Somnigroup Q4 2025 Earnings Call - Mattress Firm integration powers record results and lifts 2028 EPS target

Speaker 6: I would now like to turn the conference call over to Aubrey Moore, Investor Relations. Please go ahead.

Aubrey Moore, Investor Relations, Somnigroup: Thank you, operator. Good morning, and thank you for participating in today’s call. Joining me today are Scott Thompson, Chairman, President, and CEO, and Bhaskar Rao, Executive Vice President and Chief Financial Officer. This call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve uncertainties, and actual results may differ materially due to a variety of factors that could adversely affect the company’s business. These factors are discussed in the company’s SEC filings, including its annual reports on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statement speaks only as upon the date it, from which it is made. The company undertakes no obligation to update any forward-looking statements. This morning’s commentary will include non-GAAP financial information.

Reconciliations of this non-GAAP financial information can be found in the accompanying press release, which has been posted on the company’s website at www.somnigroup.com and filed with the SEC. Our comments will supplement the detailed information provided in the press release. Finally, before I turn the call over to Scott, I want to take a moment to share that this is my final earnings call in this role. I am transitioning to Somnigroup Vice President, Consumer and Market Intelligence. I’m pleased to say that Lauren, who many of you know well, will be leading investor relations going forward. It has been a privilege to work closely with our investor community, and I’m confident Lauren will continue to serve as a strong partner going forward. And with that, it is my pleasure to turn the call over to Scott.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Aubrey, thank you for your outstanding contributions to investor relations. Maybe even a bigger thank you for you jumping into your new role at SGI. It is important to our future success. Moving on to today’s earnings call. Good morning, thank you for joining us on our fourth quarter and full year 2025 earnings call. I’ll begin with highlights for the quarter and full year, and then turn the call over to Bhaskar to review our financial performance in more detail and discuss our 2026 guidance and our updated three-year EPS targets. After that, I’ll open the call up for Q&A. In the fourth quarter of 2025, we achieved record net sales and adjusted EBITDA, while our adjusted EPS increased a robust 20%. Year-over-year, net sales were up approximately 55% to $1.9 billion.

Adjusted EBITDA was up approximately 59% to $349 million, and adjusted EPS was $0.72 per share. This financial performance was particularly notable, given it was achieved while the industry is at a record low and underperformed our expectations. 2025 proved to be another challenging year for the bedding industry. We estimate the US industry trend declined mid-single digits in the fourth quarter and full year. The non-US markets we operate in were similarly challenged. After multiple year headwinds, we are confident the bedding industry will normalize to at least historical growth trends in the near future. Our conviction and our industry outlook is supported by our demand-driven innovation, compelling advertising, the industry’s pent-up product demand, growing health and wellness trends, consumer confidence, and future growth in housing formation.

We’ll continue to strive to win market share gains, drive cost efficiencies, and prudently allocate capital, all to deliver shareholder returns. Before turning the call over to Bhaskar, let me highlight several notable achievements in 2025, which marked a transformational year for Somnigroup. Our first highlight is the successful execution of the Mattress Firm combination and transition to Somnigroup International. We’ve made significant progress with the combination in our first year, and we’re still in the early stages of realizing all of the benefits. We brought all of our business units together through a holding company structure with unified management and a shared business strategy and focus. This structure allows us to operate effectively while maintaining a large degree of independence at the business unit level.

Building upon the successful combination of Mattress Firm, we were able to accelerate the pace of sales and cost synergies, exceeding our initial expectations. We now expect to deliver $225 million in total EBITDA synergies, $125 million in cost synergies, and $100 million from sales synergies. Bhaskar will provide more color on the increase in our cost synergy outlook in just a moment. We’ve cemented our position as the largest bedding company in the world, allowing us to drive economies of scale, streamline operations, reduce product cost, invest in advertising, and fully support industry partners. Lastly, this transaction drove earnings, de-risked distribution volatility, as we are now 65% direct to consumer and positioned us for sustainable growth. Our second highlight is the strength of our operating model....

which allows us to aggressively execute its long-term growth initiatives while remaining responsive to current market conditions. In 2025, we drove share gains across all business segments, extending our lead as the world’s largest bedding company. Our competitive advantage underpin these strong results and include a diverse portfolio of trusted brands and innovative products, our unmatched global scale and vertically integrated business model, a broad omni-channel reach with our products sold through tens of thousands of third-party retail stores worldwide and direct-to-consumer. And finally, our strong cash generation and disciplined capital allocations, which supports reinvestment in the business, returning cash to shareholders, de-leveraging, and providing dry powder to capitalize on compelling opportunities, such as our recent investments in Purple and Kingsdown. The third highlight is the outperformance of our U.S. Tempur Sealy business, supported by innovative new products, targeted advertising initiatives, and expanded distribution.

In 2025, we launched our all-new Sealy Posturepedic line, the largest launch in our history, with over 65,000 floor samples shipped. The launch is performing well, and the new collection is driving meaningful sales growth. This year also marked the first national advertising investment to support the Sealy brand and product, amplifying Sealy’s share voice and driving valuable customer traffic industry-wide. As we look ahead to 2026, we’re excited to continue investing in national advertising designed to drive traffic to retailers and reinforce our commitment to innovation with the launch of our new Stearns and Foster products in the back half of the year. Fourth highlight is that Mattress Firm’s full-year performance outpaced the broader U.S. market, driven by our refined merchandising strategy, strengthened supplier relations, and exceptional in-store execution. Since closing the acquisition, we’ve elevated Mattress Firm’s merchandising.

Our focus has been on curating a portfolio of complementary products that deliver exceptional quality and value across all price points. We deepened partnerships with some suppliers, who not only met our quality standards, but also actively supported Mattress Firm’s success through differentiated offerings and traffic-driving advertising initiatives. We also activated multiple initiatives to deliver retail excellence, including optimizing marketing strategies, enhancing the in-store experience, and leveraging our best-in-class retail talent, supporting them with quality sales tools and training to provide customers with targeted sleep solutions. Additionally, we’re making steady progress on our plan to invest $150 million between 2025 and 2027 to refresh certain Mattress Firm stores, bringing them up to our brand standards. Further, we’ve ramped installation of Tempur brand walls, which lead to improved customer engagement and education.

These brand walls, placed at both Mattress Firm and other retailers, have proven to be a worthwhile investment by driving higher retail ASP. We made substantial progress in expanding this initiative in the back half of 2025, and we remain firmly on track to complete the rollout across all Mattress Firm stores nationwide by the end of the year. As previously mentioned, we undertook a new advertising strategy for Mattress Firm to harmonize the message with Somnigroup initiatives, culminating in the launch of our new Mattress Firm advertising campaign, Sleep Easy, in the back half of 2025. We introduced new campaign iterations into the marketplace over the last quarter and continued to achieve all-time high market research scores.

Key performance indicators consistently indicate that the campaign is having a measurably positive impact upon customers’ impression of Mattress Firm and the brands being presented, enhancing awareness and triggering consumers’ interest in bedding, benefiting all bedding retailers. Campaign’s strong performance has already prompted two non-SGI vendor partners to commit additional advertising dollars directly to Mattress Firm to capitalize on the opportunity both our scale and our new messaging platform now clearly represents for bedding brands. We are pleased with these preliminary results and expect to see additional momentum as the campaign becomes more established in the market. Our fifth highlight is related to our international business. We saw impressive sales growth, demonstrating the long-term global growth opportunity ahead.

Our Tempur international business delivered low double-digit sales growth in the quarter, or on a constant currency basis, high single-digit sales growth in the fourth quarter and full year, outpacing the broader industry while navigating a challenging market. This marks our third consecutive year of solid growth across all key international regions, driven by the refreshed Tempur product lineup, standard distribution reach, and enhanced marketing investments. Dreams, our U.K.-based retail brand, also posted another solid year of market outperformance, driven by conversion and increased order volume. Full year performance was supported by robust same-store sales and strategic new store openings. The team continued to deliver operational efficiencies, execute on growth initiatives, and uphold exceptional product quality and customer satisfaction, driving share gains against a challenging U.K. bedding market.

Overall, we’re pleased with the momentum we’ve accumulated during 2025 and look forward to carrying that momentum into 2026. With that, I’ll turn the call over to Bhaskar.

Bhaskar Rao, Executive Vice President and Chief Financial Officer, Somnigroup: Thank you, Scott. In the fourth quarter of 2025, consolidated sales were $1.9 billion, and Adjusted earnings per share was $0.72, up 20% over the prior year. There are approximately $10 million of pro forma adjustments in the quarter, all of which are consistent with the terms of our senior credit facility. As a reminder, we have aligned accounting for store occupancy costs across Somnigroup, which resulted in Tempur Sealy reclassifying their store occupancy costs from operating expense to cost of goods sold. We’ve adjusted prior year Tempur Sealy financial information included in today’s earnings release to reflect the change for ease of comparability.

As a reminder, year-over-year comparisons are impacted by the acquisition of Mattress Firm in the first quarter of 2025 and the related divestitures of Sleep Outfitters and certain Mattress Firm retail locations in the second quarter of 2025. I will be highlighting like-for-like comparisons, defined as reported numbers, adjusted for the acquisition and divestiture impacts to normalize for these items in our commentary. Now, turning to Mattress Firm results. Net sales through Mattress Firm were approximately $890 million in the fourth quarter and declined 3% on a like-for-like basis. Same-store sales were flattish, outperforming a market we believe declined mid-single digits in the quarter. Mattress Firm’s adjusted gross margin was 32.4%, and adjusted operating margin was 5.4%. Turning to Tempur Sealy North American results.

Like-for-Like net sales through the wholesale channel increased approximately 6% in the fourth quarter, normalizing for the previously disclosed or closed distribution. Our sales with third-party retailers were flattish on a Like-for-Like basis, outperforming the broader industry by a solid margin. Like-for-Like net sales through the direct channel declined 7% in the fourth quarter, as our direct Tempur stores underperformed our expectations and our e-commerce sales faced difficult comps. North American adjusted gross margins increased 2,000 basis points to 59.5%, primarily driven by the elimination of the intercompany sales to Mattress Firm from Tempur Sealy. On a Like-for-Like basis, North American gross margins increased 250 basis points versus the prior year, primarily driven by operational efficiencies and mix, as the premium consumer demonstrated continued resilience.

North American adjusted operating margins improved 1,300 basis points to 27.6%, primarily driven by Mattress Firm intercompany sales elimination. On a like-for-like basis, North American adjusted operating margins increased 450 basis points versus the prior year, primarily driven by the improvement in gross margin and fixed cost leverage. Now turning to international results. International net sales grew a robust 13% on a reported basis and 9% on a constant currency basis. Our international gross margins increased 40 basis points to 51.1%, primarily driven by operational efficiencies, offset by modest headwinds from a competitive UK marketplace. Our international operating margin increased 110 basis points to 22.4%, driven by the expansion in gross margins and fixed cost leverage. Now, turning to our sales and cost synergy targets.

In 2025, we achieved a $60 million benefit in adjusted EBITDA from sales synergies ahead of our initial expectations. We exited the year at a low 60% of Mattress Firm’s total sales, averaging mid-50s for the full year. At the same time, Purple and Kingsdown both grew share at Mattress Firm. We will see the wraparound effect of Tempur Sealy share gains in 2026, resulting in an incremental $40 million of EBITDA benefit and positioning us to confidently deliver on our $100 million run rate sales synergy target.

Since we have held Mattress Firm sales flat in estimating this balance of share opportunity, we expect the synergy benefit to grow as we start to see the U.S. bedding industry normalize. On cost synergies, I’m excited to share that we are increasing our estimate to $125 million, with $20 million realized in 2025, $55 million expected in 2026, and an incremental $50 million in 2027. Our increased cost synergy outlook is principally being driven by increased expected savings from logistics and supply chain activities. Now moving on to Somnigroup’s balance sheet and cash flow items.

At the end of the fourth quarter, consolidated debt, less cash, was $4.6 billion, and our leverage ratio under our credit facility was 3.2 times, down nearly a third of a turn versus the Mattress Firm acquisition date, demonstrating our strong cash flow generation and disciplined capital allocation. We expect to return to our target leverage range of 2-3 times in the next six months. We also expect lower market interest rates will drive improved cost of our variable rate debt, which will add to future EPS growth. Finally, as we announced this morning, we are increasing our quarterly dividend 13% to $0.17 in 2026. This marks the sixth consecutive year of dividend increases, reflecting our confidence in sustained cash generation. Now turning to guidance.

As a reminder, our guidance considers the elimination of intercompany sales between Mattress Firm and Tempur Sealy, which we expect to represent approximately 23% of global Tempur Sealy 2026 sales. Intercompany eliminations, in accordance with GAAP, will reduce Tempur Sealy sales, but be margin accretive and neutral to dollars of operating profit. Please also note that we acquired Mattress Firm in February 2025. As a result, our first quarter and full year 2026 reported results will reflect the impact of a little over one additional month of Mattress Firm financial results. We expect adjusted earnings per share to be between $3 and $3.40. This guidance range contemplates a sales midpoint of approximately $7.9 billion after intercompany eliminations.

Our annual guidance also reflects our expectation that the global bedding industry will grow slightly versus the prior year, driven by low single-digit growth in the first half of the year. Tempur Sealy North America sales to grow in mid-single digits on a like-for-like basis, and reported sales to be impacted by the intercompany elimination I referenced a moment ago. International business growing mid- to high-single digits, as our legacy international continues to drive new distribution through its product strategy, and Dreams continue to drive share in a competitive UK market. Our like-for-like Mattress Firm sales to grow low- to mid-single digits. We also expect reported gross margin slightly above 45%, driven by approximately 100 basis points of net margin expansion from operational efficiencies, including synergies and fixed cost leverage.

Our 2026 outlook also contemplates our assumption for Tempur Sealy brands and private labels to be in the low 60% of Mattress Firm total sales. This represents about an incremental $40 million of EBITDA benefit for 2026 compared to 2025, and approximately $720 million of advertising investments, all of which we expect to result in adjusted EBITDA of approximately $1.45 billion at the midpoint. Regarding capital expenditures, we expect 2026 CapEx of approximately $250 million, which includes $75 million of investments in Mattress Firm store refreshes and brand wall installations. We expect our CapEx to normalize to $200 million in future years, and for at least 50% of our free cash flow in 2026 to go to quarterly dividends and share repurchases.

Now, I would like to flag a few modeling items. For the full year 2026, we expect D&A of approximately $315 million, interest expense of approximately $225 million on a tax rate of 25%, with a diluted share count of 214 million shares. Lastly, we are raising our 2028 target EPS to $5.15, representing a 24% compound annual growth rate from 2025. We are also targeting mid-single-digit annual sales growth and double-digit annual adjusted EBITDA growth over that period. With that, I’ll turn the call back over to Scott.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Thank you, Oscar. Well done. Now, I want to quickly address our proposed acquisition of Leggett & Platt before opening the call up for Q&A. We welcome Leggett & Platt’s board’s willingness to engage in discussions and conduct customary due diligence, which is currently underway. Somnigroup remains committed to pursuing a transaction that will deliver substantial value to shareholders of both companies.... There can be no assurances regarding the completion of a transaction or the terms of any transactions, and we will not be commenting further on this topic. Lastly, I’d like to headline that we will be hosting an Investor Day in New York on March fourth. During that day, we expect to share more information on our three-year EPS target, our strategic vision for Somnigroup, discuss growth initiatives for Tempur Sealy, Mattress Firm, and Dreams, and provide additional details on our capital allocation strategy.

With that, operator, that ends your call. Please open the call up for questions.

Speaker 6: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. Should you wish to cancel your request, please press the star followed by the two. If you’re using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Susan McClary from Goldman Sachs, Canada. Your line is now open.

Susan McClary, Analyst, Goldman Sachs Canada: Thank you. Good morning, everyone.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Good morning.

Susan McClary, Analyst, Goldman Sachs Canada: Good morning, Scott. My question is around the outlook for demand. Can you talk a bit about the state of the consumer, how you’re thinking about the shape of demand as we come into 2026, and how you’re thinking of the drivers and the potential for out or underperformance relative to the guide for Tempur North America, sales to be up low single digits on a Like-for-Like basis?

Scott Thompson, Chairman, President, and CEO, Somnigroup: Sure, Susan. Thank you for the question. I mean, first thing in demand, I’d say our estimates are for $3, $2.40 for 2026. You know, one of the foundations of it is basically a flat market. We didn’t call a turn in there, and if we had, obviously the flow-through on that guidance is would be significant. But we thought, you know, considering the fourth quarter came in a little light from an industry standpoint, from our expectations, that probably flat was the right way to go into the year, and then we’ll see how demand develops. If you’re talking about how what are we thinking about? Geez, you know, fourth quarter, again, came in a little bit less from an industry standpoint than we expected.

If you look at, you know, the start of the first quarter, it’s kind of a tale of two cities. If you look at the pre-President’s Day holiday period, you know, call it January first to, I don’t know, February tenth or so, you know, we had tough weather, and I hate talking about weather, obviously, but if you talk about short periods, you always have to think about it. And it was tough weather in the U.S. And the way I always look at that is I look at lost days, and if you look at Mattress Firm, we had 5,000 days of store losses that were incremental to last year. So to be clear, that’s not like rain or something.

That means this weather was so bad, the store didn’t open, so we lost 5,000 days of sales during that period off of a possibility of 90,000 days. So it’s about a 6% headwind incrementally in store closings. So as you would expect during that period, Mattress Firm’s same-store sales were slightly down. But then as soon as you get into the President holiday period, which we’ll call that, you know, February 11 forward, sales have been very robust. And when I say very robust, I mean double digits robust, driven by strong AOV, driven by Tempur, clearly a customer that’s in the market wanting to buy.

And the result is, you know, looking at U.S. Mattress Firm sales, ’cause that’s kind of the best index for consumers, and it has real-time data; now we’re running positive same-store sales at Mattress Firm to start the quarter. So when I look at it, it looks like a bedding market and a consumer that wants the market to grow. And we’ve got to get out of our way, whether it be some drama in Washington or whether it be, you know, an unusually strong storm slows you down a little bit, but it does feel like it’s a market that’s poised for growth.

Bhaskar Rao, Executive Vice President and Chief Financial Officer, Somnigroup: And if I could add on to that, then the way to think about the quarter when you put all that together is, from a first quarter sales standpoint, we would expect something in and around positive 14% or a little over $1.8 billion, with EPS growing in and around 20%.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Operator, next question.

Speaker 6: Your next question is from Bobby Griffin from Raymond James. Your line is now open.

Bobby Griffin, Analyst, Raymond James: Good morning, guys. Thanks for taking the questions, and Aubrey, congrats on the new position. It’s been great working with you over the last few years. I guess, Bhaskar and Scott, for my question, I want to maybe unpack the guide a little bit. And Bhaskar, can you help us and just clean up some things in the model in terms of, like, what’s left on the customer transition, as well as I know we have the wraparound benefit of Mattress Firm and some of the divestiture, divestitures. I guess I’m asking in the context, if I take the cost synergies, the EBITDA benefit from the floor shift, as well as our guess at what the one month of Mattress Firm is, we can walk our way pretty close to the midpoint just on those.

So is there anything I’m missing on an offset, or is the way to view that more just conservative in the model? I just want to make sure we’re thinking about all the parts the right way.

Scott Thompson, Chairman, President, and CEO, Somnigroup: ... Sure. Let me, let me give it a try, and then you can follow up as necessary. So when I think about this fundamentally is it’s all based on an industry that’s flat to slightly up. On top of that, what we have is share gains in all of our geos. So internationally growing high single, and in North America, call it that mid-single. And that would get you, let’s call it in and around $7.9 billion. When you go forward from a gross profit standpoint, well, let’s talk about the stub period. So the stub period, you’re correct, is about one month shy relative to prior year, and call that in and around, call it $280 million or so net.

When you think about from a profitability standpoint, is we’re gonna continue to support those brands. We call that about $720 million of advertising to continue to support from a launch standpoint. What’s embedded in there is very nice gross profit improvement. Let’s call it about 100 basis points on a year-over-year perspective, and the principal drivers of that is a couple of things. One is productivity through the plants, and on top of that would be the synergies that we’ve identified. And as noted in the prepared material, we’ve taken that number up about 25 basis points, sorry, $25 million on a year-over-year basis. There is a bit of a headwind associated with, let’s call it, commodities, that would offset from a gross profit standpoint.

If you add all those pieces up, I think fundamentally, the foundation being industry, market share gains, and margin expansion, it gets you to in and around the midpoint. Operator, next question?

Speaker 6: The next question is from Dave Judd Rosich from Bank of America. Your line is now open.

Bhaskar Rao, Executive Vice President and Chief Financial Officer, Somnigroup0: Hi, you have Victoria Pitsker on for Dave Judd Rosich. Thanks for taking our question. I was wondering if you could talk a little bit more about the elasticity of demand and how did price increases impact your volume?

Scott Thompson, Chairman, President, and CEO, Somnigroup: Yeah. You know, we took quite a bit of price over the last couple of years, and I can’t really see any significant impact from a volume standpoint. This is an industry that has always been very efficient in passing actual cost commodity cost increases through the channel, and it looks like it could continue to do that.

Speaker 6: Thank you. The next question is from Dan Silberstein from UBS. Your line is now open.

Dan Silberstein, Analyst, UBS: Thank you, and good morning. Appreciate you taking our question. Maybe just to build on Bobby’s question, if we kind of expand that out to the 2028 target, is the raise there just the additional synergies, or has anything else changed on kind of the outlook on the pace of an industry recovery or Somnigroup’s growth against that industry? Thank you.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Great question. Some of it is synergies and success that we’ve achieved in synergies, plus what we see going into the funnel, from a synergy standpoint, primarily in the area of logistics.

Dan Silberstein, Analyst, UBS: Mm-hmm

Scott Thompson, Chairman, President, and CEO, Somnigroup: ... and advertising. The other probably big driver would be when we look at our relative competitive position, and it’s a little early in the reporting quarter to have, you know, all the numbers and have the industry fully analyzed. But we think we took a major step forward from a competitiveness and everywhere we look. I’d highlight that we’re growing in all of our geos, and those are in markets that we believe had a tough, tough fourth quarter. So again, I guess it’s confidence in our competitive position and synergies are the main drivers. And I mean, if the industry turns in 2026, which we did not embed in our guidance, our guidance range would be light.

Bhaskar Rao, Executive Vice President and Chief Financial Officer, Somnigroup: You know, to wrap around the perspective of $515, what we’re excited about is the ability to take it up in light of an industry in 2025 that did not achieve what we thought it would be when the original $485 was put out there. So we did have some wins, as Scott said, competitive positioning, revenue synergies, cost synergies, et cetera, that allowed us to take the number to $515.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Then at the conference in New York here in a few weeks, we’ll give you more detail in the buildup to that $5.15, I think, which will give you more confidence that raise was appropriate.

Speaker 6: Thank you. The next question is from Peter Keith, from Piper Sandler. Your line is now open.

Peter Keith, Analyst, Piper Sandler: Hi, thanks. Good morning, everyone, and congrats to Aubrey and to Lauren. I wanted to just ask about the lack of product launches in the first half. With the gross margin guide of 100 basis points, could we see a little bit of excess gross margin expansion in the first half with no product launches, and then the opposite of that in the second half? And then, Scott, also, product launches usually are a big sales driver, so you’re anticipating gaining market share, Tempur North America. I guess, can you walk us through the rationale on that? Because product launches usually are a nice sales accelerant.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Yeah, a lot in that question, and I’ll start with it, and Bhaskar, and you, you can clean me up. You know, when we do a product launch, yeah, you do get more sales, but those sales are obviously much lower profit margin, closer more to break even. So it’s kind of a mixed bag. If you look what’s in the marketplace, we’ve got great products in the marketplace. You see we Posturepedic launch, the Tempur stuff. We do have a small launch later in the year, Stearns and Foster, but from a competitive standpoint, we feel very good about our, the launches. So I think we’re well positioned to continue to take share of what we’ve got in the market, back with advertising. You wanna talk to the gross margin?

Bhaskar Rao, Executive Vice President and Chief Financial Officer, Somnigroup: Absolutely. Peter, good question. So when I think about the full year, if I were to step back on the sales and let’s call it the EBIT or the fall-through line, it is effectively a push, but there is some first half, back half phasing. So think about it as a sales headwind in the first half, call it about $20 million or so, and effectively reversing in the back half. From a margin standpoint, you are correct. There is. If you look at it in isolation, the gross profit will be impacted more so in the first half of the year versus the back half of the year. However, we are also, again, as we announced, the synergy opportunity and the productivity is that as the year progresses, those things will progress as well.

But fundamentally, when you look at the full floor models in and of itself, yes, first half, back half impact. Net full year, basically nothing.

Speaker 6: Thank you. Your next question is from Brad Thomas, from KeyBanc Capital Markets. Your line is now open.

Brad Thomas, Analyst, KeyBanc Capital Markets: Hi, good morning. Thank you for taking the question. The question is about the changes at Mattress Firm from a consumer and an operational perspective. Scott, it does feel, seem like even with same store sales having slowed a bit in the fourth quarter, that that’s more a function of the industry and that Mattress Firm is still really outperforming. But I was hoping you could just comment a little bit on, you know, how you measure that the new lineup is resonating with the consumer, and then how we should think about kind of the pace of change that we’re putting in place. And then maybe just finally, any more details you could share on the timing of Purple, Kingsdown, some of the other changes that you’re doing here this year. Thank you.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Sure. So I mean, to summarize the question, Scott, can you tell me everything you know about Mattress Firm? Just kidding. Look, from everything we see, Mattress Firm continues to take share, both in the fourth quarter and start of the first quarter. So I would say that’s evidence of resonating with customers. As far as performance, you’re seeing share growth, and we’ll call it the family brands, the Tempur Sealy brands, particularly Tempur, you’re seeing growth in Kingsdown, which is doing a great job for us, and you’re seeing growth in Purple, and there’s a test going on in Kingsdown, considering expanding it, and then the new Purple high-end bed will be hitting the floor at Mattress Firm, I think late first quarter.

You know, we get a lot of feedback from our RSAs, and I think the merchandising changes have been well received, both in store and with consumers. And Nectar is doing well. I forgot to mention Nectar has been doing well on the floor. So you know, overall, I couldn’t be happier with our merchandising changes, both the way they’ve been executed, the pace they’ve been executed, and how the market has received them.

Speaker 6: Thank you. Your next question is from Jeff Lack from Stevens. Your line is now open.

Jeff Lack, Analyst, Stevens: Good morning. Thanks for taking my question. Aubrey and Lauren, congrats on the new roles, and, Scott, nice to reconnect with you. It’s been a long time. Question, Scott, I was wondering, you know, now that you’ve had Mattress Firm, you know, pretty much for an entire year, you know, you had mentioned on your prepared remarks about, some marketing step up from some of your partners. Just curious, you know, how you’re seeing, you know, I know this is a little sensitive, but just owning Mattress Firm, you know, the competitive dynamics or the strategic dynamics, any thoughts there on how that, kind of meshes with your original expectations when you bought it?

Scott Thompson, Chairman, President, and CEO, Somnigroup: Yeah, a couple of things. Great question, and good to hear from you. I guess starting with the advertising, you know, we completely changed the advertising message and the approach. It’s kind of built in a way that there’s a Mattress Firm message, and then you can kind of plug in a brand and product into the ad and get a, you know, a one-two punch. Obviously, we’re doing that with the family brands, the Tempur, Sealy, Stearns & Foster, but we’re also doing it with other brands, well, third-party brands. That’s been effective. In fact, it’s been so effective that other manufacturers are giving us incremental support, incremental outside of, we’ll call it normal support, to take some positions in those ads.

Because they’re seeing when they do it drives traffic not only on the Mattress Firm floor, but it also drives their brand at other third-party retailers. So it’s become a very, it’s a very effective way for them to get to market. And so couldn’t be happier with the way that program has worked, and I think the third-party manufacturers who participated in it are happy with that, too. As it relates to, I’ll call it channel dynamics or those kind of things, we have a term called Other, Other, ’cause it’s a short way to say how are the other retailers doing in the US that are not Mattress Firm, and how are the sales of Tempur Sealy products? We call it Other, Other.

And if you look at other sales, we think that they are outperforming the general market. So we think we’re taking share in the other area, too. And so I’m not seeing any significant channel conflict. I think everybody understands that the advertising we’re doing is helping drive product, not just at our retail stores, but throughout the industry, and it found good support. It’s probably gone better than I probably initially thought. Wasn’t too worried about it, but you gotta work, work through it. So no, I think, I think the Mattress Firm acquisition, you know, if you take the price, you take the performance, you take the synergies that have been realized, I think, we would say that it’s, it’s been very good, from our standpoint.

Jeff Lack, Analyst, Stevens: Thanks very much for taking the question. Best of luck.

Speaker 6: Thank you. Your next question is from Bobby Griffin from Raymond James. Your line is now open.

Bobby Griffin, Analyst, Raymond James: Hey, guys. Thanks for letting me back in the queue. Scott, I just... You know, we spent a lot of time on North America, but honestly, international just continues to be a bright spot there with robust kind of constant currency growth on top of a really good quarter last year. I understand you guys did a lot of work on the product portfolio, but help us understand, like, how much is new door growth versus how much is throughput or slot velocity? And then when we think about the opportunity international, like, do you still see a robust amount of new door potential, or is it more just continuing the velocity? Just help us think about the sustainability of what is turning into a nice bright spot in the story.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Yeah, I mean, great call out. International has been growing for a couple of years, very strong, again, in not a great market, which is particularly impressive. As you know, from an international standpoint, we don’t have a large balance of share internationally, so it is a long-term growth trajectory that we are very, very bullish on. Bosco, do you know the split between new distribution and velocity? Because we’re getting both internationally.

Bhaskar Rao, Executive Vice President and Chief Financial Officer, Somnigroup: Absolutely. So when you think about the growth over the last couple of years, it’s been principally at its existing distribution. And what existing distribution looks like is perhaps a few more slots in stores that we’re in, but really improving the velocity per slot on where we’re at. And really, what that does is that we have to prove ourselves in the international market. As Scott said, we have relatively low share relative to the U.S. Also, a very difficult execution. The borders, they’re not states, they’re countries, so it is a tougher slug. So the key there is making sure you have the right product, advertise ahead of that to educate the retailers and the consumers, therefore, you get the incremental slots within the store, prove yourself in those stores, and then get into new distribution.

When I think about the next leg of growth internationally, continue to do what we’re doing, but also expand the distribution outside of our historic footprint.

Speaker 6: Thank you. There are no further questions at this time. I will now hand the call back over to Scott Thompson for the closing remarks.

Scott Thompson, Chairman, President, and CEO, Somnigroup: Thank you, operator. To our 20,000 associates around the world, thank you for what you do every day to make the company successful. To our retail partners, thank you for your outstanding representation of our brands. To our shareholders and lenders, thank you for your confidence in the company’s leadership and its board of directors. This ends the call today, operator. Thank you.

Speaker 6: Thank you, ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your line.