Somnigroup International (SGI) Q3 2024 earnings summary

Executive summary

• Net sales increased 1.8% to $1.3 billion, with international growth offsetting a slight North America decline.

• Adjusted EBITDA rose 6% to $275 million, and net income increased 14.7% to $130 million.

• GAAP EPS grew 14% to $0.73, and adjusted EPS rose 6.5% to $0.82 per share.

• The pending $4.0 billion Mattress Firm acquisition faces FTC litigation, with divestiture agreements and financing in progress.

• Stearns & Foster was the strongest-performing brand, with new product launches driving growth.

Financial highlights

• Adjusted EBITDA margin reached 21.1%, the highest in 10 quarters.

• Gross margin improved to 45.4%, and adjusted gross margin reached 46.2%.

• Free cash flow was $240 million, and operating cash flow for Q3 was $257 million.

• North America net sales declined 0.8%, while international net sales grew 12.4%.

• Consolidated debt less cash was $2.2 billion; leverage ratio at 2.41x.

Outlook and guidance

• 2024 adjusted EPS guidance narrowed to $2.45–$2.55, implying 4% growth at the midpoint.

• Full-year sales expected to be slightly below prior year; Q4 sales projected consistent with prior year.

• U.S. bedding industry unit volumes expected down high single digits for 2024.

• Adjusted EBITDA for 2024 projected at approximately $915 million.

• CapEx for 2024 expected at $125 million, with a quarterly dividend of $0.13 per share.