Somnigroup International (SGI) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 2025 reached $1.6 billion, up 34.9% year-over-year, driven by the Mattress Firm acquisition, with adjusted EPS of $0.49 and strong international growth.

• The Mattress Firm acquisition was completed for $5.2 billion, adding $593.7 million in sales for the stub period and expanding omni-channel reach.

• Reported net loss was $33.1 million due to acquisition-related and one-time costs, while adjusted net income rose to $97.0 million, reflecting underlying business strength.

• Integration of Mattress Firm is ahead of schedule, with increased near-term cost synergy expectations and leadership alignment.

• Launched new Sealy Posturepedic collection targeting the mid-to-entry level market.

Financial highlights

• Net sales: $1,604.7 million (up 34.9% year-over-year); adjusted EPS: $0.49; adjusted EBITDA: $247.9 million.

• Gross margin: 36.2% (down from 39.9%); adjusted gross margin: 42.2% (up from 40.1%).

• Operating cash flow was $106 million; consolidated net debt was $5 billion with a leverage ratio of 3.51x.

• Mattress Firm contributed $593.7 million in net sales and $6.8 million in operating income for the stub period.

• Working capital deficit was $268.9 million as of March 31, 2025.

Outlook and guidance

• 2025 adjusted EPS guidance revised to $2.30–$2.65, reflecting 11 months of Mattress Firm operations and recent divestitures.

• Sales after intercompany elimination expected at $7.3–$7.5 billion; CapEx projected at $225–$250 million, including $25–$50 million for Mattress Firm store refresh.

• Bedding industry expected to be down mid-single digits year-over-year, with slight improvement in the second half.

• Board declared a quarterly dividend of $0.15 per share, payable June 5, 2025.

• Target leverage ratio to return to 2.0–3.0x within twelve months post-acquisition.