Tempur Sealy(TPX) - 2025 Q3 - Quarterly Results

Financial Performance - Consolidated net sales increased by 63.3% to $2,122.6 million compared to $1,300.0 million in Q3 2024, driven by Mattress Firm sales[3] - Net income rose by 36.5% to $177.4 million, while adjusted net income increased by 37.5% to $201.4 million compared to Q3 2024[6] - Earnings per diluted share (EPS) increased by 13.7% to $0.83, with adjusted EPS rising by 15.9% to $0.95 compared to Q3 2024[6] - Operating income grew by 55.9% to $314.7 million, with adjusted operating income increasing by 53.6% to $343.7 million compared to Q3 2024[6] - Gross profit for Q3 2025 was $952.8 million, up 72.8% from $551.5 million in Q3 2024[22] - Net income for Q3 2025 was $177.4 million, an increase from $130.0 million in Q3 2024, representing a 36.4% year-over-year growth[36] - Adjusted net income for Q3 2025 reached $201.4 million, compared to $146.5 million in Q3 2024, reflecting a 37.5% increase[36] - Adjusted earnings per share (EPS) for Q3 2025 was $0.95, up from $0.82 in Q3 2024, indicating a 15.9% rise[36] - Total net sales for Q3 2025 were $2,122.6 million, significantly higher than $1,300.0 million in Q3 2024, marking a 63.2% increase[40] - Adjusted EBITDA for Q3 2025 was $418.9 million, compared to $274.8 million in Q3 2024, which is a 52.4% increase[45] Sales and Market Performance - Mattress Firm net sales accounted for $1,070.8 million in Q3 2025, all reported through the direct channel[7] - Tempur Sealy International net sales increased by 10.9% to $315.7 million compared to Q3 2024, driven by expanded distribution[9] Margins and Guidance - North America gross margin improved to 58.4%, while adjusted gross margin increased by 1,710 basis points to 58.6% compared to Q3 2024[9] - Mattress Firm gross margin was 34.4%, with an adjusted gross margin of 35.6% for Q3 2025[8] - The company raised its full-year 2025 adjusted EPS guidance to a range of $2.60 to $2.75[12] Debt and Assets - Total debt at the end of Q3 2025 was $4.7 billion, with consolidated indebtedness less netted cash at $4.6 billion[11] - Total assets as of September 30, 2025, were $11,399.5 million, significantly up from $5,980.4 million at the end of 2024[24] - Total liabilities increased to $8,405.2 million from $5,412.1 million at the end of 2024[24] - Cash and cash equivalents at the end of Q3 2025 were $100.2 million, down from $117.4 million at the end of 2024[24] Operating Activities and Expenditures - Net cash provided by operating activities for the nine months ended September 30, 2025, was $700.7 million, compared to $537.4 million for the same period in 2024[26] - The company reported a significant acquisition expenditure of $2,824.5 million during the nine months ended September 30, 2025[26] Business Combination and Transition Costs - The Company incurred business combination charges of $32.2 million in Q3 2025, contributing to the adjustments in net income and EBITDA calculations[45] - In Q3 2025, the Company recorded $32.2 million in business combination charges, with $13.4 million related to the floor model transition and $12.6 million in professional fees and restructuring costs[1] - The Company incurred $7.3 million in supply chain transition costs in Q3 2025, with $0.9 million included in cost of sales and $6.4 million related to a manufacturing facility lease termination[2] - Disposition-related costs in Q3 2025 amounted to $1.3 million, primarily for retail store transition costs associated with the divestiture to Mattress Warehouse[3] - The Company recognized $67.9 million in transaction costs over the trailing twelve months, primarily related to the Mattress Firm acquisition and related divestitures[4] - Acquisition-related costs following the Mattress Firm acquisition totaled $114.2 million, mainly for one-time business combination accounting and purchase price allocation adjustments[5] - The Company recorded a $13.9 million loss on disposal of business related to the divestiture of 73 Mattress Firm stores and its Sleep Outfitters subsidiary[6] - For the trailing twelve months ended September 30, 2025, the Company is permitted to include $100.0 million of future cost synergies expected from acquisitions in the calculation of adjusted EBITDA[7] - The Company received $4.9 million for an insurance claim related to a cybersecurity event identified on July 23, 2023[8] - The Company included $107.6 million of Mattress Firm adjusted EBITDA prior to acquisition in its calculation of adjusted EBITDA for covenant compliance purposes[9] - The Company recognized $26.7 million in transition charges due to a customer's acquisition that affected OEM distribution[10]