Tempur Sealy(TPX) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended March 31, 2025, were $1,604.7 million, a 35% increase from $1,189.4 million in the same period of 2024[16] - Gross profit for the same period was $580.5 million, compared to $474.3 million, reflecting a gross margin improvement[16] - Operating income decreased to $13.2 million from $131.5 million year-over-year, indicating challenges in operational efficiency[16] - The net loss attributable to Somnigroup International Inc. was $33.1 million, compared to a net income of $76.3 million in the prior year[16] - The company reported a comprehensive loss income of $2.8 million for the quarter, down from a comprehensive income of $60.5 million in the previous year[18] - For the three months ended March 31, 2025, Somnigroup reported a net loss of $32.8 million, a significant decline compared to a net income of $76.8 million for the same period in 2024[26] - The company experienced a cash inflow from operating activities of $106.4 million, down from $130.2 million year-over-year[26] - Somnigroup's total stockholders' equity as of March 31, 2025, was $2,741.7 million, a decrease from $3,332.5 million as of March 31, 2024[24] - The company declared dividends of $0.15 per share, totaling $31.5 million for the quarter[26] - The effective tax rate for the three months ended March 31, 2025, was 33.5%, significantly higher than the 21.2% rate for the same period in 2024[82] Acquisition and Integration - The company completed the acquisition of Mattress Firm on February 5, 2025, which operates over 2,200 retail locations and a growing e-commerce platform[29] - Cash used in investing activities totaled $2,858.9 million, primarily due to the Mattress Firm acquisition[26] - The Mattress Firm Acquisition was completed on February 5, 2025, for an aggregate purchase price of approximately $5.2 billion, consisting of $3.1 billion in cash and 34.2 million shares valued at $65.65 each[47] - The company borrowed $625.0 million and $679.5 million under its credit facilities to finance the Mattress Firm Acquisition, along with $1,592.0 million released from escrow[48] - The preliminary purchase price consideration for Mattress Firm totaled $5,418.7 million, netting to $5,151.7 million after accounting for cash acquired[52] - The preliminary fair value of assets acquired in the Mattress Firm Acquisition was $7,107.3 million, while the preliminary fair value of liabilities assumed was $1,955.6 million, resulting in net consideration transferred of $5,151.7 million[55] - The company incurred transaction costs of $50.2 million related to the Mattress Firm Acquisition during the three months ended March 31, 2025[58] - Goodwill resulting from the Mattress Firm Acquisition amounted to $3,473.0 million, reflecting future economic benefits expected from the acquisition[57] - The Mattress Firm Acquisition contributed revenue of $593.7 million and net income of $0.8 million for the three months ended March 31, 2025[59] Debt and Assets - Total assets increased significantly to $11,329.7 million from $5,980.4 million, primarily due to the acquisition of Mattress Firm[20] - Long-term debt rose to $4,920.7 million from $3,740.4 million, reflecting increased leverage following strategic acquisitions[20] - As of March 31, 2025, total debt was $5,069.9 million, an increase from $3,844.5 million as of December 31, 2024[66] - The company was in compliance with all applicable debt covenants as of March 31, 2025[68] - The company reported accrued expenses and other current liabilities of $649.3 million as of March 31, 2025, up from $393.9 million at the end of 2024[79] Inventory and Expenses - Inventory levels increased to $680.8 million, up from $447.0 million, indicating potential overstock or supply chain issues[20] - Inventories increased to $680.8 million as of March 31, 2025, compared to $447.0 million as of December 31, 2024, with finished goods rising from $300.5 million to $530.9 million[35] - The accrued warranty expense balance increased to $58.6 million as of March 31, 2025, from $33.6 million as of December 31, 2024, due to amounts accrued and liabilities assumed from the Mattress Firm Acquisition[36] - Somnigroup's depreciation and amortization expenses increased to $57.7 million in Q1 2025 from $39.2 million in Q1 2024[26] - The total stock-based compensation expense for the three months ended March 31, 2025, was $8.4 million, down from $9.2 million in the same period of 2024[80] - Capital expenditures for the three months ended March 31, 2025, totaled $24.0 million[90] Market Conditions and Future Outlook - The company anticipates ongoing challenges in the macroeconomic environment, including inflation and competition, which may impact future performance[9] - The integration of Mattress Firm is expected to enhance market share and sales growth, although realization of synergies remains uncertain[9] - The company expects no material impact from the OECD's proposed global minimum effective tax of 15.0% on its financial results in 2025[83] - The company had approximately $774.5 million remaining under its share repurchase authorization as of March 31, 2025[75] - There were no material changes to the company's foreign currency exposure for the three months ended March 31, 2025[180]