Somnigroup International (SGI) Q4 2024 earnings summary

Executive summary

• Completed the merger of Mattress Firm and Tempur Sealy, rebranding as Somnigroup International and listing under the ticker SGI, establishing the world's largest bedding company.

• Q4 2024 net sales were $1.21 billion, up 3.2% year-over-year, with adjusted EPS of $0.60, outperforming expectations due to strong international performance.

• North America sales remained steady despite industry declines, while international sales surged 14% year-over-year, driven by new product launches.

• Achieved the strongest sales, gross margins, and operating margin in three years, with $569 million in free cash flow for 2024.

• Quarterly cash dividend increased 15% to $0.15 per share, marking the fifth increase since 2021.

Financial highlights

• Q4 2024 consolidated sales: $1.21 billion; adjusted EPS: $0.60; adjusted net income grew 14.2% to $107.2 million.

• International net sales up 14% (13% constant currency); international gross margin at 58%, operating margin at 21.2%.

• North America adjusted gross margin improved to 40.8%; operating margin declined to 14.8% due to higher advertising and reserves.

• Free cash flow for 2024: $569 million; leverage ratio improved to 2.31x adjusted EBITDA for 2024.

• Full-year 2024 net sales were $4.93 billion, up 0.1% from 2023; adjusted EPS for the year was $2.55, up 6.3%.

Outlook and guidance

• 2025 adjusted EPS guidance: $2.60–$3.00 (midpoint 10% growth vs. 2024); sales after intercompany eliminations: $7.5–$7.8 billion.

• Long-term target: compound annual sales growth in mid-single digits from 2026, with adjusted EPS expected to reach ~$4.85 by 2028.

• Anticipated $100 million in annual run-rate synergies by 2028; $10 million synergy benefit expected in H2 2025.

• 2025 CapEx: ~$250 million, including $50 million for Mattress Firm store refresh.

• Guidance includes 11 months of Mattress Firm operations and a planned divestiture.