 million driven by an increase in income before income taxes and certain discrete items, as discussed below. Our effective tax rate for the six months ended June 30, 2026 as compared to the prior year increased 4,970 basis points. The effective tax rate as compared to the U.S. federal statutory rate for the six months ended June 30, 2026 and 2025 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 $110.8 million and $134.9 million as of March 31, 2026 and December 31, 2025, respectively. We had a working capital deficit of $360.5 million as of March 31, 2026, as compared to working capital deficit of $271.1 million as of December 31, 2025.
Current wording
Cash and cash equivalents were $112.0 million and $134.9 million as of June 30, 2026 and December 31, 2025, respectively. We had a working capital deficit of $434.0 million as of June 30, 2026, as compared to working capital deficit of $271.1 million as of December 31, 2025.
Previous wording
Cash provided by operating activities increased $140.1 million in the three months ended March 31, 2026 as compared to the same period in 2025, primarily driven by strong operational performance across all segments.
Current wording
Cash provided by operating activities increased $190.3 million in the six months ended June 30, 2026 as compared to the same period in 2025, primarily driven by strong operational performance across all segments.
Previous wording
Cash used in investing activities decreased $2,798.2 million in the three months ended March 31, 2026 as compared to the same period in 2025. The decrease in cash used in investing activities was primarily driven by the Mattress Firm Acquisition in 2025.
Current wording
Cash used in investing activities decreased $2,763.0 million in the six months ended June 30, 2026 as compared to the same period in 2025. The decrease in cash used in investing activities was primarily driven by the Mattress Firm Acquisition in 2025.
Previous wording
Cash used in financing activities decreased $1,346.8 million in the three months ended March 31, 2026 as compared to the same period in 2025. We had net repayments of $134.4 million on our credit facilities in 2026 as compared to net borrowings of $1,217.3 million in 2025, which was driven by the Mattress Firm Acquisition. Share repurchases of our common stock to satisfy tax withholding obligations upon the vesting of our long-term incentive plans decreased $11.3 million in 2026 as compared to in 2025. Dividends paid to shareholders increased $3.8 million in 2026 as compared to 2025.
Current wording
Cash used in financing activities increased $1,324.2 million in the six months ended June 30, 2026 as compared to the same period in 2025. We had net repayments of $272.1 million on our credit facilities in 2026 as compared to net borrowings of $1,098.5 million in 2025, which were driven by the Mattress Firm Acquisition. Share repurchases of our common stock to satisfy tax withholding obligations upon the vesting of our long-term incentive plans decreased $106.2 million in 2026 as compared to 2025. Dividends paid to shareholders increased $8.1 million in 2026 as compared to 2025. Proceeds from exercise of stock options decreased $49.1 million as compared to 2025.
Previous wording
Capital expenditures totaled $60.5 million and $24.0 million for the three months ended March 31, 2026 and 2025, respectively. We currently expect our 2026 capital expenditures to be approximately $225 million, including $75 million of one-time investments to refresh Mattress Firm stores.
Current wording
Capital expenditures totaled $115.2 million and $60.7 million for the six months ended June 30, 2026 and 2025, respectively. We currently expect our 2026 capital expenditures to be approximately $225 million, including $75 million of one-time investments to refresh Mattress Firm stores.
Previous wording
Our total debt decreased to $4,577.9 million as of March 31, 2026 from $4,717.3 million as of December 31, 2025. Total availability under our revolving senior secured credit facility was $762.7 million as of March 31, 2026. 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 decreased to $4,436.3 million as of June 30, 2026 from $4,717.3 million as of December 31, 2025. Total availability under our revolving senior secured credit facility was $897.7 million as of June 30, 2026. 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, 2026, 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 3.07 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, 2026, 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, 2026, 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 2.99 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, 2026, 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, 2026, we did not repurchase shares under our share repurchase program. As of March 31, 2026, 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, 2026, we did not repurchase shares under our share repurchase program. As of June 30, 2026, we had $774.5 million remaining under our share repurchase authorization.
Previous wording
We manage our share repurchase program based on current and expected cash flows, share price and alternative investment opportunities. In 2026, we expect to return to our target leverage range of 2.0 to 3.0 times and allocate at least 50% of free cash flow, which is a non-GAAP financial measure, to dividends and share repurchases. 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," in the 2025 Annual Report. Please also refer to "Issuer Purchases of Equity Securities" in ITEM 2(c) of Part II of this Report.
Current wording
We manage our share repurchase program based on current and expected cash flows, share price and alternative investment opportunities. In 2026, we expect to allocate at least 50% of free cash flow, which is a non-GAAP financial measure, to dividends and share repurchases. 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," in the 2025 Annual Report. Please also refer to "Issuer Purchases of Equity Securities" in ITEM 2(c) of Part II of this Report.
Previous wording
As of March 31, 2026, we had $873.5 million of liquidity, including $110.8 million of cash on hand and $762.7 million available under our 2023 Credit Agreement. In addition, we expect to generate cash flow from operations in the full year 2026. 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, 2026, we had $1,009.7 million of liquidity, including $112.0 million of cash on hand and $897.7 million available under our 2023 Credit Agreement. In addition, we expect to generate cash flow from operations in the full year 2026. 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.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Net sales decreased 3.0%, and on a constant currency basis decreased 3.3%. The change in net sales was driven by the following:
Current report — wording carried from elsewhere
Our income tax provision increased $34.0 million due to an increase in income before income taxes. Our effective tax rate for the three months ended June 30, 2026 as compared to the prior year increased by 2,210 basis points. The effective tax rate as compared to the U.S. federal statutory rate for the three months ended June 30, 2026 included the favorable 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, 2025 included the favorable impact of the deductibility of stock compensation in the U.S. and a net unfavorable impact of other discrete items.
Current report — wording carried from elsewhere
SIX MONTHS ENDED JUNE 30, 2026 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
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
Gross margin improved 360 basis points. The primary drivers of changes in gross margin by segment are discussed below:
Current report — wording carried from elsewhere
Selling and marketing expenses include sales and marketing compensation, advertising and media production associated with the promotion of our brands, and other marketing materials such as catalogs, brochures, videos, product samples, direct customer mailings and point of purchase materials. 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, information technology, professional fees, depreciation and amortization of long-lived assets not used in the manufacturing, distribution and retail store operations, expenses for administrative functions and research and development costs.
Current report — wording carried from elsewhere
Operating income increased $195.7 million and operating margin improved 520 basis points. The primary drivers of changes in operating income and operating margin by segment are discussed below:
Current report — wording carried from elsewhere
•Corporate operating loss decreased $44.5 million, which positively impacted our consolidated operating margin.
Current report — wording carried from elsewhere
Interest expense, net, decreased $14.8 million, or 11.1%. The decrease in interest expense, net, was primarily driven by lower interest rates on outstanding variable rate debt.