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.

• Mattress Firm contributed $593.7 million in sales for the stub period, expanding omni-channel reach and outperforming the broader industry.

• Reported net loss of $33.1 million due to $114.2 million in acquisition-related and $51.9 million in transaction costs, while adjusted net income rose to $97.0 million.

• Progress on synergy initiatives post-acquisition, with $15 million in cost synergies expected in 2025, up from $10 million previously.

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

Financial highlights

• Consolidated Q1 sales were $1,604.7 million; adjusted EPS was $0.49; adjusted net income was $97.0 million.

• Gross margin declined to 36.2% from 39.9% year-over-year; adjusted gross margin improved to 42.2% from 40.1%.

• Adjusted EBITDA was $247.9 million, up from $198.2 million year-over-year.

• Operating cash flow for Q1 was $106 million; total debt at quarter-end was $5.1 billion; leverage ratio at 3.51x.

• Mattress Firm Q1 net sales were $594 million (partial quarter), with adjusted gross margin at 35.1% and operating margin at 7.2%.

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 between $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 of 2025.

• Gross margins expected slightly above 44% for 2025, with $700 million in advertising investment and adjusted EBITDA of $1.2–$1.3 billion.

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