Tempur Sealy(TPX) - 2025 Q4 - Annual Results

Financial Performance - Fourth Quarter 2025 consolidated sales increased by 54.7% to $1,868.4 million compared to $1,207.9 million in the same quarter of 2024[3] - Fourth Quarter 2025 net income rose by 95.8% to $140.8 million, while adjusted net income increased by 43.4% to $153.7 million[3] - Earnings per diluted share (EPS) for the fourth quarter increased by 65.0% to $0.66, with adjusted EPS growing by 20.0% to $0.72[3] - Operating income surged by 93.7% to $247.1 million, driven by the inclusion of Mattress Firm sales and realized synergies[7] - Net sales for Q4 2025 reached $1,868.4 million, a 54.7% increase from $1,207.9 million in Q4 2024[26] - Gross profit for the year ended December 31, 2025, was $3,183.2 million, reflecting a 57.0% increase compared to $2,027.9 million in 2024[26] - Operating income for Q4 2025 was $247.1 million, up 93.7% from $127.6 million in Q4 2024[26] - For the three months ended December 31, 2025, the Company reported a net income of $140.8 million, compared to $71.9 million for the same period in 2024, representing a 95.9% increase[39] - Adjusted net income for the same period was $153.7 million, up from $107.2 million in 2024, reflecting a 43.3% increase[39] - The adjusted earnings per share (EPS) for Q4 2025 was $0.72, compared to $0.60 in Q4 2024, marking a 20% increase[39] - For the year ended December 31, 2025, the Company reported a net income of $384.1 million, slightly down from $384.3 million in 2024[40] - Adjusted net income for the year was $565.3 million, an increase from $455.1 million in 2024, representing a 24.2% growth[40] - The adjusted EPS for the year ended December 31, 2025, was $2.70, compared to $2.55 in 2024, indicating a 5.9% increase[40] - The Company's consolidated net sales for Q4 2025 were $1,868.4 million, compared to $1,207.9 million in Q4 2024, reflecting a 55.5% increase[44] - Adjusted gross profit for 2025 was $3,315.9 million, with a margin of 44.4%, compared to $2,064.6 million and 41.9% in 2024[49][51] - Operating income for 2025 was $754.9 million, representing a margin of 10.1%, up from $634.2 million and 12.9% in 2024[49][51] - Adjusted EBITDA for 2025 was $1,306.0 million, compared to $219.4 million in 2024, indicating strong operational performance[56][54] Debt and Liabilities - Total debt at the end of the fourth quarter was $4.7 billion, with consolidated indebtedness less netted cash at $4.6 billion[12] - The company’s total liabilities increased to $8,497.1 million as of December 31, 2025, from $5,412.1 million in 2024[28] - Total debt, net as of December 31, 2025, was $4,685.7 million, with consolidated indebtedness less netted cash at $4,582.4 million[59] - The ratio of consolidated indebtedness less netted cash to adjusted EBITDA was 3.21 times for the twelve months ended December 31, 2025, below the 5.00 times requirement[57] Acquisitions and Synergies - Mattress Firm contributed $892.1 million in net sales for the fourth quarter, all reported through the direct channel[8] - The Company completed the Mattress Firm acquisition on February 5, 2025, and included $18.7 million of Mattress Firm adjusted EBITDA in its calculation of adjusted EBITDA for 2025[14] - Future cost synergies from the Mattress Firm acquisition are projected to be $100.0 million[56] - The Company incurred $263.8 million in total adjustments for operating income in 2025, primarily due to acquisition-related costs and transaction expenses[49] - The Company recognized $114.2 million of acquisition-related costs following the Mattress Firm acquisition, with $95.4 million included in cost of sales[9] Cash Flow and Dividends - The company reported net cash provided by operating activities of $800.1 million for the year ended December 31, 2025, compared to $666.5 million in 2024[30] - The quarterly cash dividend was increased by 13% to $0.17 per share, marking the sixth increase since 2021[15] Operational Efficiency - North America gross margin improved to 59.0%, up from 36.4% in the fourth quarter of 2024, primarily due to operational efficiencies[10] - The company targets a compound annual growth rate of mid-single digits for sales, expecting adjusted EPS to increase from $2.70 in 2025 to approximately $5.15 by 2028[16] - The adjusted gross profit for Q4 2025 was $839.4 million, with an adjusted gross margin of 44.9%, compared to $507.7 million and 42.0% in Q4 2024[44] - The adjusted operating income for Q4 2025 was $267.8 million, with an adjusted operating margin of 14.3%, compared to $167.6 million and 13.9% in Q4 2024[44] Asset Management - Total assets increased to $11,614.0 million as of December 31, 2025, compared to $5,980.4 million in 2024[28] - Cash and cash equivalents decreased to $134.9 million at the end of 2025 from $1,709.7 million at the end of 2024[30] Impairments and Costs - In Q4 2025, the Company recorded $6.2 million of impairment charges related to cloud-based computing arrangements[2] - The Company recorded a $13.9 million loss on disposal of business in 2025, net of proceeds of $9.0 million from the divestiture of 73 Mattress Firm stores[10] - The Company recorded $10.5 million of disposition-related costs primarily related to retail store transition costs for the divestiture to Mattress Warehouse[11] - The Company recorded $12.1 million of supply chain transition costs in 2025 associated with the consolidation of manufacturing facilities[6] - The Company incurred $6.8 million of transaction-related interest expense in 2025, net of interest income, related to the Term B Loan drawn for the Mattress Firm acquisition[5]