SOMNIGROUP INTERNATIONAL INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME ($ in millions, except per common share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net sales $ 2,122.6 $ 1,300.0 $ 5,608.1 $ 3,723.0 Cost of sales 1,169.8 748.5 3,247.6 2,179.6 Gross profit 952.8 551.5 2,360.5 1,543.4 Selling and marketing expenses 480.8 233.6 1,303.9 699.9 General, administrative and other expenses 160.4 118.6 545.8 347.4 Loss on disposal of business — — 13.9 — Equity income in earnings of unconsolidated affiliates ( 3.1 ) ( 2.5 ) ( 10.9 ) ( 10.5 ) Operating income 314.7 201.8 507.8 506.6 Other expense, net: Interest expense, net 69.9 30.8 203.7 98.5 Other expense (income), net 10.9 0.4 16.8 ( 0.5 ) Total other expense, net 80.8 31.2 220.5 98.0 Income before income taxes 233.9 170.6 287.3 408.6 Income tax provision ( 56.2 ) ( 40.8 ) ( 42.9 ) ( 95.5 ) Net income before non-controlling interest 177.7 129.8 244.4 313.1 Less: Net income (loss) attributable to non-controlling interest 0.3 ( 0.2 ) 1.1 0.7 Net income attributable to Somnigroup International Inc. $ 177.4 $ 130.0 $ 243.3 $ 312.4 Earnings per common share: Basic $ 0.85 $ 0.75 $ 1.19 $ 1.80 Diluted $ 0.83 $ 0.73 $ 1.17 $ 1.75 Weighted average common shares outstanding: Basic 209.9 173.7 204.7 173.6 Diluted 212.5 178.2 207.9 178.1 See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ($ in millions) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net income before non-controlling interest $ 177.7 $ 129.8 $ 244.4 $ 313.1 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments ( 13.9 ) 37.0 84.6 14.0 Net change in pension benefits, net of tax — — 0.6 ( 0.3 ) Other comprehensive (loss) income, net of tax ( 13.9 ) 37.0 85.2 13.7 Comprehensive income 163.8 166.8 329.6 326.8 Less: Comprehensive income (loss) attributable to non-controlling interest 0.3 ( 0.2 ) 1.1 0.7 Comprehensive income attributable to Somnigroup International Inc. $ 163.5 $ 167.0 $ 328.5 $ 326.1 See accompanying Notes to Condensed Consolidated Financial Statements . 5 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions) September 30, 2025 December 31, 2024 ASSETS (unaudited) Current Assets: Cash and cash equivalents $ 100.2 $ 117.4 Accounts receivable, net 397.7 404.5 Inventories 645.1 447.0 Prepaid expenses and other current assets 166.8 96.5 Total Current Assets 1,309.8 1,065.4 Restricted cash — 1,592.3 Property, plant and equipment, net 1,015.3 811.1 Goodwill 4,425.2 1,066.7 Trade name and other intangible assets, net 2,587.7 700.5 Operating lease right-of-use assets 1,884.4 598.8 Deferred income taxes 15.2 15.3 Other non-current assets 161.9 130.3 Total Assets $ 11,399.5 $ 5,980.4 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 458.8 $ 360.5 Accrued expenses and other current liabilities 749.6 393.9 Short-term operating lease obligations 395.8 126.8 Current portion of long-term debt 113.7 69.5 Income taxes payable 24.1 9.6 Total Current Liabilities 1,742.0 960.3 Long-term debt, net 4,511.5 3,740.4 Long-term operating lease obligations 1,600.1 532.1 Deferred income taxes 427.9 108.3 Other non-current liabilities 123.7 71.0 Total Liabilities 8,405.2 5,412.1 Redeemable non-controlling interest 8.9 9.3 Total Stockholders' Equity 2,985.4 559.0 Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity $ 11,399.5 $ 5,980.4 See accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ($ in millions) (unaudited) Three Months Ended September 30, 2025 Somnigroup International Inc. Stockholders' Equity Redeemable Non-controlling Interest Common Stock Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity Shares Issued At Par Shares Issued At Cost Additional Paid in Capital Retained Earnings Balance as of June 30, 2025 $ 8.9 283.8 $ 2.8 73.9 $ ( 1,665.5 ) $ 1,017.0 $ 3,574.5 $ ( 87.7 ) $ 2,841.1 Net income 177.4 177.4 Net income attributable to non-controlling interest 0.3 — Dividend paid to non-controlling interest in subsidiary ( 0.3 ) — Foreign currency adjustments, net of tax ( 13.9 ) ( 13.9 ) Dividends declared on common stock ($ 0.15 per share) ( 31.7 ) ( 31.7 ) Exercise of stock options — 0.7 ( 0.4 ) 0.3 Issuances of PRSUs and RSUs — 0.1 ( 0.1 ) — Treasury stock repurchased - PRSU/RSU releases — — — Amortization of unearned stock-based compensation 12.2 12.2 Balance as of September 30, 2025 $ 8.9 283.8 $ 2.8 73.9 $ ( 1,664.7 ) $ 1,028.7 $ 3,720.2 $ ( 101.6 ) $ 2,985.4 Three Months Ended September 30, 2024 Somnigroup International Inc. Stockholders' Equity Redeemable Non-controlling Interest Common Stock Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity Shares Issued At Par Shares Issued At Cost Additional Paid in Capital Retained Earnings Balance as of June 30, 2024 $ 8.9 283.8 $ 2.8 110.2 $ ( 3,331.0 ) $ 484.3 $ 3,415.7 $ ( 160.0 ) $ 411.8 Net income 130.0 130.0 Net income attributable to non-controlling interest ( 0.2 ) — Dividend paid to non-controlling interest in subsidiary — Foreign currency adjustments, net of tax 37.0 37.0 Dividends declared on common stock ($ 0.13 per share) ( 22.9 ) ( 22.9 ) Exercise of stock options — 0.1 ( 0.1 ) — Issuances of PRSUs and RSUs — 0.1 ( 0.1 ) — Treasury stock repurchased - PRSU/RSU releases — — — Amortization of unearned stock-based compensation 8.6 8.6 Balance as of September 30, 2024 $ 8.7 283.8 $ 2.8 110.2 $ ( 3,330.8 ) $ 492.7 $ 3,522.8 $ ( 123.0 ) $ 564.5 See accompanying Notes to Condensed Consolidated Financial Statements . 7 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED) ($ in millions) (unaudited) Nine Months Ended September 30, 2025 Somnigroup International Inc. Stockholders' Equity Redeemable Non-controlling Interest Common Stock Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity Shares Issued At Par Shares Issued At Cost Additional Paid in Capital Retained Earnings Balance as of December 31, 2024 $ 9.3 283.8 $ 2.8 110.2 $ ( 3,330.0 ) $ 501.2 $ 3,571.8 $ ( 186.8 ) $ 559.0 Net income 243.3 243.3 Net income attributable to non-controlling interests 1.1 — Dividend paid to non-controlling interest in subsidiary ( 1.5 ) — Adjustment to pension liability, net of tax 0.6 0.6 Foreign currency adjustments, net of tax 84.6 84.6 Dividends declared on common stock ($ 0.45 per share) ( 94.9 ) ( 94.9 ) Shares issued in connection with Mattress Firm Acquisition ( 34.2 ) 1,609.9 635.2 2,245.1 Exercise of stock options ( 2.8 ) 106.7 ( 57.3 ) 49.4 Issuances of PRSUs and RSUs ( 1.3 ) 81.1 ( 81.1 ) — Treasury stock repurchased - PRSU/RSU releases 1.9 ( 125.0 ) ( 125.0 ) Treasury stock repurchased - merger consideration 0.1 ( 7.4 ) ( 7.4 ) Amortization of unearned stock-based compensation 30.7 30.7 Balance as of September 30, 2025 $ 8.9 283.8 $ 2.8 73.9 $ ( 1,664.7 ) $ 1,028.7 $ 3,720.2 $ ( 101.6 ) $ 2,985.4 Nine Months Ended September 30, 2024 Somnigroup International Inc. Stockholders' Equity Redeemable Non-controlling Interest Common Stock Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity Shares Issued At Par Shares Issued At Cost Additional Paid in Capital Retained Earnings Balance as of December 31, 2023 $ 10.0 283.8 $ 2.8 111.5 $ ( 3,380.6 ) $ 558.7 $ 3,279.2 $ ( 136.7 ) $ 323.4 Net income 312.4 312.4 Net income attributable to non-controlling interests 0.7 — Dividend paid to non-controlling interest in subsidiary ( 2.0 ) — Adjustment to pension liability, net of tax ( 0.3 ) ( 0.3 ) Foreign currency adjustments, net of tax 14.0 14.0 Dividends declared on common stock ($ 0.39 per share) ( 68.8 ) ( 68.8 ) Exercise of stock options — 1.5 ( 1.2 ) 0.3 Issuances of PRSUs and RSUs ( 2.2 ) 92.1 ( 92.1 ) — Treasury stock repurchased - PRSU/RSU releases 0.9 ( 43.8 ) ( 43.8 ) Amortization of unearned stock-based compensation 27.3 27.3 Balance as of September 30, 2024 $ 8.7 283.8 $ 2.8 110.2 $ ( 3,330.8 ) $ 492.7 $ 3,522.8 $ ( 123.0 ) $ 564.5 See accompanying Notes to Condensed Consolidated Financial Statements . 8 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in millions) (unaudited) Nine Months Ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net income before non-controlling interest $ 244.4 $ 313.1 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 180.0 121.9 Amortization of stock-based compensation 30.7 27.3 Amortization of deferred financing costs 5.0 2.8 Bad debt expense 4.4 9.9 Deferred income taxes 1.5 0.6 Dividends received from unconsolidated affiliates 19.0 23.4 Equity income in earnings of unconsolidated affiliates ( 10.9 ) ( 10.5 ) Loss on disposal of business 13.9 — Foreign currency adjustments and other 14.2 0.9 Changes in operating assets and liabilities, net of effect of business acquisitions 198.5 48.0 Net cash provided by operating activities 700.7 537.4 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 108.6 ) ( 76.4 ) Acquisitions, net of cash acquired ( 2,824.5 ) — Purchases of investments ( 23.4 ) — Other 8.1 0.5 Net cash used in investing activities ( 2,948.4 ) ( 75.9 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under long-term debt obligations 3,429.9 1,165.3 Repayments of borrowings under long-term debt obligations ( 2,628.7 ) ( 1,472.6 ) Proceeds from exercise of stock options 49.4 0.3 Treasury stock repurchased ( 132.4 ) ( 43.8 ) Dividends paid ( 95.9 ) ( 70.1 ) Repayments of finance lease obligations and other ( 16.4 ) ( 14.8 ) Net cash provided by (used in) financing activities 605.9 ( 435.7 ) NET EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH 32.3 3.5 (Decrease) increase in cash, cash equivalents and restricted cash ( 1,609.5 ) 29.3 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 1,709.7 74.9 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 100.2 $ 104.2 Supplemental cash flow information: Cash paid during the period for: Interest $ 197.1 $ 89.8 Income taxes, net of refunds $ 14.2 $ 80.1 Non-cash investing activities: Treasury stock issued in connection with Mattress Firm Acquisition $ 2,245.1 $ — See accompanying Notes to Condensed Consolidated Financial Statements. 9 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (1) Summary of Significant Accounting Policies (a) Basis of Presentation and Description of Business. Somnigroup International Inc., a Delaware corporation, together with its subsidiaries, is a U.S. based, multinational company. The term "Somnigroup" refers to Somnigroup International Inc. only, and the term "Company" refers to Somnigroup International Inc. and its consolidated subsidiaries. Certain prior period amounts have been reclassified in the accompanying consolidated financial statements and notes thereto to conform to the current period presentation. The Company designs, manufactures, distributes and retails bedding products, which include mattresses, foundations and adjustable bases, and other products, which include pillows and other accessories. The Company also derives income from royalties by licensing Sealy® and Stearns & Foster® brands, technology and trademarks to other manufacturers. The Company sells its products through two sales channels: Wholesale and Direct. On February 5, 2025, the Company completed the previously announced acquisition of Mattress Firm, the largest mattress specialty retailer in the U.S. Mattress Firm was founded in 1986 and operates over 2,200 brick and mortar retail locations and a growing e-commerce platform. Mattress Firm's highly trained retail sales associates provide personalized service to help consumers choose the ideal bedding products across their robust assortment of market-leading brands. The Company has ownership interests in Asia-Pacific joint ventures to develop markets for Sealy® and Stearns & Foster® branded products and ownership in a United Kingdom joint venture to manufacture, market and distribute Sealy® and Stearns & Foster® branded products. The Company's ownership interests in each of these joint ventures is 50.0 %. The equity method of accounting is used for these joint ventures, over which the Company has significant influence but does not have control, and consolidation is not otherwise required. The Company's equity in the net income and losses of these investments is reported in equity income in earnings of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X and include all of the information and disclosures required by generally accepted accounting principles in the United States ("GAAP") for interim financial reporting. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2024, included in the 2024 Annual Report filed with the Securities and Exchange Commission on February 28, 2025. The results of operations for the interim periods are not necessarily indicative of results of operations for a full year. It is the opinion of management that all necessary adjustments for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. (b) Cash, Cash Equivalents and Restricted Cash. Cash and cash equivalents consist of all highly liquid investments with initial maturities of three months or less. The carrying value of cash and cash equivalents approximates fair value because of the short-term maturity of those instruments. Restricted cash consists of proceeds from the Term B Loan which were funded into escrow as of December 31, 2024 and released upon the closing of the Mattress Firm Acquisition on February 5, 2025. The carrying value of restricted cash approximates fair value because of the short-term maturity of those instruments. Total cash, cash equivalents and restricted cash consisted of the following: September 30, December 31, (in millions) 2025 2024 Cash and cash equivalents $ 100.2 $ 117.4 Restricted cash — 1,592.3 Cash, cash equivalents and restricted cash $ 100.2 $ 1,709.7 10 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (c) Inventories . Inventories are stated at the lower of cost or net realizable value, determined by either the first-in, first-out method or the weighted average cost method, depending on reportable segment , and consist of the following: September 30, December 31, (in millions) 2025 2024 Finished goods $ 501.4 $ 300.5 Work-in-process 17.5 16.1 Raw materials and supplies 126.2 130.4 $ 645.1 $ 447.0 (d) Warranties . The Company provides product warranties on both manufactured and sourced products and service warranties, which vary by segment, product and brand. Estimates of warranty expenses are based primarily on historical claims experience, product testing and recent trends. Estimated future obligations related to these products are charged to cost of sales in the period in which the related revenue is recognized. The Company considers the impact of recoverable salvage value on warranty costs in determining its estimate of future warranty obligations. The Company had the following activity for its accrued warranty expense from December 31, 2024 to September 30, 2025: (in millions) Balance as of December 31, 2024 $ 33.6 Liabilities assumed as a result of Mattress Firm Acquisition 25.3 Amounts accrued 16.6 Warranties charged to accrual ( 16.5 ) Balance as of September 30, 2025 $ 59.0 As of September 30, 2025 and December 31, 2024, $ 23.2 million and $ 15.3 million of accrued warranty expense is included as a component of accrued expenses and other current liabilities and $ 35.8 million and $ 18.3 million of accrued warranty expense is included in other non-current liabilities on the Company's accompanying Condensed Consolidated Balance Sheets, respectively. (e) Allowance for Credit Losses . The allowance for credit losses is the Company's best estimate of the amount of expected lifetime credit losses in the Company's accounts receivable. The Company regularly reviews the adequacy of its allowance for credit losses. The Company estimates losses over the contractual life using assumptions to capture the risk of loss, even if remote, based principally on how long a receivable has been outstanding. As of September 30, 2025, the Company's accounts receivable were substantially current. Account balances are charged off against the allowance for credit losses after all reasonable means of collection have been exhausted and the potential for recovery is considered remote. Other factors considered include historical write-off experience, current economic conditions and also factors such as customer credit, past transaction history with the customer and changes in customer payment terms. The allowance for credit losses is included in accounts receivable, net in the accompanying Condensed Consolidated Balance Sheets. The Company had the following activity for its allowance for credit losses from December 31, 2024 to September 30, 2025: (in millions) Balance as of December 31, 2024 $ 80.4 Amounts accrued 4.4 Write-offs charged against the allowance ( 42.2 ) Balance as of September 30, 2025 $ 42.6 11 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (f) Fair Value. Financial instruments, although not recorded at fair value on a recurring basis, include cash and cash equivalents, accounts receivable, accounts payable and the Company's debt obligations. The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term maturity of those instruments. Borrowings under the 2023 Credit Agreement (as defined in Note 5, "Debt") and the securitized debt are at variable interest rates and accordingly their carrying amounts approximate fair value. The fair value of the following material financial instruments were based on Level 2 inputs, which include observable inputs estimated using discounted cash flows and market-based expectations for interest rates, credit risk and the contractual terms of debt instruments. The fair values of these material financial instruments are as follows: Fair Value (in millions) September 30, 2025 December 31, 2024 2029 Senior Notes $ 768.5 $ 739.1 2031 Senior Notes $ 733.1 $ 698.2 (g) Cost of Sales . Costs associated with net sales are recorded in cost of sales. Cost of sales includes the costs of receiving, producing, inspecting, warehousing, insuring and shipping goods during the period, as well as depreciation and amortization of long-lived assets used in these processes. Cost of sales also includes retail store occupancy costs such as rent, common area maintenance charges, real estate and other asset-based taxes, general maintenance, utilities, depreciation and certain insurance expenses. The Company believes the classification of occupancy costs could vary widely throughout the industry. Because of this, the Company's gross profit and gross profit as a percentage of net sales may not be comparable to others in the industry which may include occupancy costs in total operating expenses. Additionally, cost of sales include royalties that the Company pays to other entities for the use of their names on products produced by the Company. Royalty expense is not material to the Company's Condensed Consolidated Statements of Income. Prior to the Mattress Firm Acquisition, the Company recorded retail store occupancy costs in selling and marketing expenses. For the three and nine months ended September 30, 2024, retail store occupancy costs of $ 38.4 million and $ 113.3 million, respectively, were reclassified to cost of sales in the accompanying consolidated financial statements and notes thereto to conform to the current period presentation. (h) Vendor Incentives. The Company's Mattress Firm business segment earns various types of incentives from its suppliers related to purchase volume rebates, sales, reimbursements of certain sales and marketing expenses, long-term supply agreements and other ordinary course transactions, collectively referred to as vendor incentives. Amounts earned for vendor incentives are recorded within accounts payable until realized and are not material to the Company's Condensed Consolidated Balance Sheets. Vendor incentives are generally recorded as a reduction of inventory at the time of purchase and, subsequently, as a reduction to cost of sales when the product is sold. Vendor incentives earned for long-term supply agreements are deferred and ratably recorded as a reduction to cost of sales over the life of the supply agreement. Vendor incentives which represent the reimbursement of certain sales and marketing expenses for the vendor's products are recorded as a reduction of sales and marketing expenses. Certain vendor incentives include product purchase estimates and assumptions which may result in subsequent period adjustments if actual results differ from the estimates and assumptions used at the time of recognition. Vendor incentives earned for expense reimbursements also include estimates for sales and marketing expenses incurred at the time of recognition. If vendor incentives exceed our sales and marketing expenses, the excess amount is recorded as a reduction to cost of sales. The Company regularly reviews the adequacy of its estimates and assumptions used in the recognition of vendor incentives. 12 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (2) Net Sales The following table presents the Company's disaggregated revenue by channel and geographical region, including a reconciliation of disaggregated revenue by segment, for the three months ended September 30, 2025 and 2024: Three Months Ended September 30, 2025 Three Months Ended September 30, 2024 (in millions) Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Channel Wholesale $ 626.4 $ 112.9 $ — $ 739.3 $ 878.4 $ 103.4 $ — $ 981.8 Direct 109.7 202.8 1,070.8 1,383.3 136.9 181.3 — 318.2 Net sales $ 736.1 $ 315.7 $ 1,070.8 $ 2,122.6 $ 1,015.3 $ 284.7 $ — $ 1,300.0 Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Geographical Region United States $ 660.6 $ — $ 1,070.8 $ 1,731.4 $ 935.3 $ — $ — $ 935.3 All other 75.5 315.7 — 391.2 80.0 284.7 — 364.7 Net sales $ 736.1 $ 315.7 $ 1,070.8 $ 2,122.6 $ 1,015.3 $ 284.7 $ — $ 1,300.0 Substantially all revenue is associated with bedding product sales. The following table presents the Company's disaggregated revenue by channel and geographical region, including a reconciliation of disaggregated revenue by segment, for the nine months ended September 30, 2025 and 2024: Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024 (in millions) Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Channel Wholesale $ 1,744.9 $ 335.8 $ — $ 2,080.7 $ 2,510.1 $ 308.0 $ — $ 2,818.1 Direct 335.8 578.3 2,613.3 3,527.4 384.7 520.2 — 904.9 Net sales $ 2,080.7 $ 914.1 $ 2,613.3 $ 5,608.1 $ 2,894.8 $ 828.2 $ — $ 3,723.0 Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Geographical region United States $ 1,882.0 $ — $ 2,613.3 $ 4,495.3 $ 2,671.7 $ — $ — $ 2,671.7 All other 198.7 914.1 — 1,112.8 223.1 828.2 — 1,051.3 Net sales $ 2,080.7 $ 914.1 $ 2,613.3 $ 5,608.1 $ 2,894.8 $ 828.2 $ — $ 3,723.0 Substantially all revenue is associated with bedding product sales. 13 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (3) Acquisitions and Divestitures Acquisition of Mattress Firm Group Inc. On February 5, 2025, the Company completed its Mattress Firm Acquisition for an aggregate purchase price of approximately $ 5.1 billion, net of cash acquired of $ 0.3 billion. The aggregate purchase price consisted of $ 3.1 billion in cash and approximately 34.2 million shares of the Company's common stock valued at $ 65.65 per share, which represents the simple average of the opening and closing price per share of the Company's common stock on the New York Stock Exchange (the "NYSE") on the trading day immediately prior to the date of acquisition, with the value of any fractional shares paid in cash. In connection with the consummation of the merger, the Company borrowed $ 625.0 million of its Delayed Draw Term A Loan and $ 679.5 million of revolving commitments under its senior credit facility. In addition, approximately $ 1,592.0 million of proceeds in respect of the Term B Loan were released from escrow. The proceeds of this financing were collectively used to fund a portion of the cash consideration, the repayment of Mattress Firm's debt and the payment of certain fees and expenses related to the merger. The Mattress Firm Acquisition enhances the Company's global omni-channel strategy and enables a seamless consumer experience, among other things. Mattress Firm operates as a separate business segment within the Company. The Company accounted for this transaction as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations . Mattress Firm's financial results for the periods from July 1, 2025 through September 30, 2025 and February 5, 2025 through September 30, 2025 (the "stub period") are included in the Company's Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2025, respectively. On May 1, 2025, the Company completed the previously announced divestiture of 73 Mattress Firm retail locations and the Company's Sleep Outfitters subsidiary, which includes 103 specialty mattress retail locations and seven distribution centers to MW SO Holdings Company, LLC ("Mattress Warehouse"). In the nine months ended September 30, 2025, the Company recorded a $ 13.9 million loss on disposal of business associated with the divestiture, net of proceeds of $ 9.0 million. The Company does not expect the divestiture to have a material impact on its results of operations for the twelve months ended December 31, 2025. The divestiture of Sleep Outfitters was not classified as assets and liabilities held for sale in the Company's Consolidated Balance Sheets as of December 31, 2024 due to the Mattress Firm Acquisition being contingent upon regulatory approval and the potential for the Company's plan of divestiture to change. Preliminary Purchase Price Consideration The preliminary purchase price of Mattress Firm as of February 5, 2025 consists of the following items: (in millions) Cash $ 3,091.5 Common stock of the Company (1) 2,245.1 Effective settlement of pre-existing relationships (2) 71.6 Total consideration $ 5,408.2 Cash acquired ( 267.0 ) Net consideration transferred $ 5,141.2 (1) The stock consideration of 34.2 million shares of Somnigroup common stock represents a value of $ 65.65 per share, which is the simple average of the opening and closing price per share of the Company's common stock on the NYSE on the business day immediately prior to the date of acquisition. This amount includes stock consideration to Mattress Firm employees for equity awards converted into the right to receive merger consideration. (2) Represents the effective settlement of Mattress Firm outstanding payables to Somnigroup, net of incentives receivable. No gain or loss was recognized on this settlement. 14 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) Preliminary Purchase Price Allocation The preliminary allocation of the purchase price is based on the fair values of the assets acquired and liabilities assumed as of February 5, 2025. The components of the preliminary purchase price allocation are as follows: (in millions) Initial Allocation of Consideration Measurement Period Adjustments Updated Preliminary Allocation Accounts receivable, net $ 43.1 $ ( 14.9 ) $ 28.2 Inventories 313.1 — 313.1 Prepaid expenses and other current assets 66.7 ( 1.1 ) 65.6 Assets held for sale 37.6 ( 1.7 ) 35.9 Property and equipment 193.1 59.7 (1) 252.8 Operating lease right-of-use assets 1,254.1 16.8 (1) 1,270.9 Other non-current assets 66.6 ( 13.9 ) 52.7 Indefinite-lived trade names 1,660.0 220.0 (1) 1,880.0 Goodwill 3,473.0 ( 148.3 ) 3,324.7 Preliminary fair value of assets acquired $ 7,107.3 $ 116.6 $ 7,223.9 Accounts payable ( 113.7 ) 13.2 ( 100.5 ) Accrued expenses and other current liabilities ( 255.7 ) ( 12.8 ) ( 268.5 ) Income taxes payable ( 2.4 ) 1.5 ( 0.9 ) Liabilities held for sale ( 32.7 ) — ( 32.7 ) Long-term operating lease obligations ( 1,287.2 ) ( 19.3 ) (1) ( 1,306.5 ) Deferred tax liability ( 194.2 ) ( 122.7 ) (2) ( 316.9 ) Other non-current liabilities ( 59.6 ) 13.9 ( 45.7 ) Long-term debt ( 10.1 ) ( 0.9 ) ( 11.0 ) Preliminary fair value of liabilities assumed ( 1,955.6 ) ( 127.1 ) ( 2,082.7 ) Net consideration transferred 5,151.7 ( 10.5 ) 5,141.2 Cash acquired 267.0 — 267.0 Total consideration transferred $ 5,418.7 $ ( 10.5 ) $ 5,408.2 (1) Represents valuation adjustments to trade name, operating leases and property and equipment during the measurement period. (2) Represents the income tax effect for the preliminary purchase price allocation adjustments. The fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available to management at the time the unaudited condensed consolidated financial statements were prepared. The Company will finalize the valuation and complete the purchase price allocation as soon as practical, but no later than the measurement period of one year from the Mattress Firm Acquisition date. The most significant open items include the estimation of certain long-lived assets and the accounting for income taxes as management is awaiting additional information to complete its assessment of these matters. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. The finalization of the Company's purchase accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed, which could be material. The indefinite-lived intangible asset represents the Mattress Firm trade name. The Company applied the income approach through a relief from royalty method to fair value the trade name asset using Level 3 inputs. The indefinite-lived intangible asset is not deductible for income tax purposes. Goodwill is calculated as the excess of the purchase price over the net assets acquired and primarily represents the future economic benefits expected from the expansion of consumer touchpoints, the assembled workforce acquired and operating efficiencies. The goodwill is not deductible for income tax purposes and is included within the Mattress Firm business segment. 15 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) Transaction Costs The Company incurred an immaterial amount of transaction costs related to the Mattress Firm Acquisition during the three months ended September 30, 2025 and $ 13.7 million in the three months ended September 30, 2024. The Company incurred $ 50.2 million of transaction costs related to the Mattress Firm Acquisition during the nine months ended September 30, 2025 compared to $ 35.8 million in the nine months ended September 30, 2024. Transaction costs primarily included legal and professional fees associated with the Mattress Firm Acquisition. Consolidated Results of Operations The business acquired in the Mattress Firm Acquisition contributed revenue of $ 1,070.8 million and $ 2,613.3 million for the three and nine months ended September 30, 2025, respectively and contributed net income of $ 66.7 million and $ 119.8 million for the three and nine months ended September 30, 2025, respectively. Unaudited Pro Forma Financial Information The following represents the unaudited consolidated pro forma financial information for the periods as if Mattress Firm had been included in the consolidated results of the Company since January 1, 2024. Pro forma results do not include the effect of any future synergies anticipated to be achieved from the acquisition, and accordingly, are not necessarily indicative of the results that would have occurred if the acquisition had occurred on the date indicated or that may result in the future. (unaudited) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 2025 2024 Pro forma net sales $ 2,122.6 $ 2,117.6 $ 5,875.2 $ 6,015.7 Pro forma net income $ 177.4 $ 134.1 $ 33.6 $ 217.7 16 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) The pro forma amounts have been calculated after applying the Company's accounting policies and by including the results of Mattress Firm, and adjusting the combined results to give effect to the following, as if the acquisition had been consummated on January 1, 2024, together with the consequential tax effects thereon: (unaudited) Three months ended Nine months ended (in millions) September 30, 2024 September 30, 2025 September 30, 2024 Pro Forma Adjustments to Net Sales, as Reported: Mattress Firm pre-acquisition net revenue $ 1,062.3 $ 345.1 $ 2,991.6 Elimination of intercompany sales to Mattress Firm (7) ( 244.7 ) ( 78.0 ) ( 698.9 ) Total adjustments to net sales $ 817.6 $ 267.1 $ 2,292.7 Pro Forma Adjustments to Net Income (Loss), as Reported: Mattress Firm pre-acquisition earnings (loss) (1) $ 10.7 $ ( 332.7 ) $ 62.0 Transaction costs (2) — 50.2 ( 50.2 ) Intercompany profit elimination (3) 8.4 78.5 ( 64.9 ) Purchase price allocation adjustments (4) 0.9 16.7 ( 18.3 ) Interest expense adjustments (5) ( 18.1 ) ( 1.9 ) ( 52.9 ) Tax effect of pro forma adjustments (6) 2.2 ( 20.5 ) 29.6 Total adjustments to net income (loss) $ 4.1 $ ( 209.7 ) $ ( 94.7 ) (1) For the nine months ended September 30, 2025, Mattress Firm pre-acquisition loss included a one-time charge of $ 340.5 million related to stock-based compensation expense recognized when the Mattress Firm Acquisition became probable. (2) Represents $ 50.2 million of transaction costs for professional fees incurred by the Company in connection with the Mattress Firm Acquisition, which were reclassified to the prior year presented in accordance with ASC 805. (3) Represents the intercompany profit elimination, which was reclassified to the prior year presented in accordance with ASC 805. (4) Represents purchase price allocation adjustments, primarily related to the fair value adjustment of Mattress Firm's finished goods, which were reclassified to the prior year presented in accordance with ASC 805. (5) Represents the net effect of interest expense on borrowings associated with the Mattress Firm Acquisition. (6) Represents the income tax benefit (provision) for the above pro forma adjustments, which applies an estimated blended statutory income tax rate of 25.0 %. (7) For the nine months ended September 30, 2024, intercompany sales to Mattress Firm of $ 698.9 million were comprised of $ 220.7 million, $ 233.5 million and $ 244.7 million of sales in the first, second and third quarters, respectively. (4) Goodwill The following summarizes changes to the Company's goodwill, by segment: (in millions) Tempur Sealy North America Tempur Sealy International Mattress Firm Consolidated Balance as of December 31, 2024 $ 603.1 $ 463.6 $ — $ 1,066.7 Net goodwill resulting from acquisitions — — 3,324.7 3,324.7 Foreign currency translation and other 2.9 30.9 — 33.8 Balance as of September 30, 2025 $ 606.0 $ 494.5 $ 3,324.7 $ 4,425.2 17 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (5) Debt Debt for the Company consists of the following: September 30, 2025 December 31, 2024 (in millions, except percentages) Amount Rate Amount Rate Maturity Date 2023 Credit Agreement: Term A Facility $ 1,057.8 (1) $ 475.0 (2) October 10, 2028 Term B Facility 1,388.5 (3) 1,600.0 (4) October 24, 2031 Revolver 303.5 (1) — October 10, 2028 2031 Senior Notes 800.0 3.875 % 800.0 3.875 % October 15, 2031 2029 Senior Notes 800.0 4.000 % 800.0 4.000 % April 15, 2029 Securitized debt 113.7 (5) — October 8, 2026 Finance lease obligations (6) 100.4 88.7 Various Other 94.5 80.8 Various Total debt 4,658.4 3,844.5 Less: Deferred financing costs 33.2 34.6 Total debt, net 4,625.2 3,809.9 Less: Current portion 113.7 69.5 Total long-term debt, net $ 4,511.5 $ 3,740.4 (1) Interest at SOFR index plus 10 basis points of credit spread adjustment, plus applicable margin of 1.625 % as of September 30, 2025. (2) Interest at SOFR index plus 10 basis points of credit spread adjustment, plus applicable margin of 1.250 % as of December 31, 2024. (3) Term B Interest at SOFR index plus applicable margin of 2.250 % as of September 30, 2025. (4) Term B Interest at SOFR index plus applicable margin of 2.500 % as of December 31, 2024. (5) Interest at one month SOFR index plus 10 basis points of credit spread adjustment, plus 85 basis points. (6) New finance lease obligations are a non-cash financing activity. As of September 30, 2025, the Company was in compliance with all applicable debt covenants. 2023 Credit Agreement On October 10, 2023, the Company entered into the 2023 Credit Agreement with a syndicate of banks. The 2023 Credit Agreement provides for a $ 1.15 billion revolving credit facility, a $ 500.0 million term loan facility, and an incremental facility in an aggregate amount of up to the greater of $ 850.0 million and additional amounts subject to the conditions set forth in the 2023 Credit Agreement, plus the amount of certain prepayments, plus an additional unlimited amount subject to compliance with a maximum consolidated secured leverage ratio test. The 2023 Credit Agreement has a $ 60.0 million sub-facility for the issuance of letters of credit. On February 6, 2024, the Company and certain other parties thereto entered into an Amendment No. 1 ("Amendment No. 1") to the 2023 Credit Agreement which provided for a $ 625.0 million Delayed Draw Term A Loan and a $ 40.0 million increase in availability on the existing revolving loan. This amendment was executed in connection with the Company's financing strategy for the Mattress Firm Acquisition. On October 24, 2024, the Company and certain other parties thereto entered into an Amendment No. 2 ("Amendment No. 2") and an Amendment No. 3 ("Amendment No. 3") to the Company's 2023 Credit Agreement. Amendment No. 2 extended the termination date for $ 605.0 million of the Delayed Draw Term A Loan commitments until October 24, 2025, among other changes. Amendment No. 3 provided for an incremental Term B Loan in the aggregate principal amount of $ 1.6 billion. The proceeds of the Term B Loan were funded into escrow, net of an original issue discount, on the closing of Amendment No. 3. On February 5, 2025, upon the consummation of the Mattress Firm Acquisition, the Company borrowed $ 625.0 million under our Delayed Draw Term A Loan and $ 679.5 million under the revolving credit facility. In addition, approximately $ 1,592.0 million of proceeds in respect of the Term B Loan were released from escrow. The proceeds of these financings were collectively used to fund a portion of the cash consideration for the acquisition, the repayment of Mattress Firm's debt and the payment of certain fees and expenses related to the acquisition. On June 24, 2025, the Company and certain other parties thereto entered into an Amendment No. 4 ("Amendment No. 4") to the Company's 2023 Credit Agreement. Amendment No. 4 repriced the Company's existing Term B Loan due October 2031 by reducing the applicable margin on the Term B Loan by 0.25 % to (i) a base rate plus an applicable margin of 1.25 %, (ii) a Term SOFR rate plus an applicable margin of 2.25 % or (iii) a Daily Simple SOFR rate plus an applicable margin of 2.25 %, subject, in each case, to an additional 0.25 % rate reduction based on the Company's consolidated total leverage ratio. In connection with the repricing, the Company prepaid $ 100.0 million of the outstanding Term B Loan (including accrued and unpaid interest in respect thereof) with cash proceeds from a borrowing under the revolving credit facility under the 2023 Credit Agreement. The repriced Term B Loan is subject to a prepayment premium in connection with certain repricing transactions that may occur on or prior to the six-month anniversary of Amendment No. 4. On August 26, 2025, the Company prepaid $ 100.0 million of the outstanding Term B Loan (including accrued and unpaid interest in respect thereof). The Company also prepaid $ 150.0 million of the outstanding Term B Loan on October 3, 2025. These prepayments were funded with operating cash flows. The Company had outstanding borrowings of $ 303.5 million under the revolving credit facility as of September 30, 2025. Total availability under the revolving facility was $ 885.7 million, after a $ 0.8 million reduction for outstanding letters of credit, as of September 30, 2025. Securitized Debt The Company and certain of its subsidiaries are party to a securitization transaction with respect to certain accounts receivable due to the Company and certain of its subsidiaries (as amended, the "Accounts Receivable Securitization"). As of September 30, 2025, there was no availability under the Accounts Receivable Securitization. While subject to a $ 150.0 million overall limit, the availability of revolving loans varies over the course of the year based on the seasonality of the Company's accounts receivable. Future Obligations As of September 30, 2025, the scheduled maturities of long-term debt outstanding, excluding finance lease obligations, for each of the next five years and thereafter are as follows: (in millions) Remainder of 2025 $ 36.9 2026 195.1 2027 81.4 2028 1,259.7 2029 825.1 Thereafter 2,159.8 Total (1) $ 4,558.0 (1) Total future obligations excludes $ 34.7 million of outstanding letters of credit issued by various financial institutions, including $ 0.8 million associated with the 2023 Credit Facility. 18 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (6) Stockholders' Equity (a) Treasury Stock. As of September 30, 2025, the Company had approximately $ 774.5 million remaining under its share repurchase authorization. The Company did not repurchase shares under the program during the three and nine months ended September 30, 2025 or 2024. In addition, the Company acquired an insignificant amount of shares upon the exercise of stock options, the vesting of certain restricted stock units ("RSUs") and performance restricted stock units ("PRSUs"), which were withheld to satisfy tax withholding obligations during the three months ended September 30, 2025 and 2024, respectively. The shares withheld were valued at the closing price of the stock on the New York Stock Exchange on the vesting date or first business day prior to vesting, resulting in an immaterial amount of treasury stock acquired during the three months ended September 30, 2025 and 2024, respectively. The Company acquired 2.1 million and 0.9 million shares during the nine months ended September 30, 2025 and 2024, respectively, resulting in $ 132.4 million and $ 43.8 million in treasury stock acquired for the nine months ended September 30, 2025 and 2024, respectively. (b) Accumulated Other Comprehensive Loss ("AOCL"). AOCL consisted of the following: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2025 2024 2025 2024 Foreign Currency Translation Balance at beginning of period $ ( 88.7 ) $ ( 158.5 ) $ ( 187.2 ) $ ( 135.5 ) Other comprehensive (loss) income: Foreign currency translation adjustments (1) ( 13.9 ) 37.0 84.6 14.0 Balance at end of period $ ( 102.6 ) $ ( 121.5 ) $ ( 102.6 ) $ ( 121.5 ) Pensions Balance at beginning of period $ 1.0 $ ( 1.5 ) $ 0.4 $ ( 1.2 ) Other comprehensive income (loss): Net change from period revaluations (2) — — 0.6 ( 0.3 ) Balance at end of period $ 1.0 $ ( 1.5 ) $ 1.0 $ ( 1.5 ) (1) In 2025 and 2024, there were no tax impacts related to foreign currency translation adjustments and no amounts were reclassified to earnings. (2) In 2025 and 2024, there were no tax impacts related to pension adjustments. (7) Other Items Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: (in millions) September 30, 2025 December 31, 2024 Wages and benefits $ 164.3 $ 81.7 Unearned revenue 120.1 56.8 Sales returns 101.3 30.3 Advertising 92.6 59.3 Taxes 21.9 18.4 Other 249.4 147.4 $ 749.6 $ 393.9 19 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (8) Stock-Based Compensation The Company's stock-based compensation expense for the three and nine months ended September 30, 2025 and 2024 included PRSUs, RSUs and non-qualified stock options. A summary of the Company's stock-based compensation expense is presented in the following table: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 2025 2024 PRSU expense $ 5.2 $ 3.6 $ 13.6 $ 12.2 RSU expense 4.8 4.4 13.7 13.4 Option expense 2.2 0.6 3.4 1.7 Total stock-based compensation expense $ 12.2 $ 8.6 $ 30.7 $ 27.3 The Company grants PRSUs to executive officers and certain members of management. Actual payout under the PRSUs is dependent upon the achievement of certain financial goals. During the first quarter of 2025, the Company granted PRSUs as a component of the long-term incentive plan ("2025 PRSUs"). The Company has recorded stock-based compensation expense related to the 2025 PRSUs during the three and nine months ended September 30, 2025, as it was probable that the Company would achieve the specified performance targets for the performance period. (9) Commitments and Contingencies The Company is involved in various legal and administrative proceedings incidental to the operations of its business. Except as disclosed, the Company believes that the outcome of all such pending proceedings in the aggregate will not have a material adverse effect on its business, financial condition, liquidity or operating results. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable potential losses. Accordingly, the Company has not established material reserves or ranges of possible loss related to these proceedings, as at this time in the proceedings, the matters do not relate to a probable loss and/or the amount or range of losses are not reasonably estimable. Although the Company believes that it has strong defenses for the litigation and regulatory proceedings in which it is involved, it could, in the future, enter into settlements of claims that could have a material adverse effect on the Company's financial position, results of operations or cash flows. (10) Income Taxes The Company's effective tax rates for the three months ended September 30, 2025 and 2024 were 24.0 % and 23.9 %, respectively. The Company's effective tax rates for the nine months ended September 30, 2025 and 2024 were 14.9 % and 23.4 %, respectively. The Company's effective tax rates for the three and nine months ended September 30, 2025 and 2024 differed from the U.S. federal statutory rate of 21.0% principally due to subpart F income (i.e., global intangible low-taxed income, or "GILTI," earned by the Company's foreign subsidiaries), foreign income tax rate differentials, state and local taxes, changes in the Company's uncertain tax positions, the excess tax benefit related to stock-based compensation and certain other permanent items. The OECD (Organization for Economic Co-operation and Development) has proposed a global minimum effective tax of 15.0% on income arising in each jurisdiction ("Pillar 2") that has been agreed upon in principle by over 140 countries. During 2024 and 2023, many countries took steps to incorporate Pillar 2 model rule concepts into their domestic laws. Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar 2 slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar 2. Accordingly, the Company is evaluating the potential consequences of Pillar 2 on its longer-term financial position. In 2025, the Company does not expect Pillar 2 to have a material impact on its financial results. On July 4, 2025, the Tax Act was signed into law. While the Tax Act has multiple provisions that may impact the Company, guidance on the potentially relevant provisions has not been released by Congress or the Treasury department. As such, it is unclear at this time what, if any, impact the Tax Act will have on the Company's income tax rate and associated financial results. The Company will continue to evaluate the impact as further information becomes available. 20 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (11) Earnings Per Common Share The following table sets forth the components of the numerator and denominator for the computation of basic and diluted earnings per share for net income attributable to Somnigroup International Inc.: Three Months Ended Nine Months Ended September 30, September 30, (in millions, except per common share amounts) 2025 2024 2025 2024 Numerator: Net income attributable to Somnigroup International Inc. $ 177.4 $ 130.0 $ 243.3 $ 312.4 Denominator: Denominator for basic earnings per common share-weighted average shares 209.9 173.7 204.7 173.6 Effect of dilutive securities 2.6 4.5 3.2 4.5 Denominator for diluted earnings per common share-adjusted weighted average shares 212.5 178.2 207.9 178.1 Basic earnings per common share $ 0.85 $ 0.75 $ 1.19 $ 1.80 Diluted earnings per common share $ 0.83 $ 0.73 $ 1.17 $ 1.75 The Company excludes shares issuable upon exercise of certain outstanding stock options from the diluted earnings per common share computation because their exercise price was greater than the average market price of Somnigroup International Inc.'s common stock or they were otherwise anti-dilutive. As a result, the Company excluded 1.2 million shares for the three months ended September 30, 2025, and 0.4 million shares for the nine months ended September 30, 2025 . The Company did not exclude any shares for the three months ended September 30, 2024, and excluded an immaterial amount of shares for the nine months ended September 30, 2024. Holders of non-vested stock-based compensation awards do not have voting rights but do participate in dividend equivalents distributed upon the award vesting. (12) Business Segment Information The Company operates in three segments: Tempur Sealy North America, Tempur Sealy International and Mattress Firm. These segments are strategic business units that are managed separately. The Tempur Sealy North America segment consists of manufacturing, distribution and retail subsidiaries and licensees located in the U.S., Canada and Mexico (other than Mattress Firm retail and distribution locations). The Tempur Sealy International segment consists of manufacturing, distribution and retail subsidiaries, joint ventures and licensees located in Europe, Asia-Pacific and Latin America (other than Mexico). The Mattress Firm segment consists of retail stores and distribution centers located in the U.S. The Company evaluates segment performance based on net sales, gross profit and operating income. The Company's Tempur Sealy North America and Tempur Sealy International segment assets include investments in subsidiaries that are appropriately eliminated in the Company's accompanying Condensed Consolidated Financial Statements. The remaining inter-segment balance sheet eliminations are comprised of intercompany accounts receivable and payable. Inter-segment sales are made primarily at prices that approximate market-based selling prices. 21 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) The following table summarizes total assets by segment: (in millions) September 30, 2025 December 31, 2024 Tempur Sealy North America $ 5,590.3 $ 5,575.2 Tempur Sealy International 1,522.7 1,477.6 Mattress Firm 7,769.4 — Corporate 2,332.0 3,580.0 Inter-segment eliminations ( 5,814.9 ) ( 4,652.4 ) Total assets $ 11,399.5 $ 5,980.4 The following table summarizes property, plant and equipment, net, by segment: (in millions) September 30, 2025 December 31, 2024 Tempur Sealy North America $ 612.3 $ 687.7 Tempur Sealy International 110.5 89.6 Mattress Firm 262.7 — Corporate 29.8 33.8 Total property, plant and equipment, net $ 1,015.3 $ 811.1 The following table summarizes operating lease right-of-use assets by segment: (in millions) September 30, 2025 December 31, 2024 Tempur Sealy North America $ 324.5 $ 407.1 Tempur Sealy International 211.4 188.6 Mattress Firm 1,345.4 — Corporate 3.1 3.1 Total operating lease right-of-use assets $ 1,884.4 $ 598.8 22 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) The following table summarizes segment information for the three months ended September 30, 2025: (in millions) Tempur Sealy North America Tempur Sealy International Mattress Firm Corporate Eliminations Consolidated Net sales $ 736.1 $ 315.7 $ 1,070.8 $ — $ — $ 2,122.6 Inter-segment sales 314.0 0.1 — — ( 314.1 ) — Total net sales and inter-segment sales $ 1,050.1 $ 315.8 $ 1,070.8 $ — $ ( 314.1 ) $ 2,122.6 Inter-segment royalty expense (income) 9.6 ( 9.6 ) — — — — Gross profit 429.6 155.1 368.1 — — 952.8 Advertising expense 111.0 21.8 59.2 — — 192.0 Other selling and marketing expense 62.6 50.5 170.7 5.0 — 288.8 General, administrative and other expenses 41.6 28.9 57.0 32.9 — 160.4 Equity income in earnings of unconsolidated affiliates — ( 3.1 ) — — — ( 3.1 ) Operating income (loss) $ 214.4 $ 57.0 $ 81.2 $ ( 37.9 ) $ — $ 314.7 Interest expense, net 69.9 Other expense, net 10.9 Income before income taxes $ 233.9 Depreciation and amortization (1) $ 30.0 $ 7.9 $ 23.1 $ 15.0 $ — $ 76.0 Capital expenditures 7.1 15.2 25.1 0.5 — 47.9 (1) Depreciation and amortization includes stock-based compensation amortization expense. 23 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) The following table summarizes segment information for the three months ended September 30, 2024: (in millions) Tempur Sealy North America Tempur Sealy International Corporate Eliminations Consolidated Net sales $ 1,015.3 $ 284.7 $ — $ — $ 1,300.0 Inter-segment sales — — — — — Total net sales and inter-segment sales $ 1,015.3 $ 284.7 $ — $ — $ 1,300.0 Inter-segment royalty expense (income) 9.3 ( 9.3 ) — — — Gross profit 410.6 140.9 — — 551.5 Advertising expense 98.2 21.1 — — 119.3 Other selling and marketing expense 67.1 43.4 3.8 — 114.3 General, administrative and other expenses 52.0 27.2 39.4 — 118.6 Equity income in earnings of unconsolidated affiliates — ( 2.5 ) — — ( 2.5 ) Operating income (loss) $ 193.3 $ 51.7 $ ( 43.2 ) $ — $ 201.8 Interest expense, net 30.8 Other expense, net 0.4 Income before income taxes $ 170.6 Depreciation and amortization (1) $ 32.3 $ 7.3 $ 11.2 $ — $ 50.8 Capital expenditures 9.7 6.2 0.5 — 16.4 (1) Depreciation and amortization includes stock-based compensation amortization expense. 24 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) The following table summarizes segment information for the nine months ended September 30, 2025: (in millions) Tempur Sealy North America Tempur Sealy International Mattress Firm Corporate Eliminations Consolidated Net sales $ 2,080.7 $ 914.1 $ 2,613.3 $ — $ — $ 5,608.1 Inter-segment sales 707.6 0.4 — — ( 708.0 ) — Total net sales and inter-segment sales $ 2,788.3 $ 914.5 $ 2,613.3 $ — $ ( 708.0 ) $ 5,608.1 Inter-segment royalty expense (income) 26.9 ( 26.9 ) — — — — Gross profit 1,017.8 446.0 896.7 — — 2,360.5 Advertising expense 297.9 71.6 154.9 — — 524.4 Other selling and marketing expense 194.6 148.0 424.0 12.9 — 779.5 General, administrative and other expenses 130.7 89.4 162.5 163.2 — 545.8 Loss on disposal of business 9.8 — 4.1 — — 13.9 Equity income in earnings of unconsolidated affiliates — ( 10.9 ) — — — ( 10.9 ) Operating income (loss) $ 384.8 $ 147.9 $ 151.2 $ ( 176.1 ) $ — $ 507.8 Interest expense, net 203.7 Other expense, net 16.8 Income before income taxes $ 287.3 Depreciation and amortization (1) $ 91.0 $ 23.0 $ 57.7 $ 39.0 $ — $ 210.7 Capital expenditures 18.4 29.2 57.9 3.1 — 108.6 (1) Depreciation and amortization includes stock-based compensation amortization expense. 25 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) The following table summarizes segment information for the nine months ended September 30, 2024: (in millions) Tempur Sealy North America Tempur Sealy International Corporate Eliminations Consolidated Net sales $ 2,894.8 $ 828.2 $ — $ — $ 3,723.0 Inter-segment sales 0.5 0.1 — ( 0.6 ) — Total net sales and inter-segment sales 2,895.3 828.3 — ( 0.6 ) 3,723.0 Inter-segment royalty expense (income) 26.0 ( 26.0 ) — — — Gross profit 1,141.0 402.4 — — 1,543.4 Advertising expense 281.1 65.5 — — 346.6 Other selling and marketing expense 205.4 135.8 12.1 — 353.3 General, administrative and other expenses 146.4 83.3 117.7 — 347.4 Equity income in earnings of unconsolidated affiliates — ( 10.5 ) — — ( 10.5 ) Operating income (loss) $ 508.1 $ 128.3 $ ( 129.8 ) $ — $ 506.6 Interest expense, net 98.5 Other income, net ( 0.5 ) Income before income taxes $ 408.6 Depreciation and amortization (1) $ 94.5 $ 20.6 $ 34.1 $ — $ 149.2 Capital expenditures 46.5 21.3 8.6 — 76.4 (1) Depreciation and amortization includes stock-based compensation amortization expense. The following table summarizes property, plant and equipment, net by geographic region: (in millions) September 30, 2025 December 31, 2024 United States $ 887.1 $ 704.1 All other 128.2 107.0 Total property, plant and equipment, net $ 1,015.3 $ 811.1 The following table summarizes operating lease right-of-use assets by geographic region: (in millions) September 30, 2025 December 31, 2024 United States $ 1,665.1 $ 401.0 All other 219.3 197.8 Total operating lease right-of-use assets $ 1,884.4 $ 598.8 26 Table of Contents