Earnings release
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SOMNIGROUP SOMNIGROUP INTERNATIONAL INC . REPORTS SECOND QUARTER 2026 RESULTS DALLAS , TX , August 6 , 2026 - EPS Growth of 11 % and Adjusted EPS Growth of 9 % - Second Quarter Gross Margins Expand - Record Second Quarter Cash Flows from Operations of $ 236 Million Somnigroup International Inc. ( NYSE : SGI , " Company " ) announced financial results for the second quarter ended June 30 , 2026 and revised financial guidance for the full year 2026 . • • • • • SECOND QUARTER 2026 FINANCIAL SUMMARY Total net sales decreased 3.0 % to $ 1,823.5 million as compared to $ 1,880.8 million in the second quarter of 2025 . Gross margin was 44.8 % as compared to 44.0 % in the second quarter of 2025. Adjusted gross margin ( ¹ ) was 45.1 % as compared to 44.2 % in the second quarter of 2025 . Operating income increased 12.1 % to $ 201.7 million as compared to $ 179.9 million in the second quarter of 2025. Adjusted operating income ( ¹ ) decreased 3.5 % to $ 216.6 million as compared to $ 224.4 million in the second quarter of 2025 . Net income increased 12.0 % to $ 110.9 million as compared to $ 99.0 million in the second quarter of 2025. Adjusted net income ( ¹ ) increased 8.4 % to $ 122.6 million as compared to $ 113.1 million in the second quarter of 2025 . Earnings per diluted share ( " EPS " ) increased 10.6 % to $ 0.52 as compared to $ 0.47 in the second quarter of 2025. Adjusted EPS ( ¹ ) increased 9.4 % to $ 0.58 as compared to $ 0.53 in the second quarter of 2025 . Leverage based on the ratio of consolidated indebtedness less netted cash ( ¹ ) to adjusted EBITDA ( ¹ ) was 2.99 times for the trailing twelve months ended June 30 , 2026 compared to 3.56 times for the trailing twelve months ended June 30 , 2025 . KEY HIGHLIGHTS ( in millions , except percentages and per common share amounts ) Net sales Net income Adjusted net income ( 1 ) EPS Adjusted EPS ( 1 ) Three Months Ended June 30 , 2026 June 30 , 2025 % Reported Change $ 1,823.5 $ 1,880.8 ( 3.0 ) % $ 110.9 $ 99.0 12.0 % $ 122.6 $ 113.1 8.4 % $ 0.52 $ 0.47 10.6 % $ 0.58 $ 0.53 9.4 % Company Chairman and CEO Scott Thompson commented , " Our second - quarter performance demonstrates our global team's ability to execute in a dynamic environment . We delivered solid results while continuing to fully invest in our iconic brands , advancing our international growth strategy , preparing for the North American launch of our new Stearns & Foster collection and strengthening our multiple distribution platforms . The progress we are making across the business reinforces our confidence in our long - term strategy and our ability to create sustainable value . " ( 1 ) This is a non - GAAP financial measure . Please refer to " Non - GAAP Financial Measures and Constant Currency Information " below . 1
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Business Segment Highlights The Company's business segments include Mattress Firm, Tempur Sealy North America and Tempur Sealy International. Corporate operating expenses are not included in any of the business segments and are presented separately as a reconciling item to consolidated results. Mattress Firm net sales decreased 2.8% to $922.2 million as compared to $948.8 million in the second quarter of 2025, primarily driven by store closures. Mattress Firm same store sales were up slightly as compared to the second quarter of 2025. All Mattress Firm sales are reported through the direct channel. Mattress Firm gross margin was 33.3% as compared to 35.6% in the second quarter of 2025. Adjusted gross margin declined 240 basis points to 33.3% as compared to 35.7% in the second quarter of 2025. These declines were primarily driven by product mix, consumer financing costs, investments in Mattress Firm's stores and deleverage. Mattress Firm operating margin was 6.4% as compared to 6.7% in the second quarter of 2025. Adjusted operating margin declined 130 basis points to 6.5% as compared to 7.8% in the second quarter of 2025. These declines were primarily driven by the decline in gross margin, partially offset by favorable co-operative advertising expense. Tempur Sealy North America net sales to Mattress Firm increased 11.6% to $294.0 million as compared to $263.5 million in the second quarter of 2025. These sales are eliminated on a reported basis. Reported net sales, which were impacted by market conditions, decreased 5.7% to $601.8 million as compared to $638.4 million in the second quarter of 2025. Reported net sales through the wholesale channel decreased $29.6 million, or 5.5%, to $504.4 million as compared to the second quarter of 2025. Reported net sales through the direct channel decreased $7.0 million, or 6.7%, to $97.4 million as compared to the second quarter of 2025, primarily driven by a decrease in sales from the divestiture of Sleep Outfitters in the second quarter of 2025. North America gross margin was 61.1% as compared to 54.5% in the second quarter of 2025. Adjusted gross margin improved 680 basis points to 61.8% as compared to 55.0% in the second quarter of 2025. These improvements were primarily driven by the achievement of synergies from the Mattress Firm acquisition, operational efficiencies and mix. These improvements were partially offset by commodity cost inflation before pricing actions. Subsequent to quarter end, the Company implemented price increases designed to reflect the increase in key input cost of production. North America operating margin was 25.9% as compared to 20.4% in the second quarter of 2025. Adjusted operating margin improved 400 basis points to 26.7% as compared to 22.7% in the second quarter of 2025. These improvements were primarily driven by the improvement in gross margin, partially offset by investments in co-operative advertising expense. Tempur Sealy International net sales increased 2.0% to $299.5 million as compared to $293.6 million in the second quarter of 2025. On a constant currency basis , International net sales increased 1.3% as compared to the second quarter of 2025. Net sales through the direct channel decreased $2.2 million, or 1.2%, to $182.7 million as compared to the second quarter of 2025. Net sales through the wholesale channel increased $8.1 million, or 7.5%, to $116.8 million as compared to the second quarter of 2025. International gross margin declined 80 basis points to 47.4% as compared to 48.2% in the second quarter of 2025. The decline was primarily driven by commodity cost inflation before pricing actions, partially offset by operational efficiencies. Subsequent to quarter end, the Company implemented price increases designed to reflect the increase in key input cost of production. International operating margin declined 120 basis points to 12.4% as compared to 13.6% in the second quarter of 2025. The decline was primarily driven by the decline in gross margin. Corporate operating expense decreased to $50.8 million as compared to $53.2 million in the second quarter of 2025, primarily driven by decreased costs related to the Mattress Firm acquisition. Adjusted operating expense was $41.0 million as compared to $34.4 million in the second quarter of 2025. (1) (1) (1) (1) (1) (1) (1) This is a non-GAAP financial measure. Please refer to "Non-GAAP Financial Measures and Constant Currency Information" below. 2
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Consolidated Financial Position Consolidated net income increased 12.0% to $110.9 million as compared to $99.0 million in the second quarter of 2025. Adjusted net income increased 8.4% to $122.6 million as compared to $113.1 million in the second quarter of 2025. EPS increased 10.6% to $0.52 as compared to $0.47 in the second quarter of 2025. Adjusted EPS increased 9.4% to $0.58 as compared to $0.53 in the second quarter of 2025. The Company ended the second quarter of 2026 with total debt of $4.4 billion and consolidated indebtedness less netted cash of $4.3 billion. Leverage based on the ratio of consolidated indebtedness less netted cash to adjusted EBITDA was 2.99 times for the trailing twelve months ended June 30, 2026. Financial Guidance For the full year 2026, the Company revised its expectations for adjusted EPS to a range of $2.85 to $3.15, which represents an approximate 11% increase from 2025 adjusted EPS at the mid-point of the range. The Company noted that its expectations are based on information available at the time of this release, and are subject to changing conditions and risks, many of which are outside the Company's control, including the possible imposition of new tariffs or retaliatory tariffs, uncertainties arising from global and geo-political events (including the war in Ukraine and the war in the Middle East) and any related effect on pricing, sales and supply of materials, labor costs and other employment-related costs, increases in existing tariffs and other changes in trade policy and regulations and the resulting uncertainty of the macroeconomic environment. The Company is unable to reconcile forward ‐ looking adjusted EPS, a non ‐ GAAP financial measure, to EPS, its most directly comparable forward ‐ looking GAAP financial measure, without unreasonable efforts, because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact EPS in 2026. Proposed Acquisition of Leggett & Platt On April 13, 2026, the Company announced it has signed a definitive agreement to acquire Leggett & Platt, Incorporated ("Leggett & Platt"), a diversified component manufacturer, in an all-stock transaction valued at approximately $2.5 billion based on the closing price of Somnigroup International's common stock as of April 10, 2026 and inclusive of Leggett & Platt's existing indebtedness. The Company expects the transaction to close by the end of the third quarter of 2026, subject to the satisfaction of customary closing conditions, including approval by Leggett & Platt's shareholders and receipt of applicable regulatory approvals. A separate press release related to the announcement of this transaction can be found on the Company's investor relations website at investor.somnigroup.com. Dividend Declared Today, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.17 per share, payable on September 3, 2026 to shareholders of record at the close of business on August 20, 2026. Conference Call Information Somnigroup International Inc. will host a live conference call to discuss financial results today, August 6, 2026, at 8:00 a.m. Eastern Time. The call will be webcast and can be accessed on the Company's investor relations website at investor.somnigroup.com. After the conference call, a webcast replay will remain available on the investor relations section of the Company's website for 30 days. Non-GAAP Financial Measures and Constant Currency Information For additional information regarding EBITDA, adjusted EBITDA, adjusted EPS, adjusted net income, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash (all of which are non-GAAP financial measures), please refer to the reconciliations and other information included in the attached schedules. For information on the methodology used to present information on a constant currency basis, please refer to "Constant Currency Information" included in the attached schedules. Forward-Looking Statements This press release contains statements that may be characterized as "forward-looking," within the meaning of the federal securities laws. Such statements might include information concerning one or more of the Company's plans, guidance, objectives, goals, strategies and other information that is not historical information. When used in this release, the words "assumes," "estimates," "expects," "guidance," "anticipates," "might," "projects," "plans," "proposed," "targets," "intends," "believes," "will," "contemplates" and variations of such words or similar expressions are intended to identify forward-looking statements. These forward-looking statements include, without limitation, statements relating to the Company's expectations regarding the Mattress Firm acquisition and the pending Leggett & Platt acquisition, expectations regarding post-closing supply agreements, future performance, synergies, integration of acquired companies with our (1) (1) (1) (1) (1) (1) (1)
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business, including the Mattress Firm acquisition and the pending Leggett & Platt acquisition, the Company's expected quarterly results, full year guidance and outperformance relative to the broader industry, the Company's quarterly cash dividend, the Company's expectations regarding geopolitical events (including the war in Ukraine and the war in the Middle East) and any related effect on pricing, sales and supply of materials, the imposition of new tariffs or retaliatory tariffs, increases in existing tariffs and other changes in trade policy and regulations, changes in tax laws generally, including the H.R. 1 bill, a potential U.S. government shutdown and its effect on sales and supply of materials, loss of suppliers and disruptions in the supply of raw materials, the macroeconomic environment including its impact on consumer behavior, foreign exchange rates and fluctuations in such rates, the bedding industry, financial infrastructure, adjusted EPS for 2026 and subsequent periods and the Company's expectations for sales and adjusted EPS growth, product launches, expected hiring and advertising, capital project timelines, channel growth, acquisitions and commodities outlook. Any forward-looking statements contained herein are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations, meet its guidance or that these beliefs will prove correct. Numerous factors, many of which are beyond the Company's control, could cause actual results to differ materially from any that may be expressed herein as forward-looking statements. These potential risks include the ability to close the pending Leggett & Platt acquisition, which depends on the satisfaction of customary closing conditions, including approval by Leggett & Platt's shareholders and receipt of applicable regulatory approvals; the ability to successfully integrate Mattress Firm and Leggett & Platt into the Company's operations and realize synergies from the transactions; the possibility that the expected benefits of the Mattress Firm and Leggett & Platt acquisitions are not realized when expected or at all; general economic, financial and industry conditions, particularly conditions relating to the financial performance and related credit issues present in the retail sector, as well as consumer confidence and the availability of consumer financing; the impact of the macroeconomic environment in both the U.S. and internationally on the Company; uncertainties arising from national and global events and any related effect on pricing, sales and supply of materials; industry competition; the effects of consolidation of retailers on revenues and costs; and consumer acceptance and changes in demand for the Company's products and the factors discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. There may be other factors that may cause the Company's actual results to differ materially from the forward-looking statements. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. About Somnigroup International Inc. Somnigroup (NYSE: SGI) is the world's leading bedding company, dedicated to transforming how the world sleeps. With superior capabilities in design, manufacturing, distribution and retail, we deliver breakthrough sleep solutions and serve the evolving needs of consumers in more than 100 countries worldwide through our fully-owned businesses, Tempur Sealy, Mattress Firm and Dreams. Our portfolio includes the most highly recognized brands in the industry, including Tempur-Pedic®, Sealy®, Stearns & Foster® and Sleepy’s®, and our global omni-channel platform enables us to meet consumers wherever they shop, offering a personal connection and innovation to provide a unique retail experience and tailored solutions. Investor Relations Contact: Lauren Avritt Investor Relations Somnigroup International Inc. Investor.relations@somnigroup.com 3
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SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Statements of Income (in millions, except percentages and per common share amounts) (unaudited) Three Months Ended Six Months Ended June 30, Chg % June 30, Chg % 2026 2025 2026 2025 Net sales $ 1,823.5 $ 1,880.8 (3.0)% $ 3,625.0 $ 3,485.5 4.0% Cost of sales 1,006.3 1,053.6 2,030.9 2,077.8 Gross profit 817.2 827.2 (1.2)% 1,594.1 1,407.7 13.2% Selling and marketing expenses 453.5 460.5 882.0 823.1 General, administrative and other expenses 165.1 175.9 332.0 385.4 Loss on disposal of business — 13.9 — 13.9 Equity income in earnings of unconsolidated affiliates (3.1) (3.0) (8.7) (7.8) Operating income 201.7 179.9 12.1% 388.8 193.1 101.3% Other expense, net: Interest expense, net 59.0 72.5 119.0 133.8 Other (income) expense, net (5.1) 4.7 (15.3) 5.9 Total other expense, net 53.9 77.2 103.7 139.7 Income before income taxes 147.8 102.7 43.9% 285.1 53.4 433.9% Income tax (provision) benefit (37.2) (3.2) (70.6) 13.3 Net income before non-controlling interest 110.6 99.5 11.2% 214.5 66.7 221.6% Less: Net (loss) income attributable to non-controlling interest(0.3) 0.5 (0.6) 0.8 Net income attributable to Somnigroup International Inc.$ 110.9 $ 99.0 12.0% $ 215.1 $ 65.9 226.4% Earnings per common share: Basic $ 0.53 $ 0.47 12.8% $ 1.02 $ 0.33 209.1% Diluted $ 0.52 $ 0.47 10.6% $ 1.01 $ 0.32 215.6% Weighted average common shares outstanding: Basic 210.4 209.2 210.4 202.1 Diluted 212.5 212.4 212.6 205.7 4
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SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (in millions) June 30, 2026 December 31, 2025 ASSETS (unaudited) Current Assets: Cash and cash equivalents $ 112.0 $ 134.9 Accounts receivable, net 361.4 358.5 Inventories 649.8 630.0 Prepaid expenses and other current assets 165.8 170.7 Total Current Assets 1,289.0 1,294.1 Property, plant and equipment, net 1,009.7 1,019.2 Goodwill 4,584.5 4,595.9 Trade name and other intangible assets, net 2,580.1 2,587.1 Operating lease right-of-use assets 1,893.5 1,878.8 Deferred income taxes 21.6 18.5 Other non-current assets 232.6 207.1 Total Assets $ 11,611.0 $ 11,600.7 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 522.2 $ 401.6 Accrued expenses and other current liabilities 646.3 636.5 Short-term operating lease obligations 405.2 399.6 Current portion of long-term debt 115.7 112.4 Income taxes payable 33.6 15.1 Total Current Liabilities 1,723.0 1,565.2 Long-term debt, net 4,292.8 4,573.3 Long-term operating lease obligations 1,598.4 1,589.8 Deferred income taxes 626.5 624.9 Other non-current liabilities 133.3 130.6 Total Liabilities 8,374.0 8,483.8 Redeemable non-controlling interest 7.6 8.9 Total Stockholders' Equity 3,229.4 3,108.0 Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity$ 11,611.0 $ 11,600.7 5
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SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) Six Months Ended June 30, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net income before non-controlling interest $ 214.5 $ 66.7 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 123.3 116.2 Amortization of stock-based compensation 22.6 18.5 Amortization of deferred financing costs 3.3 3.4 Bad debt expense 1.3 4.3 Deferred income taxes (0.6) 1.1 Dividends received from unconsolidated affiliates 6.6 6.7 Equity income in earnings of unconsolidated affiliates (8.7) (7.8) Loss on disposal of business — 13.9 Foreign currency adjustments and other 3.8 4.4 Changes in operating assets and liabilities, net of effect of business acquisitions 116.7 65.1 Net cash provided by operating activities 482.8 292.5 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (115.2) (60.7) Acquisitions, net of cash acquired — (2,824.5) Purchases of investments (0.3) — Other 0.4 7.1 Net cash used in investing activities (115.1) (2,878.1) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under long-term debt obligations 1,779.7 2,677.1 Repayments of borrowings under long-term debt obligations (2,051.8) (1,578.6) Proceeds from exercise of stock options — 49.1 Treasury stock repurchased (26.2) (132.4) Dividends paid (72.5) (64.4) Repayments of finance lease obligations and other (13.2) (10.6) Net cash (used in) provided by financing activities (384.0) 940.2 NET EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS ANDRESTRICTED CASH (6.6) 33.8 Decrease in cash, cash equivalents and restricted cash (22.9) (1,611.6) CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 134.9 1,709.7 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 112.0 $ 98.1 6
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Summary of Channel Sales The following table highlights net sales information, by channel and by business segment, for the three months ended June 30, 2026 and 2025: Three Months Ended June 30, (in millions) Consolidated Mattress Firm Tempur SealyNorth America Tempur Sealy International 2026 2025 2026 2025 2026 2025 2026 2025 Direct $ 1,202.3 $ 1,238.1 $ 922.2 $ 948.8 $ 97.4 $ 104.4 $ 182.7 $ 184.9 Wholesale 621.2 642.7 — — 504.4 534.0 116.8 108.7 $ 1,823.5 $ 1,880.8 $ 922.2 $ 948.8 $ 601.8 $ 638.4 $ 299.5 $ 293.6 (a) The Direct channel includes company-owned stores, online and call centers. (b) The Wholesale channel includes all third party retailers, including third party distribution, hospitality and healthcare. (a) (b) 7
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SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES Reconciliation of Non-GAAP Financial Measures (in millions, except percentages, ratios and per common share amounts) The Company provides information regarding adjusted net income, EBITDA, adjusted EBITDA, adjusted EPS, adjusted gross profit, adjusted gross margin, adjusted operating income (expense), adjusted operating margin, consolidated indebtedness and consolidated indebtedness less netted cash, which are not recognized terms under GAAP and do not purport to be alternatives to net income, earnings per share, gross profit, gross margin, operating income (expense) and operating margin as a measure of operating performance, or an alternative to total debt as a measure of liquidity. The Company believes these non-GAAP financial measures provide investors with performance measures that better reflect the Company's underlying operations and trends, providing a perspective not immediately apparent from net income, gross profit, gross margin, operating income (expense) and operating margin. The adjustments management makes to derive the non-GAAP financial measures include adjustments to exclude items that may cause short-term fluctuations in the nearest GAAP financial measure, but which management does not consider to be the fundamental attributes or primary drivers of the Company's business. The Company believes that exclusion of these items assists in providing a more complete understanding of the Company's underlying results from operations and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company's business, to evaluate its consolidated and business segment performance compared to prior periods and the marketplace, to establish operational goals and to provide continuity to investors for comparability purposes. Limitations associated with the use of these non-GAAP financial measures include that these measures do not present all of the amounts associated with the Company's results as determined in accordance with GAAP. These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable financial measures defined by GAAP. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies. For more information about these non-GAAP financial measures and a reconciliation to the nearest GAAP financial measure, please refer to the reconciliations on the following pages. Constant Currency Information In this press release the Company refers to, and in other press releases and other communications with investors the Company may refer to, net sales, earnings or other historical financial information on a "constant currency basis", which is a non-GAAP financial measure. These references to constant currency basis do not include operational impacts that could result from fluctuations in foreign currency rates. To provide information on a constant currency basis, the applicable financial results are adjusted based on a simple mathematical model that translates current period results in local currency using the comparable prior corresponding period's currency conversion rate. This approach is used for countries where the functional currency is the local country currency. This information is provided so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby facilitating period-to-period comparisons of business performance. 8
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Adjusted Net Income and Adjusted EPS A reconciliation of reported net income to adjusted net income and the calculation of adjusted EPS are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release. The following table sets forth the reconciliation of the Company's reported net income to adjusted net income and the calculation of adjusted EPS for the three months ended June 30, 2026 and 2025: Three Months Ended (in millions, except per share amounts) June 30, 2026 June 30, 2025 Net income $ 110.9 $ 99.0 Transaction costs 8.3 4.9 Business combination charges 7.4 17.6 Loss on disposal of business — 13.9 Disposition-related costs — 9.2 Supply chain transition costs — 1.3 Adjusted income tax provision (4.0) (32.8) Adjusted net income $ 122.6 $ 113.1 Adjusted earnings per common share, diluted $ 0.58 $ 0.53 Diluted shares outstanding 212.5 212.4 (1) (2) (3) (4) (5) (6) Please refer to Footnotes at the end of this release. 9
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Adjusted Gross Profit, Adjusted Gross Margin, Adjusted Operating Income (Expense) and Adjusted Operating Margin A reconciliation of gross profit and gross margin to adjusted gross profit and adjusted gross margin, respectively, and operating income (expense) and operating margin to adjusted operating income (expense) and adjusted operating margin, respectively, are provided below. Management believes that the use of these non-GAAP financial measures provides investors with additional useful information with respect to the impact of various adjustments as described in the footnotes at the end of this release. The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended June 30, 2026. 2Q 2026 (in millions, exceptpercentages) Consolidated Margin MattressFirm Margin Tempur SealyNorthAmerica Margin Tempur SealyInternational Margin Corporate Net sales $ 1,823.5 $ 922.2 $ 601.8 $ 299.5 $ — Gross profit $ 817.2 44.8 % $ 307.5 33.3 % $ 367.8 61.1 % $ 141.9 47.4 % $ — Adjustments: Business combinationcharges 4.3 — 4.3 — — Total adjustments 4.3 — 4.3 — — Adjusted gross profit $ 821.5 45.1 % $ 307.5 33.3 % $ 372.1 61.8 % $ 141.9 47.4 % $ — Operating income (expense) $ 201.7 11.1 % $ 59.4 6.4 % $ 155.9 25.9 % $ 37.2 12.4 % $ (50.8) Adjustments: Transaction costs 8.3 — — — 8.3 Business combinationcharges 6.6 0.5 4.6 — 1.5 Total adjustments 14.9 0.5 4.6 — 9.8 Adjusted operating income(expense) $ 216.6 11.9 % $ 59.9 6.5 % $ 160.5 26.7 % $ 37.2 12.4 % $ (41.0) (2) (1) (2) Please refer to Footnotes at the end of this release. 10
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The following table sets forth the reconciliation of the Company's reported gross profit and operating income (expense) to the calculation of adjusted gross profit and adjusted operating income (expense) for the three months ended June 30, 2025: 2Q 2025 (in millions, exceptpercentages) Consolidated Margin MattressFirm Margin Tempur SealyNorthAmerica Margin Tempur SealyInternational Margin Corporate Net sales $ 1,880.8 $ 948.8 $ 638.4 $ 293.6 $ — Gross profit $ 827.2 44.0 % $ 337.4 35.6 % $ 348.2 54.5 % $ 141.6 48.2 % $ — Adjustments: Disposition-related costs 3.7 1.4 2.3 — — Supply chain transitioncosts 0.7 — 0.7 — — Total adjustments 4.4 1.4 3.0 — — Adjusted gross profit $ 831.6 44.2 % $ 338.8 35.7 % $ 351.2 55.0 % $ 141.6 48.2 % $ — Operating income (expense) $ 179.9 9.6 % $ 63.2 6.7 % $ 130.1 20.4 % $ 39.8 13.6 % $ (53.2) Adjustments: Business combinationcharges 17.6 2.2 — — 15.4 Loss on disposal of business 13.9 4.1 9.8 — — Disposition-related costs 7.4 2.9 4.5 — — Transaction costs 4.9 1.5 — — 3.4 Supply chain transitioncosts 0.7 — 0.7 — — Total adjustments 44.5 10.7 15.0 — 18.8 Adjusted operating income(expense) $ 224.4 11.9 % $ 73.9 7.8 % $ 145.1 22.7 % $ 39.8 13.6 % $ (34.4) (4) (5) (2) (3) (4) (1) (5) Please refer to Footnotes at the end of this release. 11
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EBITDA, Adjusted EBITDA and Consolidated Indebtedness less Netted Cash The following reconciliations are provided below: • Net income to EBITDA and adjusted EBITDA • Ratio of consolidated indebtedness less netted cash to adjusted EBITDA • Total debt, net to consolidated indebtedness less netted cash Management believes that presenting these non-GAAP measures provides investors with useful information with respect to the Company's operating performance, cash flow generation and comparisons from period to period, as well as general information about the Company's leverage. The Company's credit agreement (the "2023 Credit Agreement") provides the definition of adjusted EBITDA. Accordingly, the Company presents adjusted EBITDA to provide information regarding the Company's compliance with requirements under the 2023 Credit Agreement. The following table sets forth the reconciliation of the Company's reported net income to the calculations of EBITDA and adjusted EBITDA for the three months ended June 30, 2026 and 2025: Three Months Ended (in millions) June 30, 2026 June 30, 2025 Net income $ 110.9 $ 99.0 Interest expense, net 59.0 72.5 Income tax provision 37.2 3.2 Depreciation and amortization 73.7 69.1 EBITDA $ 280.8 $ 243.8 Adjustments: Transaction costs 8.3 4.9 Business combination charges 7.4 17.6 Loss on disposal of business — 13.9 Disposition-related costs — 9.2 Supply chain transition costs — 1.3 Adjusted EBITDA $ 296.5 $ 290.7 (1) (2) (3) (4) (5) Please refer to Footnotes at the end of this release. 12
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The following table sets forth the reconciliation of the Company's net income to the calculations of EBITDA and adjusted EBITDA for the trailing twelve months ended June 30, 2026: Trailing Twelve Months Ended (in millions) June 30, 2026 Net income $ 533.3 Interest expense, net 253.1 Income tax provision 179.6 Depreciation and amortization 302.7 EBITDA $ 1,268.7 Adjustments: Business combination charges 57.5 Transaction costs 11.1 Legal and other charges 8.6 Supply chain transition costs 7.3 Cloud-based computing arrangements impairment 6.2 Disposition-related costs 1.3 Adjusted EBITDA $ 1,360.7 Future cost synergies to be realized from Mattress Firm acquisition 85.0 Adjusted EBITDA per credit facility $ 1,445.7 Consolidated indebtedness less netted cash $ 4,324.3 Ratio of consolidated indebtedness less netted cash to adjusted EBITDA per credit facility 2.99 times Under the 2023 Credit Agreement, the definition of adjusted EBITDA per credit facility contains certain restrictions that limit adjustments to net income when calculating adjusted EBITDA. For the trailing twelve months ended June 30, 2026, the Company's adjustments to net income when calculating adjusted EBITDA did not exceed the allowable amount under the 2023 Credit Agreement. The ratio of consolidated indebtedness less netted cash to adjusted EBITDA per credit facility is 2.99 times for the trailing twelve months ended June 30, 2026. The 2023 Credit Agreement requires the Company to maintain a ratio of consolidated indebtedness less netted cash to adjusted EBITDA of less than 5.00 times. The following table sets forth the reconciliation of the Company's reported total debt to the calculation of consolidated indebtedness less netted cash as of June 30, 2026. "Consolidated Indebtedness" and "Netted Cash" are terms used in the 2023 Credit Agreement for purposes of certain financial covenants. (in millions) June 30, 2026 Total debt, net $ 4,408.5 Plus: Deferred financing costs 27.8 Consolidated indebtedness 4,436.3 Less: Netted cash 112.0 Consolidated indebtedness less netted cash $ 4,324.3 (2) (1) (7) (5) (8) (4) (9) (10) (11) Please refer to Footnotes at the end of this release. 13
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Footnotes: (1) In the second quarter of 2026, the Company recorded $8.3 million of transaction costs, primarily associated with legal and professional fees relatedto the proposed acquisition of Leggett & Platt. In the second quarter of 2025, the Company recorded $4.9 million of transaction costs associatedwith the Term B Loan repricing and the divestiture of 73 Mattress Firm stores and its Sleep Outfitters subsidiary, which primarily included legaland professional fees. In the trailing twelve months ended June 30, 2026, the Company recognized $11.1 million of transaction costs primarily related to the proposedacquisition of Leggett & Platt. (2) In the second quarter of 2026, the Company recorded $7.4 million of business combination charges. Cost of sales included $4.3 million of chargesprimarily related to costs to achieve supply chain synergies. Operating expenses included $2.3 million of professional fees and restructuring costs.Other income, net included $0.8 million of charges related to Mattress Firm store refreshes. In the second quarter of 2025, the Company recorded$17.6 million of business combination charges, primarily related to the CEO transaction bonus, professional fees and restructuring costs. In the trailing twelve months ended June 30, 2026, the Company recognized $57.5 million of business combination charges primarily related to thefloor model transition associated with the refinement of Mattress Firm's multi-branded merchandising plan, professional fees and restructuringcosts. (3) In the second quarter of 2025, the Company recorded a $13.9 million loss on disposal of business, net of proceeds of $9.0 million, associated withthe divestiture of 73 Mattress Firm stores and its Sleep Outfitters subsidiary. (4) In the second quarter of 2025, the Company recorded $9.2 million of disposition-related costs. Cost of sales included $3.7 million, primarilyrelated to retail store transition costs incurred for the divestiture to Mattress Warehouse. Operating expenses included $3.7 million ofmerchandising, store personnel and other support costs related to the divestiture. Other expenses included a $1.8 million loss on disposal for assetsnot divested to Mattress Warehouse. In the trailing twelve months ended June 30, 2026, the Company recognized $1.3 million of disposition-related costs, primarily related to retailstore transition costs incurred for the divestiture to Mattress Warehouse. (5) In the second quarter of 2025, the Company recorded $1.3 million of supply chain transition costs associated with the consolidation of certainmanufacturing facilities, with $0.7 million recorded in cost of sales and $0.6 million recorded in other expenses. In the trailing twelve months ended June 30, 2026, the Company recognized $7.3 million in supply chain transition costs, primarily related to amanufacturing facility lease termination. (6) Adjusted income tax provision represents the tax effects associated with the aforementioned items and other non-recurring discrete items. (7) In the trailing twelve months ended June 30, 2026, the Company recorded $8.6 million of one-time charges, including $6.1 million of legal feesand $2.5 million of customer-related charges. (8) In the trailing twelve months ended June 30, 2026, the Company recorded $6.2 million of impairment charges related to certain cloud-basedcomputing arrangements. (9) In the trailing twelve months ended June 30, 2026, the Company is permitted to include $85.0 million of future cost synergies expected to berealized in connection with acquisitions for the purpose of calculating the Company's adjusted EBITDA in accordance with the 2023 CreditAgreement. (10) The Company presents deferred financing costs as a direct reduction from the carrying amount of the related debt in the Condensed ConsolidatedBalance Sheets. For purposes of determining total debt for financial covenant purposes, the Company has added these costs back to total debt, netas calculated per the Condensed Consolidated Balance Sheets. (11) Netted cash includes cash and cash equivalents for domestic and foreign subsidiaries designated as restricted subsidiaries in the 2023 CreditAgreement. 14