Good morning, ladies and gentlemen, and welcome to the Somnigroup First Quarter 2025 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, May 8th, 2025. I would now like to turn the conference over to Aubrey Moore from Investor Relations. Please go ahead. Thank you, Operator. Good morning, everyone, and thank you for participating in today's call. Joining me today are Scott Thompson, Chairman, President, and CEO, and Bhaskar Rao, Executive Vice President and Chief Financial Officer. This call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve uncertainties, and actual results may differ materially due to a variety of factors that could adversely affect the company's business. These factors are discussed in the company's SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statement speaks only as of the date on which it is made. The company undertakes no obligation to update any forward-looking statement. This morning's commentary will also include Non-GAAP financial information. Reconciliations of this Non-GAAP financial information can be found in the accompanying press release, which has been posted on the company's website at www.somnigroup.com and filed with the SEC. Our comments will supplement the detailed information provided in the press release. And now, with that introduction, it is my pleasure to turn the call over to Scott. Good morning, and thank you for joining us on our First Quarter 2025 earnings call. I'll begin with some highlights from the First Quarter 2025 and then turn the call over to Bhaskar to review our financial performance in more detail and discuss our revised 2025 guidance. After that, we'll open up the call for Q&A. A quick call-out: this is the first quarter since we acquired Mattress Firm, so the financial statements are a bit complicated when looking at trend performance. We'll focus on like-for-like numbers adjusted for the acquisition's impact to provide insight into the underlying business trends. In the first quarter of 2025, net sales were approximately $1.6 billion, and adjusted EPS was $0.49. We're pleased with these results given the weakness of the Presidents' Day holiday period and the decline in U.S. consumer confidence. We continued to outperform the U.S. Betting market, which we believe was down high single digits, which was below our expectations. Turning to the first highlight of the quarter, we reported continued strong performance in our international business. We reported mid-single digit sales growth. Excluding the negative impact of FX, sales grew at a healthy high single digit rate. This is the eighth quarter of mid- to high-single digit sales expansion on a constant currency basis for our legacy international business, while clearly operating in a soft market. Our new collection of Tempur products continued to be a leading catalyst for growth, fueled by expanded price points that have broadened our total addressable market and the improved late-stage customization manufacturing process that allows us to seamlessly tailor products to individual markets and channels. These strategies have already resulted in over 10% growth in distribution with third-party retail partners, with additional expansion opportunities underway. Strong demand for these products, coupled with our ongoing expansion opportunities, reinforce our confidence in that the international Tempur collection will remain a key growth driver for years to come. Our U.K.-based retail business, Dreams, also had a strong quarter, delivering solid mid-single digit growth against a backdrop that continues to be pressured. Our second highlight was the market outperformance of our Tempur Sealy North America and Mattress Firm business units. Like-for-like net sales for our Tempur Sealy North American business unit were down 3% in the quarter, excluding the mid-single digit headwind from the foreclosed distribution discussed last quarter. Our first quarter performance was highlighted by the successful launch of our all-new Sealy Posturepedic collection, a comprehensive reimagining of our Posturepedic product branding and marketing strategy. We expect the product to be approximately 80% floored by Memorial Day. Early results from locations where the product is already floored are encouraging, with solid performance and share gain. We're supporting launch with a national advertising campaign throughout the Memorial Day holiday selling period, which starts this week. Our Mattress Firm business unit also outperformed the broader industry, reporting like-for-like sales down 1% from the prior year. The team remained agile throughout the quarter as we faced unexpected choppy demand periods and managed through post-acquisition transition activities. Our third highlight for the quarter is our mitigation strategy regarding recent tariff announcements. While this is an evolving situation, we are confident that we are well positioned to effectively manage through it. First and foremost, it's important to remind everyone that our direct exposure to tariffs on finished goods is structurally mitigated, as the vast majority of the products that we sell in the U.S. are manufactured domestically. For our Tempur Sealy business unit, we estimate approximately $750 million of our cost of goods sold are exposed to tariffs. We estimate this could have resulted in approximately $120 million of incremental annual cost before any mitigation actions. However, our operations team acted swiftly to collaborate with our suppliers and resolved about half of the impact. The balance of the estimated impact of tariffs is being passed through to the market via a modest price increase, which we announced earlier this week and will take effect in the third quarter. The price increase represents a 2% increase in annual sales for our North American standalone business unit. There'll be a bit of pricing between products, but it's 2% overall. Based on historical price increases, we would describe this pricing action as average in size. We expect beginning in the third quarter, the combination of the actions just discussed will fully offset the impact of the tariffs currently in place. Due to the timing lag between when the tariffs were enacted and when our pricing adjustment takes effect, we expect a one-time tariff-related headwind of approximately $5 million in the second quarter of 2025. Turning to our Mattress Firm business unit, we anticipate some tariff impact will be passed through price increases from some of their suppliers, including Tempur Sealy. We expect Mattress Firm will pass along any future price increase to the end consumer or make merchandising adjustments. Thus, we are currently not expecting any headwinds from tariffs in the Mattress Firm unit. Finally, it's worth mentioning that tariffs are most impactful on imported finished goods, which create a competitive advantage for us. While there's no question that tariffs can be disruptive, they also present an opportunity to strengthen our relative market position by making import products more expensive, and the tariffs are likely to exert outside pressure on small domestic manufacturers and retailers. Our final highlight is the progress we have made on our synergy initiatives following the acquisition of Mattress Firm. We're three months post-acquisition and making good progress in bringing Mattress Firm, Tempur Sealy, and Dreams under the Somnigroup holding company structure. In the first few months, we've aligned on our leadership organization and established clear goals and objectives to guide our efforts. I'm pleased with the progress made on our opportunities to reduce costs, drive efficiency, and fully leverage our global scale. The teams at Tempur Sealy and Mattress Firm have collaborated closely to refine and execute our plans, and we're on track to achieve our target of at least $100 million in annual run rate synergies by 2028. In fact, we've already increased our near-term expectations. We now anticipate to realize $15 million of those cost synergies in 2025, an increase from our prior expectation of $10 million. There are many projects actively underway along the Somnigroup organization. One of the opportunities within our logistics operation is the ability to streamline order fulfillment. We're advancing a project to leverage Mattress Firm's home delivery network for Tempur Sealy. In addition to driving cost efficiencies, we expect this initiative to add value by enhancing oversight of delivery processes, in turn improving customer outcomes and satisfaction. One of our largest opportunities from the acquisition is our combined advertising power. On a consolidated basis, Somnigroup is now the largest bedding advertiser in the industry by a factor of two. We expect to leverage this competitive advantage in a couple of ways. First, our enhanced global scale provides us a unique opportunity to drive cost synergies in our advertising investment. Our marketing teams are actively identifying ways to leverage our combined volume to secure more favorable placement and pricing terms. Second, we see an additional potential to enhance the effectiveness of our combined advertising spend by aligning our advertising approach and messaging. We can deliver higher quality campaigns, ensuring one plus one equals more than two. As part of this alignment, our strategy is positioning the product as the hero of future ad campaigns, cutting through the noise and better showcasing bedding innovation. This approach will help consumers more clearly understand the value of products, drive interest, and increase retail traffic industry-wide. Another key opportunity lies in Mattress Firm's merchandising strategy. We see value in taking a more holistic approach to product selection, leaning into suppliers who offer differentiated, high-quality products at a competitive price point and who drive in-store traffic through investments in advertising. We communicated these expectations at Mattress Firm's first-ever major vendor summit. The response was constructive. Consistent with this customer-focused merchandising plan, Mattress Firm recently executed new supply arrangements with Resident Home, a subsidiary of Ashley Furniture, Purple Innovation, and Leggett & Platt, which provide for the distribution and development of mattresses, foundations, and other bedding-related products across a range of price points. The expanded assortment of products is expected to be available at Mattress Firm starting in late 2025 and through 2026. These products and others ensure Mattress Firm will meet its objective of servicing customers with different needs and preferences. At the same time, we're working to optimize Somnigroup's own brands. Mattress Firm's new merchandising philosophy removes the pre-acquisition self-imposed cap on Tempur Sealy brands, ensuring the floor and sales reflect in-consumer demand. Tempur Sealy manufactured products represented mid-40% of Mattress Firm's total sales in 2024, and we expect to be in the high 40s% of Mattress Firm's floor and sales of 2025. This improvement is driven in part by the expanded private label partnership between Tempur Sealy and Mattress Firm. As of the first quarter of 2025, Tempur Sealy is now manufacturing the vast majority of Mattress Firm's Sleepy's private label mattresses. While we're still in the early stages of implementing this plan, we're confident in its potential. Importantly, we believe we can execute this strategy while continuing to provide third-party suppliers with significant volume and continuing to be their largest customer. We look forward to providing you further updates on these initiatives as we continue to make progress. And with that, I'll turn the call over to Bhaskar. Thank you, Scott. In the first quarter of 2025, consolidated sales were $1.6 billion, and adjusted earnings per share was $0.49. There are approximately $176 million of pro forma adjustments in the quarter, all of which are consistent with the terms of our senior credit facility. These adjustments are primarily related to cost incurred in connection with our acquisition of Mattress Firm. As a reminder, we have aligned accounting for store occupancy costs across Somnigroup, which resulted in Tempur Sealy reclassifying their store occupancy costs from operating expense to cost of goods sold. We have adjusted prior year Tempur Sealy financial information included in today's earnings release to reflect this change for ease of comparability. Please refer to the investor presentation posted to our IR website this morning for further detail on the impact of this policy alignment and other acquisition-related items. I will be highlighting like-for-like comparisons to normalize for these items in our commentary. Turning to Tempur Sealy North America results, like-for-like net sales through the wholesale channel declined approximately 8% in the first quarter, normalizing for the previously disclosed foreclosed distribution. Wholesale declined 3%. Net sales through the direct channel declined 2% in the first quarter. North American adjusted gross margin increased 760 basis points to 45.3%, primarily driven by the elimination of the intercompany sales to Mattress Firm from Tempur Sealy. On a like-for-like basis, North American gross margins improved 50 basis points versus the prior year, primarily driven by operational efficiencies and the mixed impact of foreclosed distribution, partially offset by deleverage and commodity costs. North American adjusted operating margin improved 190 basis points to 17.2%, primarily driven by Mattress Firm intercompany sales elimination. On a like-for-like basis, North American adjusted operating margin declined 70 basis points compared to the prior year, driven by the improvement in gross margin, partially offset by reduced leverage on our investment in advertising as we continue to support customers. Now turning to Tempur Sealy International results. International net sales grew 6% on a reported basis and 8% on a constant currency basis. Our international gross margin improved 130 basis points to 49%, driven by lower launch costs. Our international adjusted operating margin improved 130 basis points to 16.8%, driven by gross margins. Now on to Mattress Firm results. Net sales through Mattress Firm were $594 million in the first quarter, which reflects a partial quarter following the acquisition close in February. On a like-for-like basis, Mattress Firm's sales declined 1% over the prior year. Mattress Firm's adjusted gross margin was 35.1% and was consistent on a like-for-like basis before purchase accounting and was slightly down versus the prior year, including the impact of purchase accounting. Mattress Firm's reported adjusted operating margin was 7.2%. Now moving on to the balance sheet and cash flow items. At the end of the first quarter, consolidated debt less cash was $5 billion, and our leverage ratio under our credit facility was 3.5 times. We expect to return to our target leverage range of two to three times and for share repurchase to be minimal over the near term. In the first quarter, we generated operating cash flow of $106 million. Before turning to full year guidance, I want to remind you of a few considerations. As a reminder, our guidance considers the elimination of intercompany sales between Mattress Firm and Tempur Sealy. We expect the intercompany sales to represent approximately 18% of global Tempur Sealy 2025 sales. The intercompany elimination will reduce Tempur Sealy sales but will be margin accretive and neutral to EPS. Consistent with the prior quarter, our guidance also reflects the previously announced divestiture of Tempur Sealy Sleep Outfitters retail business, as well as 73 Mattress Firm stores. This divestiture was completed last week, as expected. Now turning to 2025 guidance, we have revised our adjusted earnings per share to now be in the range of $2.30-$2.65. Our guidance is based on sales after intercompany elimination to be between approximately $7.3 billion and $7.5 billion on a reported basis. This revision reflects our lower U.S. bedding industry outlook, driven by recent softness in consumer confidence and estimates of 2025 economic activity. We now expect that the bedding industry will be down mid-single digits versus the prior year, with trends improving slightly into the second half of 2025. Our prior guidance had an expectation for the bedding industry to be consistent with the prior year. Our guidance also reflects like-for-like Tempur Sealy sales to be down low single digits and reported sales to be impacted by the intercompany elimination I referenced a moment ago. Tempur Sealy North America sales declining mid-single digits on a like-for-like basis, which includes our continued market outperformance, a mid-single digit headwind from closed distribution, and the industry pressures. The international business growing mid-single digits and high single digits on a constant currency basis, which includes the continued momentum of the omnichannel expansion strategy. And our like-for-like Mattress Firm sales declining low single digits, supported by in-store initiatives to grow AOV and conversion, and the industry pressures. We also expect gross margins to be slightly above 44%. This expectation includes the impact of the one-time tariff headwind to the second quarter and the impact of the recently announced pricing action. And our outlooks also contemplate $700 million of advertising investment, all of which we expect to result in adjusted EBITDA of approximately $1.2-$1.3 billion. Regarding capital expenditures, we expect 2025 CapEx of approximately $225 million, including $25 million of investments to refresh Mattress Firm stores. Over the next three years, we expect to invest a cumulative $150 million to refresh Mattress Firm stores. Over the long term, we expect normalized run rate Somnigroup CapEx to be approximately $200 million. Lastly, I would like to flag a few modeling items. For the full year of 2025, we expect EBITDA of approximately $295 million-$305 million, interest expense of approximately $260 million-$270 million on a tax rate of 25%, with a diluted share count of 210 million shares. With that, I'll turn the call back over to Scott. Thank you, Bhaskar. Nice job to you and your team. It was a heavy lift this quarter. In closing, our results this quarter reflect both the transformational impact of the Mattress Firm acquisition and our ability to navigate a weak global market. Across all of our business units, domestically and internationally, we've made meaningful progress on our competitive position by leveraging our core strengths of our business: its people, iconic brands, diverse distribution, scale, operational flexibility, and manufacturing capabilities. The board and I continue to be grateful and impressed by the dedication and talent of all of our people all around the world. By staying focused on execution and our customers, we are driving share gains and delivering solid financial results across the entire Somnigroup enterprise. And with that, Operator, please open the call. Thank you, ladies and gentlemen. We will now start the Q&A session. If you have any questions, please press Star, followed by the number one on your touchtone phone. You will now hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press two. Please limit yourself to one question. Your first question comes from Susan Maklari, Goldman Sachs. Please go ahead. Good morning, everyone. Scott, I want to focus a bit on, good morning, Scott. I want to talk a bit about demand. Can you give us some color on how things trended through the quarter, what you saw coming into the second quarter? And then when you talk about a modest second-half improvement this year, how should we think about what that means and what the drivers are of that? Sure. Thank you, Susan, for your question. Look, the first quarter was a little bit challenged. Obviously, it was a little bit slower than we expected. It actually, after President's Day, got better and what I'd call stable, flat, flattish post-President's Day. But President's Day holiday, as we've spoken about earlier, was challenged, I think, for the industry, particularly about the U.S. If you go after first quarter into the second quarter, it started out slow. If you're talking about the last couple of weeks going into the holiday that we're headed towards, it's gotten better and been, I'd call, relatively good the last couple of weeks. So we'll call it choppy, for lack of a better word. If you're talking about internationally, it was in market, it was probably weak, but we're taking significant share both in the first quarter and continuing through the second quarter. That market's not been as challenged as the U.S. market, as the U.S. market deals with, we'll call it, interesting dynamics coming out of Washington, D.C., for lack of a better way to explain it, and the impact that that's had on consumer confidence or sentiment. As I think about the drivers of growth, the drivers of the slight improvement in the back half versus prior year, I would point to, we're very excited about the Sealy launch. There's a little transition. That transition continues to happen in the first half as those floor models get out there. So as that initiative gets its legs and drives some opportunity in the back half, continuing with that is we do have, as we announced, the price increase that goes into effect in the third quarter. So that should help us from a top-line perspective. Specifically, as you think about the second quarter, just to give some color on that specifically, from an EPS standpoint, I would, the way I think about it is EPS in the second quarter would be around $0.50, down 20% on a year-over-year. From what that means on a top-line perspective is, again, continue to see that challenged industry. So that from a North America perspective is what we would expect the North America sales to be consistent with what we saw in the first quarter, Mattress Firm to be, let's call it, down low single digits, and then with the international market continuing that momentum. And I think the last driver I would add, Bhaskar, is the reimagining of Mattress Firm's advertising that should probably begin late second quarter, third quarter. That stuff's pretty much getting in the cans and tested, and we expect that to be incrementally positive to both us and the industry. Next question, Operator. All right. Thank you so much. The next question will be from Bobby Griffin, Raymond James. Scott, I wanted to touch on - I think it was in your prepared remarks - just some comments on Mattress Firm's merchandising and kind of letting the brands compete against themselves. I think you called out the potential of Tempur Sealy-related products in the high 40s as their sales by the end of this year. Can you put that in context of that versus maybe balanced share in some of your other accounts where we can get a sense of what the ceiling is or what normal is now that some of the restrictions on kind of the brands competing freely on the floor are going to be taken off? Yeah. In general, and it varies quite a bit, as you know, in mattress specialty company, Bhaskar, what would you say? They usually have a six-handle. That's correct. On it. In general, in balance of share would be probably the average in a specialty shop. Next question, Operator. All right. The next question is from Rafe Jadrosich from Bank of America. Go ahead, please. Hi. Good morning. Thanks for taking my question. In the presentation, the investor presentation, it shows that you're kind of keeping that 2028 target of 485, but off of a lower base for 2025. Can you just talk about the confidence in sort of hitting that run rate, kind of sort of a higher growth rate going forward? And now that you've had a little bit of time of actually owning Mattress Firm, has anything sort of changed from your initial expectations, either positively or negatively in terms of hitting those longer-term targets? Sure. Great question. I mean, first of all, I mean, look, when you look through our guidance, the substance related to that that caused that is a rapid change in consumer confidence or sentiment in the U.S. If you go back to when the last time we gave guidance and look at that trend, consumer confidence and sentiment are down double digits. Historically, we've said that's really the leading indicator when we look at future activity, and so that's the driver, and so you look at that and you go, "Okay, it's consumer confidence and sentiment," and I think we all know that's a very volatile index. And the good news about that is, yeah, volatile means goes down and goes up, and I suspect that we would all agree that it all has to do with policies coming out of D.C., which can change rapidly. But as we sit here today with what we saw in that data, it made sense to us to react to a double-digit decline in consumer confidence. It has nothing to do with anything we've seen in Mattress Firm or really what I'd even call the real economy, where consumers continue to seem very solid, financing is available, buyers are buying. It's simply consumer confidence. So if you pivot from that discussion to your question, which is where we've put a perspective out, which is a three-year perspective, it's a longer-term period, and we're dealing with what I consider to be a short-term quarter-ish or two kind of consumer confidence issue. And if you look at that perspective, I think it's like a 5% growth rate on revenue per year. If you tweak it to 6%, you end up at the same 485 to the extent you're anchored on the 485, and when we thought through that, I think what we really see is, look, a little heavier dip here than we expected, admittedly. But that just means you're going to have a little bit stronger recovery as you come out of it during the longer period of time, so we didn't see this particular market that we find ourselves in as being kind of structural or long-term issue, so we didn't, quite frankly, feel any pressure to change the longer-term perspective. Thank you. The next question comes from Peter Keith, Piper Sandler. Go ahead, please. Hey, Peter. Maybe you're on mute. Sorry. I was on mute. Apologies for that. Good morning. On the commodity costs that you're flagging, could you unpack that a little bit and help us understand what the key pressure points are within your COGS? And then on that gross margin outlook, because there's some comparability issues to last year, is 44% still flat year on year, or are you now taking gross margin down as well? Sure. So let's talk with gross margin first. So previously, when we came out of the 2024, our perspective was, call it, 45% gross margin on a full year. So it'd be easier to anchor off that. Where we sit here today is down versus that expectation, call it, somewhere in the 44%-44.5% range. When I think about what's driving that, a couple of things. One is just deleverage as our revenue expectation caused by the industry backdrop has declined. Put a little bit of deleverage in there. And then we do have the transitory impact of the tariffs, call it about $5 million in the second quarter. And consistent, we are taking price. However, no margin flows with that. So there's a little bit of margin%, that is. So there is a little bit of pressure coming out of that. So versus where we were before and where we are now, that's the way to think about it. As I think about from a commodity standpoint, largely speaking, we're in and around where we were before, somewhere between $25 million-$30 million. And those drivers, where we saw historically, they remain. So whether it be chems, whether it be the associated steel, etc. So consistent with where we were before, those are the drivers that we see today in how we're thinking about the rest of the year. The next question comes from Michael Lasser, UBS. Please go ahead. Hi. Good morning. This is Dan Silverstein. I'm from Michael. Our question is on Mattress Firm, what type of sales growth does the business need to leverage its expense space today, just so we can sensitize some different outcomes? And then just on the stores that were divested, how should we think about the lost profit associated there for this year? Thank you. Sure. Sure. So when you think about the divested stores, and again, thanks for everybody that participated in that process, both the Mattress Warehouse as well as the SGI team, the way I think about it is about, call it, $100 million for the rest of the year. $100 million from, if you were to bifurcate that out, call that more than half of it comes from Mattress Firm, the balance of it from Sleep Outfitters. When I think about the flow-through associated with that, we've historically ran Sleep Outfitters as break-even. So nothing to really think about from a flow-through standpoint. However, on the Mattress Firm side, think about that flow-through somewhere between 30%-40% when you think about what the impact of those divested stores. Sorry, what was the first question? And the other part of his question was revenue growth, I think, to cover expenses at Mattress Firm. So I don't fully understand the details of the question because you have a lot of levers in the business besides sales, whether it be margin improvement or expense reductions or optimization of footprint and everything else. I'm not sure we really think of the business that way. I can tell you, since we've acquired them after a rough Presidents' Day holiday period, it's pretty clear to us, based on the data that we've seen, that Mattress Firm has performed, relatively speaking, well and has taken share in the U.S. market, as we've seen most of our large retailers perform better in the market than their competition. So they've performed well and look like they've got a bright future. What I would say about Mattress Firm flow-through is every incremental dollar is very accretive versus the fleet. When you think about where Mattress Firm was and where it is today, as Scott has said, historically, it's held in better than what the pro forma would indicate when we started this process. As the industry comes back, there's no reason to believe that it won't come back. That is the flow-through associated with Mattress Firm will be very rich versus the fleet. And I believe we've quantified that as somewhere around, let's call it, in the 40% range for every incremental dollar. Thank you. The next question will be from Laura Champine, and she's from Loop Capital. Go ahead, please. Thanks for taking my question. It's really on the shape of the year, and I appreciate all the details on your outlook. It's going to be kind of a rarity this earnings season. But you do expect improvement as the year progresses in industry demand, I think. And I'd love to hear kind of more what that's predicated on. Sure. When I think about the shape of the year, that is very fair. A couple of things we talk about ourselves is, as I mentioned before, momentum from the new products launching that we have in place in the U.S. around Sealy. As I think about international, the continuing momentum that we're seeing from the new products that were introduced and the comps are getting a little bit harder, but we'd still expect mid-single-digit growth in the back half of the year. When I think about, well, from an industry standpoint, the way I would think about that is exiting 2025 is we would expect the industry still to be negative, and there would be slight improvement. The slight improvement is really as the comps get a bit easier as you get into the back half. More driven by our performance, what we're doing to execute, and a bit of improvement from the industry. And then I know I'm looking at finer points, but I think you mentioned that $0.50 in Q2 EPS is reasonable. What sort of a gross margin should I be thinking about to get there? Great question, Laura. When I think about gross margin, let's think about it as sequentially. Easier to talk about it sequentially. We put up 42%, call it 42.2% in the first quarter. What I would expect is a bit of improvement as you go into Q2. That bit of improvement is really driven by a couple of things. Commodities getting a bit easier on a sequential basis, just a bit. Productivity continued to drive improvement. So that all leads to gross margins being a bit higher than what I would expect or what I saw in Q1. If you think about gross margins for the rest of the year, consistent with what you'd expect from a seasonality standpoint, Q3 being the highest, and then as you think about Q4 being relatively the same as Q2. A little bit more on Q2. I think I gave you a way to think about the shape or a way to think about sales. Now we've talked about gross margin. Just from a macro standpoint, as we mentioned the tariffs, so that's the transitory items that we've taken care of. Also, we're very excited about the Sealy launch, and as we thought about it, is the Sealy launch consistent with the plan? It was a headwind to EBITDA for 2025. When you see that headwind specifically in Q2, there is a bit of a drag, as in prior year, the launch was effectively complete in Q2, and this year it is still continues. Hopefully, the objective is to get it largely out by Memorial Day in and around right now. But that's the other driver of EPS in the second quarter. Got it. Thank you. Of course. The next question comes from Brad Thomas, KeyBanc Capital Markets. Go ahead, please. Good morning. I also was hoping to follow up on Mattress Firm and was wondering if you could talk, Scott, a little bit about some of these partnerships. Purple, Leggett, Resident that you mentioned. For some of them, you're helping with the manufacturing for these products. And if you could just talk about how this fits into your merchandising strategy. I'm wondering if there's any other changes that you're making operationally at Mattress Firm around employee training, commissions, etc., that might be worth highlighting. Thanks. Sure. Let me start with kind of the merchandising thinking. Look, when we think about merchandising at Mattress Firm, we take more of a broader look at it probably than they have historically, including financial strength and risk of various suppliers. And we look at the full profit picture. And so to the extent that we can manufacture the product and make some more money overall on that side of the house, we think about that as we kind of help set the floor at Mattress Firm. We also look at things like advertising and whether or not that brand's driving incremental traffic in, ease to work with, all kinds of issues. And in doing that, we've made some changes, which we've highlighted all along, that we would take a broad look at the merchandising. And we've signed three agreements, and there'll probably be some more as we work through to give customers the products that we think that the customers want going forward. You asked about other changes. Sure. We're looking at all things that Mattress Firm is doing to optimize Mattress Firm for customers and for shareholders. There's not any changes in commissions or anything like that. We're just making sure that we've got the floor level and customers are able to choose the products that best fit their needs. The next question will be from Jonathan Matuszewski from Jefferies. Please go ahead. Great. Good morning, and thanks for taking my question. Could you talk about the dispersion in performance across the different brands, Sealy, Tempur, Stearns & Foster this quarter? Obviously, you have this Sealy kind of new product launch getting floored, so that kind of impacts results. But just any nuances across the brands and how you're thinking about any relative performance as we go throughout the year. Thanks so much. Sure. I mean, starting with international, which is dominated by the Tempur brand, Tempur's rocking. So I mean, could we give a call out to the international group and the Tempur brand? Sealy's been okay internationally, I would say. If you go to the U.S., which is probably really where the center of your question is, Tempur was the strongest brand, and then Stearns & Foster, and then Sealy. Pretty hard to judge the Sealy brand this quarter as it's in the middle of the launch, and that's always choppy with floor models and selling off back stock, but we continue to see the higher-income customer or the premium products outperform, we'll call it, the entry-level products. All right. Now we are taking our final question from William Reuter with Bank of America. Go ahead, please. Good morning. Just a question on the $750 million of COGS for the Tempur Sealy products or, sorry, the Tempur products that are from other countries. What countries is this exposure to? I guess I'm curious whether there is some from China and then where it is in the rest of the world. And then you mentioned ways to offset at half price and half other items. Are those other items moving the sourcing of the product, or how have you been able to find ways to offset that? Thanks. Sure. Good question. So when I think about it, from aligning on the top, so $750 million of COGS associated with Tempur Sealy is exposed to, let's say, could be subject to tariff. Of that, $120 million unmitigated is what we initially saw. We've mitigated that down to $60 million. So how did that happen? A couple of different ways. One is that just given our scale, we were able to move some supply from, let's call it, Supplier X to Supplier Y that was more advantageous from a tariff standpoint. In addition to that, what we're able to do, just given the strategic relationships with our suppliers, is that we were able to work with each other to be able to share some of those costs. So at the end of the day, what that resulted in is about a 50% reduction in the tariffs versus the unmitigated way. Then what I would look at is that we do, just given the strength of our brands and our products, is that we've taken price to fully offset, other than the second quarter, fully offset the impact of the tariff. As I think about where that exposure is coming from, it is principally in, let's call it, Asia, as you could imagine, and a bit coming from Mexico. Great. Thank you. All right. At this moment, there are no further questions being raised. Ladies and gentlemen, this concludes today's Q&A session. We will now turn the call over to Scott Thompson for closing remarks. Thank you, Operator. To our over 20,000 associates around the world, thank you for what you do every day to make the company successful. To our retail partners, thank you for your outstanding representation of our brands. To our shareholders and lenders, thank you for your confidence in the company's leadership and its board of directors. This ends the call today. Thank you, Operator. Thank you so much, and thank you for your participation. You may now disconnect. You have a great day.