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Somnigroup International Reports Strong Financial Performance in Q4 and Year-End 2024

Somnigroup International Inc. (formerly known as Tempur Sealy International), listed on NYSE as SGI, has recently announced its financial results for the fourth quarter and the entire fiscal year that ended December 31, 2024. The results, made public on February 20, 2025, reveal a steady increase in sales, profitability, and a promising outlook for the upcoming year. This comprehensive report elucidates the highlights of Somnigroup's performance, its recent acquisition strategies, and management’s perspective on future growth.

Q4 2024 Financial Summary

In the fourth quarter of 2024, Somnigroup reported that net sales surged by 3.2% to $1.2 billion, compared to $1.17 billion in the same quarter of 2023. This increase was driven primarily by a substantial 14.1% growth in international sales, suggesting strong global demand for its products. North America, however, saw a marginal decline of 0.1%, illustrating the contrasting performance dynamics between the domestic and international markets.

The company’s gross margin stood at 43.3%, a slight decrease from the previous year’s 43.8%. Nevertheless, the adjusted gross margin improved, indicating the effectiveness of operational efficiencies implemented during the year. Operating income also reflected a healthy increase of 4.7%, achieving $127.6 million.

Despite a decrease in net income of 6.7%, which recorded $71.9 million compared to $77.1 million in Q4 2023, adjusted net income rose by an impressive 14.2% to $107.2 million. This discrepancy highlights the impact of various charges and expenses that influenced the bottom line.

Earnings per share (EPS) experienced a decrease of 7.0%, landing at $0.40, while adjusted EPS showed a significant improvement, increasing 13.2% to $0.60 per share. This growth is an encouraging sign for investors as it underscores the company's commitment to enhancing shareholder value.

Acquisition of Mattress Firm

One of the most critical developments for Somnigroup has been the acquisition of Mattress Firm, the largest specialty retailer in the U.S. in the mattress sector. Announced earlier as part of its expansion strategy, this acquisition, finalized on February 5, 2025, positions Somnigroup as the world’s leading bedding company.

Chairman and CEO Scott Thompson articulated the significance of this acquisition, emphasizing that it reinforces the company's capabilities across design, manufacturing, and retail. With a diversified portfolio that includes well-known brands such as Tempur-Pedic® and Sealy®, this strategic move is expected to bolster Somnigroup's market penetration significantly.

Dividend Increase and Future Guidance

In line with its strong financial performance, Somnigroup announced a 15% increase in its quarterly dividend, now set at $0.15 per share, highlighting its financial health and commitment to returning value to shareholders. This is the fifth such increase since 2021, indicative of the company's robust cash flow generation capabilities.

Looking ahead, Somnigroup has guided for adjusted EPS between $2.60 and $3.00 for the full year 2025, projecting a 10% increase from the prior year. This forecast considers approximately 11 months of operations from Mattress Firm, thus emphasizing the corporate confidence in the expanded operational structure.

Long-Term Perspectives

Thompson concluded by providing a longer-term view, mentioning the retention of a strong growth trajectory even amid industry variances below historical norms. Somnigroup anticipates a gradual market recovery, especially with the synergistic effects of the Mattress Firm integration expected to elevate sales growth toward mid-single digits annually starting in 2026.

With a focus on maintaining a ratio of consolidated indebtedness less netted cash to adjusted EBITDA at 2.31 times, Somnigroup reiterates its strategic financial management. As it navigates the mattress industry landscape, the company’s robust performance metrics signify a promising future.

In conclusion, Somnigroup International's recent financial results reflect not only a stable operational foundation but also set the stage for significant growth in market share and innovation, especially following the key acquisition of Mattress Firm. Investors and industry analysts will undoubtedly be monitoring the company's progress as it implements its ambitious plans moving forward.