Management View - Sleep Number Corporation introduced Amy O'Keefe as the new CFO, highlighting her experience in operational and financial transformations [2] - The management emphasized a focus on streamlining business operations and strengthening the capital structure [2] Sales Growth Strategy - Sleep Number outlined a strategy for double-digit sales growth in the second half of the year [2] - The company is undergoing a product reset as part of its turnaround strategy [2]

Financial Data and Key Metrics Changes - Consolidated shipments for 2025 were 5.5 million units, up 1% year-over-year, with increases in South America, North America, and the Middle East and Africa [7] - Net revenues were EUR 153 billion, a decrease of 2% year-over-year, with an AOI margin of negative 0.5% reflecting early recovery stages and substantial net tariff expenses [7][8] - Industrial free cash flow showed outflows of EUR 4.5 billion for the full year, with H2 2025 industrial free cash flow of negative EUR 1.5 billion representing a 50% sequential improvement compared to H1 2025 [9][10] Business Line Data and Key Metrics Changes - North America saw a 39% increase in shipments and a 31% increase in revenues in H2 2025, driven by normalized inventory dynamics and higher sales [10] - In Enlarged Europe, H2 AOI decreased due to a higher LEV mix and net pricing decline amid a competitive environment [11] - South America experienced a decline in AOI due to increased costs, while the Middle East and Africa saw solid growth in shipments driven by increased production in Algeria [11] Market Data and Key Metrics Changes - U.S. market share increased year-over-year in January 2026, while European shares saw a sequential increase compared to H2 2025 [5] - The order portfolio in North America and Europe combined was up 46%, with North America up 150% and Europe up 18% [16] - South America maintained its number one share position, with the Ram Dakota launched in Argentina and set to launch in Brazil [24] Company Strategy and Development Direction - The company is focused on a decisive reset to put the customer at the center, aiming for profitable growth and execution in 2026 [4][18] - A $13 billion investment over four years is planned to improve market coverage and manufacturing utilization in the U.S., introducing five new vehicles and renewing the current lineup [17] - The company is integrating the Maserati business into regional segments to enhance operational efficiency and regional focus [13][54] Management's Comments on Operating Environment and Future Outlook - Management noted that Europe remains a tough environment with unclear regulations, but there is strong demand for STLA AutoDrive products, which will support profit building in 2026 [29] - In North America, market share is expected to continue increasing, with new products like the Jeep Cherokee and Charger Sixpack contributing to profitability [30] - The company anticipates a stable to slightly positive pricing environment in the U.S. while facing continued price pressure in Europe [82] Other Important Information - The company confirmed its 2026 financial guidance and will start reporting full-year earnings results on a quarterly basis [12] - A significant focus on quality improvements has been established, with a 50% improvement in North America and 30% in Europe for one-month service indicators [62] - The partnership with Leapmotor is expected to enhance competitiveness, particularly in electric vehicles, and support market reach in Europe and South America [90] Q&A Session All Questions and Answers Question: Will larger restructuring measures be needed in Europe to turn the business profitable? - Management noted a rebound in market share and strong demand for products, indicating that while Europe is challenging, there are opportunities for profit building in 2026 [29] Question: What is the outlook for operating leverage in North America? - Management acknowledged strong shipment growth but noted that operational issues had constrained production, which has now been resolved, leading to expected improvements in 2026 [34] Question: What are the market assumptions for revenue growth in 2026? - Management forecasts a slight decline in the North American market and flat conditions in Europe, with growth driven by new vehicle launches [43] Question: Should we expect North America and Europe to be in positive territory in 2026 in terms of AOI? - Management confirmed that North America is expected to be the largest contributor to profitable growth in 2026 [49] Question: What is the expected impact of CapEx in 2026? - Management confirmed that investments are expected to remain flat year-over-year, focusing on areas with the highest return potential [55] Question: How is quality trending currently? - Management reported significant improvements in quality metrics, with ongoing efforts to enhance quality through organizational changes and additional engineering hires [62]