Somnigroup International Inc. Reports Strong First Quarter Results with Record Net Sales Growth

Somnigroup International Inc. Reports First Quarter Results

Somnigroup International Inc. (NYSE: SGI) has released its financial results for the first quarter of 2025, marking a significant turnaround driven by its recent acquisition of Mattress Firm. The period ending March 31, 2025, has showcased remarkable achievements, including a notable 34.9% increase in total net sales, totaling $1,604.7 million compared to $1,189.4 million for the same quarter the previous year.

The company attributes this growth primarily to the inclusion of Mattress Firm's operations, which contributed approximately $593.7 million in net sales during the stub period from February 5, 2025, until March 31, 2025. However, this figure was partially offset by the accounting elimination of $130.1 million of internal sales from Tempur Sealy North America to Mattress Firm.

Despite this impressive increase in net sales, the gross margin experienced a decline to 36.2% from 39.9% in Q1 2024. Nevertheless, the adjusted gross margin saw a positive shift, improving to 42.2% from 40.1% in the same quarter last year. In terms of operating success, the operating income fell to $13.2 million from $131.5 million last year, reflecting the costs associated with the Mattress Firm acquisition. The adjusted operating income improved significantly to $182.8 million, up from $149.4 million year-over-year.

However, net income showed a contrasting trend, resulting in a loss of $(33.1) million compared to a profit of $76.3 million in the first quarter of 2024. This resulted in a loss per diluted share of $(0.17), compared to earnings of $0.43 per share in the same quarter of 2024. Despite these fluctuations in net income, the adjusted net income increased by 8.1%, totaling $97.0 million, slightly above the previous year’s $89.7 million.

Insights from Leadership

Company Chairman and CEO Scott Thompson shared his thoughts on the results, attributing the positive growth trends to the strategic acquisition of Mattress Firm amidst current global market challenges. He remarked on the company's ability to navigate a weak market while recognizing the contributions of all business units in promoting growth opportunities. This strategic emphasis on leveraging operational flexibility and manufacturing capabilities is pivotal in maintaining the company’s position in the bedding industry.

Segment Performance

Somnigroup's business segments, including Tempur Sealy North America, Tempur Sealy International, and Mattress Firm, each exhibited unique performance metrics. In North America, net sales were reduced due to the aforementioned accounting adjustments, resulting in a decrease of $194.9 million compared to Q1 2024, bringing the North America segment's sales to $706.2 million.

The international segment, however, saw a 5.7% incline in net sales to $304.8 million, thanks to successful new product launches and resilient market performance. The Mattress Firm segment had stellar results, posting $593.7 million in net sales during the stub period, reflecting a robust market response.

Operational costs also rose, particularly due to acquisition-related expenses, with corporate operating expenses climbing to $85 million from $47.7 million compared to the prior year.

Financial Outlook

As a forward-looking measure, Somnigroup has adjusted its financial outlook for the full year 2025, forecasting an adjusted EPS range of $2.30 to $2.65. This takes into account roughly 11 months of expected Mattress Firm operations while considering external market conditions and risks that could affect outlook.

Additionally, the company declared a quarterly cash dividend of $0.15 per share, payable on June 5, 2025, illustrating its commitment to returning value to shareholders amidst ongoing transformations.

Conclusion

Somnigroup’s first quarter results demonstrate its proactive approach in adapting to market dynamics while pursuing growth through strategic acquisitions. The favorable sales uptick, coupled with increased operational efficiencies, highlights the company’s dedication to improving sleep solutions across its expansive market.

As the company progresses through 2025, all eyes will be on how effectively it can integrate Mattress Firm's operations and maintain its trajectory of growth in the competitive bedding sector.