Somnigroup International (SGI) Business update summary

Strategic rationale and integration

• Closed the acquisition of Leggett & Platt, expanding global scale, vertical integration, and operational flexibility.

• Leggett & Platt will operate as a standalone business unit, maintaining a decentralized model to stay close to customers and markets.

• The acquisition deepens supply chain control, brings component engineering closer to mattress design, and supports accelerated innovation cycles.

• Leggett & Platt's non-bedding businesses represent about 12% of consolidated EBITDA and will be evaluated for long-term fit, with no immediate plans for divestiture.

• Leadership strengthened with Tyson Hagale as President and Karl Glassman continuing as CEO of Leggett & Platt.

Financial impact and guidance

• Transaction is expected to be $0.35–$0.40 accretive to annualized EPS before synergies, with $0.10 accretion for partial year 2026.

• Annual synergy target increased by 50% to $75 million, with $25 million expected by 2027 and full realization over three years.

• Synergies include $35 million from sourcing, $30 million from operations, and $10 million from innovation.

• Net financial leverage reduced by 0.2x, with year-end leverage expected at midpoint of 2x–3x adjusted EBITDA.

• Long-term EPS target of $5.15 for 2028 remains in play, with upside potential if industry recovers.

Operational and market outlook

• Over 90% of U.S. spring needs will be internally sourced by 2027, enhancing cost savings and integration.

• Leggett & Platt's restructuring removed $70 million in annual costs, positioning for strong margin flow-through as industry recovers.

• Fixed/variable cost structure now about 30% fixed, 70% variable, supporting attractive flow-through as volumes rise.

• No significant channel conflict expected with third-party bedding customers; focus remains on omni-channel strategy.

• Industry rebound depends on improved consumer confidence and effective advertising, with structural demand seen as intact.