Sleep Number Corporation (NASDAQ:SNBR) Q3 2023 Results Conference Call November 7, 2023 5:00 PM ET Company Participants Dave Schwantes - VP, Finance and IR Shelly Ibach - Chair, President and CEO Francis Lee - CFO Conference Call Participants Bobby Griffin - Raymond James Peter Keith - Piper Sandler Brad Thomas - KeyBanc Capital Markets Atul Maheswari - UBS Operator Thank you. Welcome to Sleep Number’s Q3 2023 Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and- ...

Financial Data and Key Metrics Changes - The company reported net sales of $459 million for Q2 2023, which is 16% lower than the previous year, with demand down mid-single digits [56][61] - The gross profit rate for Q2 was 57.6%, consistent with expectations, and the year-to-date gross margin rate was 58.3%, up nearly 300 basis points from the second half of the previous year [6][62] - Earnings per share (EPS) for the quarter were $0.03, a significant decline from $1.54 in the same quarter last year [12][61] - The company expects full-year EPS to be in the range of $1.25 to $1.75, narrowing the previous guidance by $0.25 [63][59] Business Line Data and Key Metrics Changes - The introduction of next-generation Smart Beds, including the Climate360 model, is expected to drive demand and improve margins [7][57] - The average revenue per unit (ARU) for Smart Beds was just under $6,000, with expectations for ARU to be around $5,900 in Q3 and approximately $6,000 in Q4 [86][112] - The company delivered nearly 77,000 Smart Bed units in Q2, leveraging its fulfillment network to manage backlog [86] Market Data and Key Metrics Changes - Year-over-year demand trends improved, with combined May and June demand down low single digits, indicating a recovery from previous lows [6][9] - The mattress industry overall has been operating under recessionary spend levels for six consecutive quarters, with industry unit levels 14% below 2019 [6][56] Company Strategy and Development Direction - The company is focused on expanding gross margin rates with a goal to return to 60% within a year and 62% over the next couple of years [60] - Strategic initiatives include increasing the mix of higher-margin products, leveraging retail and fulfillment networks, and addressing commodity cost pressures [60][64] - The company aims to take market share through brand building, innovation, and connected smart sleepers [81] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer sentiment is improving, and brand indicators are strong, despite the challenging economic environment [59][68] - The company expects continued demand improvements, with mid-single to low double-digit growth anticipated in the back half of the year [81][90] - Management expressed confidence in the new product line's performance and its ability to drive demand during key selling periods [35][68] Other Important Information - The company has made adjustments to its financing strategy to mitigate increased costs associated with higher interest rates [13][117] - The company ended the quarter with $334 million of liquidity and a leverage ratio of 4.7x EBITDA, below the amended 5x covenant [63] Q&A Session Summary Question: What are the expectations for demand in the third quarter? - Management indicated expectations for demand to be up mid- to high single digits, with positive trends observed since the start of the year [18][93] Question: How has the financing strategy been impacted by changes in approval rates? - Management confirmed that adjustments to financing plans have been effective, with no significant negative impact on approval rates or sales conversion [22][117] Question: What is the expected impact of the new product line on sales? - Management reported strong performance from the new models, with positive consumer reactions and expectations for improved sales mix [24][35] Question: How are promotional strategies being adjusted for the Labor Day event? - Management expressed confidence in their promotional strategy, noting that they have learned from past experiences and are prepared for the upcoming selling period [129][68] Question: What are the expectations for gross margin in the back half of the year? - Management expects gross margin rates to be approximately 58% in Q3, with expectations to approach 60% in Q4 as margin initiatives mature [90][104]

Got it. That makes sense. And Shelly, as my follow-up, to the extent demand just weakened more than what you'd expect. How much more room do you have to cut costs given that you've already managed cost pretty tightly? Like what are the key areas that you could target in a slower-demand environment? And at what point does it become very hard to cut costs without jeopardizing future revenues? Shelly Ibach Well, we are operating with a very thorough risk management processes and mitigants. We're very clear on ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 000-25121 SLEEP NUMBER CORPORATION (Exact name of registrant as specified in its charter) Minnesota 41-1597886 (State or ...

Sleep Number Corporation (NASDAQ:SNBR) Q4 2022 Results Conference Call February 22, 2023 5:00 PM ET Company Participants Dave Schwantes - Vice President-Finance and Investor Relations Shelly Ibach - Chair, President and Chief Executive Officer Chris Krusmark - CFO and Chief Human Resources Officer Conference Call Participants Bobby Griffin - Raymond James Peter Keith - Piper Sandler Brad Thomas - KeyBanc Capital Markets Seth Basham - Wedbush Securities Atul Maheswari - UBS Operator Good day everyone. Welcom ...

Sleep Number Corporation (NASDAQ:SNBR) Q3 2022 Earnings Conference Call October 26, 2022 5:00 PM ET Company Participants Dave Schwantes – Vice President-Finance and Investor Relations Shelly Ibach – Chair, President and Chief Executive Officer David Callen – Chief Financial Officer Conference Call Participants Brad Thomas – KeyBanc Capital Markets Matt Egger – Piper Sandler Bobby Griffin – Raymond James Seth Basham – Wedbush Securities Michael Lasser – UBS Operator Welcome to Sleep NumberÂ's Quarter Three 2 ...

Financial Data and Key Metrics Changes - Net sales for Q2 2022 increased by 13% to $549 million, driven by servicing a portion of the profitable excess backlog despite weaker demand and electronic component delays [8][25] - Net operating profit for Q2 was $50 million, a 68% increase from 2021, with a net operating profit rate of 9.1%, up 300 basis points year-over-year [8][9] - Earnings per diluted share were $1.54, a 75% increase compared to $0.88 a year ago, with a trailing 12-month ROIC of 21.8% [9][30] - The updated EPS outlook for 2022 is revised to $3 to $4, reflecting ongoing economic challenges [9][22] Business Line Data and Key Metrics Changes - Delivered smart bed units in Q2 represented a stronger-than-average profit profile, despite a 12% decline in demand compared to the previous year [7][9] - Average Revenue per Unit (ARU) increased by 27% year-over-year to $6,485, although smart bed deliveries were down 11% compared to Q2 2021 [26] Market Data and Key Metrics Changes - Consumer sentiment has significantly declined, correlating with a 12% drop in demand for Sleep Number products in Q2 [6][7] - The annual inflation rate reached over 9% in June, impacting consumer purchasing power and sentiment [6] Company Strategy and Development Direction - The company is focused on maintaining liquidity and financial flexibility while advancing long-term strategies, including cost reductions of over $100 million [10][19] - New product innovations, such as the Climate360 smart bed, are set to launch in October, designed to enhance sleep quality and reduce component complexity [13][14] - The company is transitioning to a new smart bed platform in 2023, which is expected to improve supply chain efficiency and product availability [14][19] Management's Comments on Operating Environment and Future Outlook - Management noted that external business conditions have worsened, with record low consumer sentiment and higher input costs impacting operations [9][22] - The company anticipates demand to decline in the high single to low double digits for the remainder of the year, with net sales growth expected to be low single digits due to backlog servicing [30][31] - Management remains optimistic about future opportunities as consumer sentiment improves and supply chain issues are resolved [20][22] Other Important Information - The company has suspended share repurchases and narrowed capital spending projects to manage costs effectively [22] - Strategic investments are being made to enhance supply chain flexibility and resilience [19] Q&A Session Summary Question: Clarification on Q3 earnings and EPS guidance - Management explained that Q3 is expected to be breakeven due to delivery constraints and necessary spending to generate demand, with a more profitable Q4 anticipated [37][38] Question: Pricing changes and input costs - Management confirmed that additional pricing actions are being taken to address higher input costs and inefficiencies in supply flow [42][43] Question: Demand trends and consumer sentiment - Demand was most impacted in May, with some recovery in June and July as adjustments were made to respond to the changing consumer environment [49][50] Question: Financing options with Synchrony - Management discussed the extended partnership with Synchrony to support consumer financing, maintaining a stable penetration rate for financing options [52][53] Question: Backlog servicing and sales impact - Management indicated that backlog servicing will contribute to sales, but the extent will depend on demand and supply dynamics in the back half of the year [60][61] Question: Risks of order cancellations - Management noted that while there was a slight increase in cancellations during Q2, it was not material to the overall business [66][67] Question: Confidence in guidance and supply normalization - Management expressed cautious optimism about supply normalization in 2023, with expectations for improved gross margin rates as supply chains stabilize [72][74]

Sleep Number Corporation (NASDAQ:SNBR) Q1 2022 Earnings Conference Call April 20, 2022 5:00 PM ET Company Participants David Schwantes - VP of Finance, Investor Relations and Decision Support Shelly Ibach - President and CEO David Callen - EVP and CFO Conference Call Participants Peter Keith - Piper Sandler & Co. Robert Griffin - Raymond James & Associates, Inc. Matthew McCartney - Wedbush Securities Inc. Atul Maheswari - UBS Bradley Thomas - KeyBanc Capital Markets Curtis Nagle - Bank of America Merrill Ly ...

Sleep Number Corporation (NASDAQ:SNBR) Q4 2021 Earnings Conference Call February 23, 2022 5:00 PM ET Company Participants David Schwantes - Vice President of Finance, Investor Relations and Decision Support Shelly Ibach - President and Chief Executive Officer David Callen - Executive Vice President and Chief Financial Officer Conference Call Participants Peter Keith - Piper Sandler & Co. Seth Basham - Wedbush Securities Inc. Robert Griffin - Raymond James & Associates, Inc. Atul Maheshwari - UBS Curtis Nagl ...

Financial Data and Key Metrics Changes - Net sales increased by 21% compared to the previous year and were 35% higher than 2019 [10][30] - Earnings per share (EPS) reached $2.22, which is 24% higher than Q3 2020 and up 136% from 2019 [10][33] - Year-to-date EPS of $5.63 is more than double the $1.88 earned in the same period two years ago [38] Business Line Data and Key Metrics Changes - The company achieved four consecutive quarters of double-digit demand growth for its smart beds [8][18] - Q3 sales metrics included 15 points of growth from units and 5 points from average revenue per unit (ARU) [32] - More than 11% of sales came from e-commerce, phone, and chat, compared to about 7% historically [32] Market Data and Key Metrics Changes - The company reported a year-to-date cash from operations of $293 million, with a trailing 12-month return on invested capital (ROIC) exceeding 34% [12] - The company ended Q3 with 632 stores and expects to reach about 650 by year-end [37] Company Strategy and Development Direction - The company is focused on leveraging its vertically integrated business model to navigate supply chain challenges and drive sustainable profitable growth [9][13] - Plans for retail expansion include opening 40 to 50 new stores and enhancing online capabilities [24] - The company is targeting mid-to-high single-digit demand growth for 2022, driven by innovation, pricing actions, and digital ecosystem advancements [24][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing global supply chain shortages but expressed confidence in the company's ability to meet demand through strategic partnerships and operational efficiencies [9][21] - The company anticipates that supply will improve in the first quarter of 2022, with suppliers making stronger commitments for electronic component deliveries [21] - Management remains optimistic about achieving a full-year EPS target of $7.25, despite potential shifts in delivery timing due to supply constraints [19][41] Other Important Information - The company has repurchased $364 million of its stock year-to-date, nearly matching the total repurchased during 2019 and 2020 combined [39] - The company is extending its debt facility by $200 million to $800 million with a renewed five-year term [40] Q&A Session Summary Question: Guidance for $7.25 EPS and demand expectations - Management confirmed strong demand and backlog but noted constraints due to electronic supply shortages [44] Question: Backlog and revenue carryover into 2022 - Management estimated about $100 million in excess net sales equivalents that will carry over into 2022 [45] Question: Impact of electronics shortages on product components - The main challenges are related to semiconductor chips and other electronic components in smart beds [57] Question: Clarification on backlog and customer deposits - Management clarified that customer deposits do not perfectly reflect backlog due to fluctuations in offers and timing [60] Question: EPS guidance and cost inflation in Q4 - Management indicated that the EPS target considers ongoing cost pressures and supply constraints [76][79] Question: Efficiency gains and pricing actions - Management highlighted that efficiency gains are driven by increased volume and digital integration, with pricing actions taken across product offerings [85][87]