Somnigroup International Inc. · NYSE:SGI
Somnigroup International — Investor Presentation (February 2025)
49 slides from Somnigroup International's investor presentation, Feb 20, 2025
Slide 1: February 2025
NYSE: SGI F E B R U A R Y 2 0 2 5
Slide 2: Somnigroup Investment Thesis
Leader in the $120 billion3 global bedding market. Broad, sustainable competitive advantages across iconic brands, capabilities, and scale; industry-leading design and manufacturing capabilities; vertically integrated operations; worldwide omni-channel distribution network. Attractive secular indust
Slide 3: About Somnigroup
In February 2025, the Company was reimagined, and Somnigroup International Inc. was founded, reflecting the transformative nature of the Mattress Firm acquisition. Somnigroup provides sleep solutions with a portfolio of outstanding businesses with iconic brands. SOMN = sleep OMNI = omnichannel GROUP
Slide 4: Somnigroup's Structure
High-level strategic direction • Corporate governance • Capital allocation Tactical go-to-market strategy • Operational excellence • Passionate customer service SOMNIGROUP’S STRUCTURE 4
Slide 5: Somnigroup: world's largest bedding company
SOMNIGROUP 5 CONSUMER-CENTRIC INNOVATION DIVERSIFIED PORTFOLIO MANUFACTURING & LOGISTICS OMNI-CHANNEL RETAIL • Advanced R&D capabilities driving continuous solutions-based innovation • Diverse brand portfolio includes the most highly recognized brands in the industry • Global manufacturing footprint
Slide 6: Uniquely Positioned to Optimize Consumer Experience
SOMNIGROUP 6 Optimize investments in sleep technology Improve targeted innovation Drive advertising share of voice Enhance consumer outcomes Accelerate continuous feedback loop Uniquely Positioned to Optimize Consumer Experience
Slide 7: Somnigroup's Vertically Integrated Strategy
SOMNIGROUP’S VERTICALLY INTEGRATED STRATEGY 7 160+ OPERATIONS FACILITIES W I T H 2,800+ RETAIL STORES 20,000 associates Manufacturing and R&D facilities Distribution centers Logistics fleet Mattress Firm retail stores Dreams retail stores Tempur® retail stores E-commerce platforms SOMNIGROUP ECOSYST
Slide 8: Somnigroup's Journey to Vertical Retailer
SOMNIGROUP’S JOURNEY TO VERTICAL RETAILER 8 2015 2024 Pro Forma4 Total Sales $3.2B $8.0B Adjusted EBITDA2 $0.5B $1.3B Stock Price $17.61 $66.80* +56% DIRECT TO CONSUMER As a percentage of TOTAL SALES4 2015 9% 2024 65% *SGI closing stock price on 2/19/25
Slide 9: Somnigroup Team's Value Creation
SOMNIGROUP TEAM’S VALUE CREATION 9 Since the management change in 2015, sales have increased 56%, adjusted EBITDA2 has increased over 100%, and adjusted EPS2 has increased over 200%. Current TPX Management Track Record Since 2015 (in millions, except percentages, multiples, and per common share amou
Slide 10: Somnigroup Executive Team
SOMNIGROUP EXECUTIVE TEAM 10 SCOTT THOMPSON CHAIRMAN, CEO CLIFF BUSTER CEO SCOTT THOMPSON INTERIM CEO JONATHAN HIRST CEO BHASKAR RAO EVP, CFO KINDRA BELLIS CIO DAVID MONTGOMERY EVP, GLOBAL BUS. DEVELOPMENT
Slide 11: Mattress Firm acquisition terms
+ 11 LEVERAGE2 • 3.5x at closing • 2.0-3.0x target leverage range • Share repurchases minimal in the near term PRICE • $2.7B of cash • 34.2M shares of common stock MULTIPLE • 9 times Mattress Firm’s four-year average adjusted EBITDA1,2 • 8 times Mattress Firm’s four-year average adjusted EBITDA1,2 a
Slide 12: Transaction Rationale
1. Expands consumer touchpoints to enhance ability to keep pace with evolving consumer preferences 2. Accelerates U.S. omni-channel strategy, enabling a seamless consumer experience 3. Simplifies consumer purchase journey, reducing friction at each touchpoint 4. Aligns new product development and te
Slide 13: Somnigroup's Robust Capital Allocation
SOMNIGROUP’S ROBUST CAPITAL ALLOCATION 13 INVESTMENTS IN GROWTH INITIATIVES CAPITAL RETURNED TO SHAREHOLDERS $820M invested in our people, plants and processes $5.6B4 invested in accretive M&A activities $1.9B invested in share repurchases $300M invested in quarterly dividends 2x-3x target leverage2
Slide 14: Tempur Sealy
TEMPUR*SEALY
Slide 15: Overview
OVERVIEW 15 CORE COMPETENCIES OMNI-CHANNEL DISTRIBUTION 100+ PRODUCTS SOLD IN 100+ COUNTRIES WORLDWIDE Consumer-Centric Innovation Leading Product Brands World-Class Manufacturing Integrated Marketing Extensive Logistics Capabilities 70% Wholesale 30% Direct-to-Consumer
Slide 16: Competitive Differentiators
COMPETITIVE DIFFERENTIATORS 16 ICONIC BRANDS Consumer preferred supported by advertising DIVERSE PORTFOLIO Wide range of price points and technologies MANUFACTURING Extensive capabilities across 70+ plants LOGISTICS Global integrated logistics operations R&D Advanced in-house technology and product
Slide 17: Brand Portfolio
BRAND PORTFOLIO 17 TEMPUR-PEDIC®: LEADING WORLDWIDE PREMIUM BEDDING BRAND Tempur-Pedic® uniquely adapts, supports, and aligns to you to deliver truly life- changing sleep. $2,200-$9,998* STEARNS & FOSTER®: HIGH-END-TARGETED BRAND The world’s finest beds that are made with exceptional materials, time
Slide 18: Global Manufacturing Footprint
GLOBAL MANUFACTURING FOOTPRINT 18 71 manufacturing facilities 20 million sq. ft. of manufacturing and distribution operations 4 state-of-the-art product testing locations 75k sq. ft. R&D innovation Wholly owned (31) Joint Venture (9) Licensee (27)Tempur-Pedic® Facility (4)
Slide 19: Successful Omni-Distribution Platform
FY‘24 Sales SUCCESSFUL OMNI-DISTRIBUTION PLATFORM 19 • Significant worldwide sales growth • Highly profitable and rapidly expanding • Direct customer relationships E-commerce • Luxury Tempur-Pedic® and Dreams® experiences • Operate over 6505 stores worldwide and expanding direct customer relationshi
Slide 20: Key Markets
KEY MARKETS 20 NORTH AMERICA • $50B3 bedding market • Concentrated • Historically strong bedding industry growth, emerging from a prolonged downturn* • Market share leader with continued opportunities to expand through higher slot velocity, expansion into non-traditional channels, and growing DTC pr
Slide 21: Sales Growth Outlook
SALES GROWTH OUTLOOK 21 Expand into OEM market. Grow wholesale through existing and new retail relationships. Invest in innovation to meet customer demand. Expand direct-to-consumer through e-commerce and company-owned stores. Invest in U.S. Sealy and Stearns & Foster® products and marketing.
Slide 22: Mattress Firm
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Slide 23: Overview
OVERVIEW 23 LEADING OMNICHANNEL U.S. RETAILER 2,200+ brick-and-mortar retail stores integrated with e- commerce and sleep education platforms to enable a seamless consumer purchase journey STRONG CONSUMER ENGAGEMENT Robust consumer touchpoints with deep insight into evolving preferences to optimize
Slide 24: Retail Footprint
RETAIL FOOTPRINT 24 TX MT CA ID NV AZ OR IL NM CO WY MN SD IA ND UT KS NE WA WI OK MI MO NY PA FL IN AL GA AR LA NC VA TN KY OH MS ME SC WV VT NH CT NJ MD DE RI DC AK 66 32 220 21 12 22 62 50 7 14 11 35 255 25 13 6 9023 45 2 24 397 92 29 45 16 68 91 117 5 10 42 65 98 8 HI 1 Owned locations Owned loc
Slide 25: Mattress Firm's Diversified Product Offerings
MATTRESS FIRM’S DIVERSIFIED PRODUCT OFFERINGS 25 Somnigroup Brands and Private Label Other Leading Brands and Private Labels • A leading retailer of Tempur-Pedic®, Sealy®, and Stearns & Foster® branded products • Retails Sleepy’s® private label bedding manufactured by Tempur Sealy • A leading retail
Slide 26: Competitive Differentiators
SCALE COMPETITIVE DIFFERENTIATORS 26 PRODUCT SELECTION Diverse and curated assortment CONVENIENCE Seamless experience nationwide on and offline RETAIL EXPERTISE Highly trained Sleep Experts EXPERIENCE Personalized to each consumer CONSUMER TOUCHPOINTS Data driven tools improving consumer outcomes LO
Slide 27: Sales Growth Outlook
SALES GROWTH OUTLOOK 27 Drive conversion and AOV through enhanced RSA training Invest in stores and products to improve consumer shopping experience Continuously align brick-and-mortar footprint to consumer demand Drive e-commerce traffic via strategic investments in digital marketing Leverage impro
Slide 28: Dreams
Dreams
Slide 29: Dreams Overview
DIVERSIFIED PRODUCT OFFERING Multi-branded strategy comprised of in-house brands, Tempur Sealy brands, and third-party brands OVERVIEW 29 LEADING UK BEDDING RETAILER 200+ brick-and-mortar retail stores, 2,000+ colleagues, and an integrated e-commerce platform attracting over 18M visitors6 annually V
Slide 30: Financials
FINANCIALS 30
Slide 31: Fourth Quarter and Full Year Performance
FOURTH QUARTER AND FULL YEAR PERFORMANCE 31 Three Months Ended Year Ended (in millions, except percentages and per common share amounts) December 31, 2024 December 31, 2023 % Change December 31, 2024 December 31, 2023 % Change Net Sales $1,207.9 $1,170.5 3.2% $4,930.9 $4,925.4 0.1% Net Income $71.9
Slide 32: 2025 Outlook
2025 OUTLOOK 7 32 Expect full-year adjusted EPS 2 between $2.60 and $3.00 Other Modeling Assumptions Depreciation & Amortization $295M-$305M Capital Expenditures $250M Interest Expense $265M-$275M U.S. Federal Tax Rate 25% Diluted Share Count 210M shares • On a reported basis, we expect sales betwee
Slide 33: Impact of Mattress Firm Acquisition
33 Impact of Mattress Firm Acquisition ACQUISITION AND DIVESTITURE • The acquisition of Mattress Firm on February 5th • The planned divestiture of 103 Sleep Outfitters and 73 Mattress Firm stores on May 1st • The elimination of intercompany sales between Mattress Firm and Tempur Sealy, which is expe
Slide 34: Long Term Perspective 2026-2028
LONG TERM PERSPECTIVE 7 34 2026-2028 $2.80 $4.85 $- $2.00 $4.00 $6.00 2025 2028 Adjusted EPS2 INTERNAL TARGETS3 • We are internally targeting sales to grow at a compound annual rate of mid single digits starting in 2025. • This indicates adjusted EPS2 would increase from the $2.80 midpoint for 2025
Slide 35: Synergies Outlook
35% 30% 15% 20% Logistics Product Lifecycle Management Manufacturing Efficiencies Sourcing SYNERGIES OUTLOOK3 35 $100M OF RUN-RATE SYNERGIES EXPECTED RUN RATE SYNERGIES Enhanced visibility to consumer demand creates opportunities for agile and fortified supply chain management while expanded scale a
Slide 36: Strong Balance Sheet & Cash Flow
$0 $200 $400 $600 $800 2020 2021 2022 2023 2024 Full-Year Operating Cash Flow STRONG BALANCE SHEET & CASH FLOW 36 $0 $200 $400 $600 $800 $1,000 $1,200 2020 2021 2022 2023 2024 Full-Year Adjusted EBITDA2 1.0x 2.0x 3.0x 4.0x 4Q23 1Q24 2Q24 3Q24 4Q24 4Q'24 Pro Forma Leverage2 Target Range Leverage
Slide 37: Capital Structure
CAPITAL STRUCTURE 37 • The acquisition of Mattress Firm was funded with the $1.6B Term Loan B on hand and drawing on the $625M Delayed Draw Term A and $571M on our revolving credit facility • Pro forma 12/31/24 leverage2 was 3.5x and liquidity was ~$730M $571 $25 $25 $400 $109 $800 $800 $16 $16 $16
Slide 38: Thank you for your interest
Thank you for your interest in For more information, please email: investor.relations@somnigroup.com 38
Slide 39: Appendix
APPENDIX 39
Slide 40: U.S. Historical Industry Volumes
U.S. HISTORICAL INDUSTRY VOLUMES3 40 U.S. Produced Mattress Units Source: ISPA, U.S. ITC, management estimates 18.1 20.1 20.9 22.5 24.3 23.5 23.6 23.5 24.1 24.7 20.4 18.0 16.7 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 15.0 16.0 17.0 18.0 19.0 20.0 21.0 22.0 23.0 24.0 25.0 2009 20-year Trough 2013 2014 2015
Slide 41: Sustainability Initiatives
41 SUSTAINABILITY INITIATIVES Environmental • Achieved zero waste to landfill status at our Canadian and Mexican manufacturing operations and maintained our zero waste to landfill status at our U.S. and European manufacturing operations • Achieved zero waste to landfill status at 75% of our corporat
Slide 42: Forward-Looking Statements
42 This investor presentation contains statements regarding the Company’s expectations regarding the Mattress Firm acquisition, expectations regarding post-closing supply agreements, future performances, integration of the acquired companies with our business, expectations regarding the divestiture
Slide 43: Use of Non-GAAP Financial Measures
43 In this investor presentation and certain of its press releases and SEC filings, the Company provides information regarding adjusted net income, adjusted EPS, EBITDA, adjusted EBITDA, free cash flow, consolidated indebtedness less netted cash, and leverage, which are not recognized terms under U.
Slide 44: Non-GAAP footnotes
(1) In the fourth quarter of 2024, we recorded $26.7 million of transition charges as a result of a customer's acquisition which foreclosed on our OEM distribution to this customer. (2) We recorded $12.0 million $17.5 million of transaction costs, primarily related to legal and professional fees ass
Slide 45: TTM Adjusted Net Income and Adjusted EPS
45 TTM ADJUSTED NET INCOME2 AND ADJUSTED EPS2 *For a reconciliation net income to adjusted net income and adjusted EPS in prior reporting periods, please refer to the Company’s SEC filings. Trailing Twelve Months Ended (in millions, except per common share amounts) December 31, 2024 Net income $ 384
Slide 46: Adjusted EBITDA
46 ADJUSTED EBITDA2 *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings. Three Months Ended (in millions) December 31, 2024 December 31, 2023 Net income $ 71.9 $ 77.1 Interest expense, net 26.5 30.9 Transaction related
Slide 47: TTM Adjusted EBITDA
47 TTM ADJUSTED EBITDA2 *For a reconciliation net income to EBITDA and Adjusted EBITDA in prior reporting periods, please refer to the Company’s SEC filings. Trailing Twelve Months Ended (in millions) December 31, 2024 Net income $ 384.3 Interest expense, net 125.0 Transaction related interest expen
Slide 48: Leverage Reconciliation
48 LEVERAGE2 RECONCILIATION *For a reconciliation of leverage to consolidated indebtedness less netted cash in prior reporting periods, please refer to the Company’s SEC filings. (in millions) December 31, 2024 Total debt, net $ 3,809.9 Plus: Deferred financing costs(1) 34.6 Total debt 3,844.5 Less:
Slide 49: Footnotes
49 FOOTNOTES 1 Any financial information included in this presentation for Mattress Firm prior to the acquisition date of February 5, 2025, is based on Mattress Firm’s historical financial reporting and has not been audited by the Company or the Company’s accountants 2 Adjusted net income, EBITDA, a
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