Sleep Number(SNBR) - 2024 Q4 - Annual Results

Financial Performance - Fourth quarter gross profit rate improved to 59.9%, up 330 basis points year-over-year, with a full-year gross profit rate of 59.6%, up 190 basis points [7]. - Fourth quarter net sales were $377 million, down 12% compared to the prior year, while full-year net sales decreased 11% to $1.68 billion [8]. - Fourth quarter adjusted EBITDA was $26 million, up 43% year-over-year, with a full-year adjusted EBITDA of $120 million, at the midpoint of the earnings outlook [7]. - The company reported a fourth quarter net loss of $5 million, an improvement from a net loss of $25 million in the same period last year, while the full-year net loss was $20 million compared to a net loss of $15 million the previous year [8]. - Net loss for the twelve months ended December 28, 2024, was $20,334 million, compared to a net loss of $15,287 million in 2023, representing a 33.3% increase in losses [22]. - Adjusted EBITDA for the trailing twelve months ended December 28, 2024, was $119,579 million, down from $126,676 million in 2023, a decrease of about 5.6% [25]. - Consolidated EBITDAR decreased from $240,477 to $226,684, a decline of approximately 5.7% [30]. - Adjusted ROIC for the trailing twelve months ended December 28, 2024, was 7.6%, slightly down from 7.8% in the previous year [33]. - Adjusted NOPAT for the trailing twelve months ended December 28, 2024, was $37,740, compared to $38,868, a decrease of about 2.9% [33]. Cost Management - Operating expenses for the fourth quarter were reduced by $28 million year-over-year, totaling $219 million, with a full-year reduction of $88 million [8]. - Free cash flow for the year was $4 million, an increase of $70 million compared to the prior year [8]. - Free cash flow for the trailing twelve months ended December 28, 2024, was $3,638 million, compared to a negative $66,084 million in 2023, indicating a significant improvement [27]. - Total current liabilities decreased from $936,071 million in 2023 to $908,012 million in 2024, a reduction of about 3% [20]. - Cash and cash equivalents at the end of the period were $1,950 million in 2024, down from $2,539 million in 2023, a decrease of approximately 23.1% [22]. - Total debt including operating lease liabilities decreased from $980,120 to $943,496, a reduction of approximately 3.7% [30]. - Operating lease liabilities decreased from $433,154 to $389,508, a reduction of about 10.1% [33]. - Consolidated rent expense decreased from $113,801 to $107,105, a decline of approximately 5.9% [30]. Sales and Market Trends - Retail comparable-store sales decreased by 10% for the three months ended December 28, 2024, compared to a 15% decline in the same period of 2023 [24]. - Average revenue per smart bed unit increased to $5,959 in 2024 from $5,541 in 2023, reflecting a growth of approximately 7.5% [24]. - The percentage of sales from retail stores increased to 86.6% in Q4 2024 from 85.9% in Q4 2023, indicating a shift towards physical retail [24]. Leadership and Strategic Changes - The company announced a leadership transition with Linda Findley appointed as President and CEO effective April 7, 2025 [7]. - The company has transformed its operating model over the past 18 months to enhance financial resilience amid ongoing challenges in the U.S. bedding industry [3]. - Future financial outlook for 2025 will be provided later as the new CEO evaluates strategies and business trends [10]. Asset Management - Total assets decreased from $950,880 million in 2023 to $860,810 million in 2024, a decline of approximately 9.4% [20]. - Long-term debt increased from $539,819 to $546,841, an increase of about 1.3% [33]. - The leverage ratio at the end of the year was 4.2x EBITDAR, below the covenant maximum of 4.8x [8]. - The net leverage ratio under the revolving credit facility increased from 4.1 to 1.0 to 4.2 to 1.0 [30]. - Average adjusted invested capital increased slightly from $496,612 to $497,972, an increase of approximately 0.3% [33]. - The company opened 1 new store and closed 4 stores in the three months ended December 28, 2024, resulting in a total of 640 stores at the end of the period [24].