SOMNIGROUP INTERNATIONAL INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) ($ in millions, except per common share amounts) (unaudited) Three Months Ended March 31, 2026 2025 Net sales $ 1,801.5 $ 1,604.7 Cost of sales 1,024.6 1,024.2 Gross profit 776.9 580.5 Selling and marketing expenses 428.5 362.6 General, administrative and other expenses 166.9 209.5 Equity income in earnings of unconsolidated affiliates ( 5.6 ) ( 4.8 ) Operating income 187.1 13.2 Other expense, net: Interest expense, net 60.0 61.3 Other (income) expense, net ( 10.2 ) 1.2 Total other expense, net 49.8 62.5 Income (loss) before income taxes 137.3 ( 49.3 ) Income tax (provision) benefit ( 33.4 ) 16.5 Net income (loss) before non-controlling interest 103.9 ( 32.8 ) Less: Net (loss) income attributable to non-controlling interest ( 0.3 ) 0.3 Net income (loss) attributable to Somnigroup International Inc. $ 104.2 $ ( 33.1 ) Earnings (loss) per common share: Basic $ 0.50 $ ( 0.17 ) Diluted $ 0.49 $ ( 0.17 ) Weighted average common shares outstanding: Basic 210.3 194.9 Diluted 212.6 198.9 See accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ($ in millions) (unaudited) Three Months Ended March 31, 2026 2025 Net income (loss) before non-controlling interest $ 103.9 $ ( 32.8 ) Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments ( 14.2 ) 29.7 Net change in pension benefits, net of tax — 0.6 Other comprehensive (loss) income, net of tax ( 14.2 ) 30.3 Comprehensive income (loss) 89.7 ( 2.5 ) Less: Comprehensive (loss) income attributable to non-controlling interest ( 0.3 ) 0.3 Comprehensive income (loss) attributable to Somnigroup International Inc. $ 90.0 $ ( 2.8 ) See accompanying Notes to Condensed Consolidated Financial Statements . 6 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in millions) March 31, 2026 December 31, 2025 ASSETS (unaudited) Current Assets: Cash and cash equivalents $ 110.8 $ 134.9 Accounts receivable, net 339.1 358.5 Inventories 631.0 630.0 Prepaid expenses and other current assets 164.8 170.7 Total Current Assets 1,245.7 1,294.1 Property, plant and equipment, net 1,009.8 1,019.2 Goodwill 4,586.9 4,595.9 Trade name and other intangible assets, net 2,582.6 2,587.1 Operating lease right-of-use assets 1,876.4 1,878.8 Deferred income taxes 18.3 18.5 Other non-current assets 219.9 207.1 Total Assets $ 11,539.6 $ 11,600.7 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ 465.1 $ 401.6 Accrued expenses and other current liabilities 610.1 636.5 Short-term operating lease obligations 400.7 399.6 Current portion of long-term debt 112.1 112.4 Income taxes payable 18.2 15.1 Total Current Liabilities 1,606.2 1,565.2 Long-term debt, net 4,436.4 4,573.3 Long-term operating lease obligations 1,585.3 1,589.8 Deferred income taxes 625.7 624.9 Other non-current liabilities 130.7 130.6 Total Liabilities 8,384.3 8,483.8 Redeemable non-controlling interest 7.9 8.9 Total Stockholders' Equity 3,147.4 3,108.0 Total Liabilities, Redeemable Non-Controlling Interest and Stockholders' Equity $ 11,539.6 $ 11,600.7 See accompanying Notes to Condensed Consolidated Financial Statements. 7 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ($ in millions) (unaudited) Three Months Ended March 31, 2026 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, 2025 $ 8.9 283.8 $ 2.8 73.9 $ ( 1,664.3 ) $ 1,038.7 $ 3,829.2 $ ( 98.4 ) $ 3,108.0 Net income 104.2 104.2 Net income attributable to non-controlling interest ( 0.3 ) — Dividend paid to non-controlling interest in subsidiary ( 0.7 ) — Adjustment to pension liability, net of tax — — Foreign currency adjustments, net of tax ( 14.2 ) ( 14.2 ) Dividends declared on common stock ($ 0.17 per share) ( 36.0 ) ( 36.0 ) Issuances of PRSUs and RSUs ( 0.7 ) 28.1 ( 28.1 ) — Treasury stock repurchased - PRSU/RSU releases 0.3 ( 26.2 ) ( 26.2 ) Amortization of unearned stock-based compensation 11.6 11.6 Balance as of March 31, 2026 $ 7.9 283.8 $ 2.8 73.5 $ ( 1,662.4 ) $ 1,022.2 $ 3,897.4 $ ( 112.6 ) $ 3,147.4 Three Months Ended March 31, 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 ( 33.1 ) ( 33.1 ) Net income attributable to non-controlling interest 0.3 — Dividend paid to non-controlling interest in subsidiary ( 1.0 ) — Adjustment to pension liability, net of tax 0.6 0.6 Foreign currency adjustments, net of tax 29.7 29.7 Dividends declared on common stock ($ 0.15 per share) ( 31.5 ) ( 31.5 ) Shares issued in connection with Mattress Firm acquisition ( 34.2 ) 1,609.9 635.2 2,245.1 Exercise of stock options ( 0.1 ) 2.3 ( 1.3 ) 1.0 Issuances of PRSUs and RSUs ( 1.3 ) 80.2 ( 80.2 ) — Treasury stock repurchased - PRSU/RSU releases 0.5 ( 30.1 ) ( 30.1 ) Treasury stock repurchased - merger consideration 0.1 ( 7.4 ) ( 7.4 ) Amortization of unearned stock-based compensation 8.4 8.4 Balance as of March 31, 2025 $ 8.6 283.8 $ 2.8 75.2 $ ( 1,675.1 ) $ 1,063.3 $ 3,507.2 $ ( 156.5 ) $ 2,741.7 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) Three Months Ended March 31, 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) before non-controlling interest $ 103.9 $ ( 32.8 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 60.9 57.7 Amortization of stock-based compensation 11.6 8.4 Amortization of deferred financing costs 1.7 1.7 Bad debt expense 1.9 4.7 Deferred income taxes 1.7 — Dividends received from unconsolidated affiliates 5.3 5.5 Equity income in earnings of unconsolidated affiliates ( 5.6 ) ( 4.8 ) Foreign currency adjustments and other 2.6 0.8 Changes in operating assets and liabilities, net of effect of business acquisitions 62.5 65.2 Net cash provided by operating activities 246.5 106.4 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment ( 60.5 ) ( 24.0 ) Acquisitions, net of cash acquired — ( 2,835.0 ) Purchases of investments ( 0.3 ) — Other 0.1 0.1 Net cash used in investing activities ( 60.7 ) ( 2,858.9 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under long-term debt obligations 1,164.9 1,880.4 Repayments of borrowings under long-term debt obligations ( 1,299.3 ) ( 663.1 ) Proceeds from exercise of stock options — 1.0 Treasury stock repurchased ( 26.2 ) ( 37.5 ) Dividends paid ( 36.7 ) ( 32.9 ) Repayments of finance lease obligations and other ( 7.4 ) ( 5.8 ) Net cash (used in) provided by financing activities ( 204.7 ) 1,142.1 NET EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 5.2 ) 11.8 Decrease in cash, cash equivalents and restricted cash ( 24.1 ) ( 1,598.6 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 134.9 1,709.7 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 110.8 $ 111.1 Supplemental cash flow information: Cash paid for interest $ 45.1 $ 52.2 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 International" refers to Somnigroup International Inc. only, and the term "Company" refers to Somnigroup International Inc. and its consolidated subsidiaries. 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 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, as well as licensing the Mattress Firm® trademark to retail franchisees. The Company sells its products through two sales channels: Direct and Wholesale. 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 (Loss). 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, 2025, included in the 2025 Annual Report filed with the Securities and Exchange Commission on February 27, 2026. 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) 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: March 31, December 31, (in millions) 2026 2025 Finished goods $ 488.7 $ 484.7 Work-in-process 17.0 16.5 Raw materials and supplies 125.3 128.8 $ 631.0 $ 630.0 10 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (c) 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) March 31, 2026 December 31, 2025 2029 Senior Notes $ 770.4 $ 780.1 2031 Senior Notes $ 728.8 $ 748.8 (d) Definitive Agreement with Leggett & Platt, Incorporated On April 13, 2026, Somnigroup International and Leggett & Platt, Incorporated ("Leggett & Platt") entered into a definitive agreement (the "Merger Agreement") for a proposed business acquisition in which Somnigroup International, through a wholly-owned subsidiary, will acquire Leggett & Platt in an all-stock transaction (the "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 Transaction is currently anticipated to close by year-end 2026, subject to the satisfaction of customary closing conditions, including approval by Leggett & Platt’s shareholders and receipt of applicable regulatory approvals. The Transaction does not require Somnigroup International shareholder approval. Following the close of the Transaction, Leggett & Platt is expected to operate as a separate business unit within Somnigroup and to maintain its offices in Carthage, Missouri. 11 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 March 31, 2026 and 2025: Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 (in millions) Mattress Firm Tempur Sealy North America Tempur Sealy International Consolidated Mattress Firm Tempur Sealy North America Tempur Sealy International Consolidated Channel Direct $ 885.9 $ 90.0 $ 220.4 $ 1,196.3 $ 593.7 $ 121.7 $ 190.6 $ 906.0 Wholesale — 473.5 131.7 605.2 — 584.5 114.2 698.7 Net sales $ 885.9 $ 563.5 $ 352.1 $ 1,801.5 $ 593.7 $ 706.2 $ 304.8 $ 1,604.7 Mattress Firm Tempur Sealy North America Tempur Sealy International Consolidated Mattress Firm Tempur Sealy North America Tempur Sealy International Consolidated Geographical Region United States $ 885.9 $ 505.0 $ — $ 1,390.9 $ 593.7 $ 648.1 $ — $ 1,241.8 All other — 58.5 352.1 410.6 — 58.1 304.8 362.9 Net sales $ 885.9 $ 563.5 $ 352.1 $ 1,801.5 $ 593.7 $ 706.2 $ 304.8 $ 1,604.7 Substantially all revenue is associated with bedding product sales. 12 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. 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 three months ended March 31, 2026 and the period of February 5, 2025 through March 31, 2025 (the "stub period") are included in the Company's Condensed Consolidated Financial Statements for the three months ended March 31, 2026 and March 31, 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"). Purchase Price Consideration The final 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) 71.8 Total consideration $ 5,408.4 Cash acquired ( 267.0 ) Net consideration transferred $ 5,141.4 (1) The stock consideration of 34.2 million shares of Somnigroup International 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. 13 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) Final Purchase Price Allocation The final 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 final purchase price allocation are as follows: (in millions) Final Allocation Accounts receivable, net $ 21.5 Inventories 313.1 Prepaid expenses and other current assets 65.6 Assets held for sale 35.9 Property and equipment 252.8 Operating lease right-of-use assets 1,270.9 Other non-current assets 54.0 Indefinite-lived trade names 1,880.0 Goodwill 3,493.9 Fair value of assets acquired $ 7,387.7 Accounts payable ( 93.6 ) Accrued expenses and other current liabilities ( 259.4 ) Income taxes payable ( 0.6 ) Liabilities held for sale ( 32.7 ) Long-term operating lease obligations ( 1,306.5 ) Deferred tax liability ( 486.0 ) Other non-current liabilities ( 56.5 ) Long-term debt ( 11.0 ) Fair value of liabilities assumed ( 2,246.3 ) Net consideration transferred 5,141.4 Cash acquired 267.0 Total consideration transferred $ 5,408.4 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. Due to carryover tax basis, approximately $ 164.6 million of the goodwill is deductible for income tax purposes and approximately $ 3,329.3 million is non-deductible for income tax purposes. Combined total goodwill of $ 3,493.9 million is included within the Mattress Firm segment. Transaction Costs The Company incurred an immaterial amount of transaction costs related to the Mattress Firm Acquisition during the three months ended March 31, 2026 and $ 50.2 million in the three months ended March 31, 2025. Transaction costs primarily included legal and professional fees associated with the Mattress Firm Acquisition. 14 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) Consolidated Results of Operations The business acquired in the Mattress Firm Acquisition contributed revenue of $ 885.9 million and $ 593.7 million for the three months ended March 31, 2026 and March 31, 2025, respectively and contributed net income of $ 32.4 million and $ 0.8 million for the three months ended March 31, 2026 and March 31, 2025, respectively. Unaudited Pro Forma Financial Information The following represents the unaudited consolidated pro forma financial information for the period 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) Three Months Ended March 31, (in millions) 2025 Pro forma net sales $ 1,871.8 Pro forma net income $ ( 241.1 ) 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 (in millions) March 31, 2025 Pro Forma Adjustments to Net Sales, as Reported: Mattress Firm pre-acquisition net revenue $ 345.1 Elimination of intercompany sales to Mattress Firm ( 78.0 ) Total adjustments to net sales $ 267.1 Pro Forma Adjustments to Net Loss, as Reported: Mattress Firm pre-acquisition loss (1) $ ( 318.3 ) Transaction costs (2) 50.2 Intercompany profit elimination (3) 62.0 Purchase price allocation adjustments (4) 16.7 Interest expense adjustments (5) ( 2.4 ) Tax effect of pro forma adjustments (6) ( 16.2 ) Total adjustments to net loss $ ( 208.0 ) (1) For the three months ended March 31, 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 %. 15 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (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, 2025 $ 607.0 $ 495.0 $ 3,493.9 $ 4,595.9 Foreign currency translation and other ( 0.8 ) ( 8.2 ) — ( 9.0 ) Balance as of March 31, 2026 $ 606.2 $ 486.8 $ 3,493.9 $ 4,586.9 (5) Debt Debt for the Company consists of the following: March 31, 2026 December 31, 2025 (in millions, except percentages) Amount Rate Amount Rate Maturity Date 2023 Credit Agreement: Term A Facility $ 1,029.7 (1) $ 1,043.8 (1) October 10, 2028 Term B Facility 1,231.0 (2) 1,234.8 (2) October 24, 2031 Revolver 426.5 (1) 550.5 (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 89.5 (3) 79.3 (3) October 8, 2026 Finance lease obligations (4) 105.9 110.6 Various Other 95.3 98.3 Various Total debt 4,577.9 4,717.3 Less: Deferred financing costs 29.4 31.6 Total debt, net 4,548.5 4,685.7 Less: Current portion 112.1 112.4 Total long-term debt, net $ 4,436.4 $ 4,573.3 (1) Interest at SOFR index plus 10 basis points of credit spread adjustment, plus applicable margin of 1.375 % as of March 31, 2026 and December 31, 2025. (2) Term B Interest at SOFR index plus applicable margin of 2.250 % as of March 31, 2026 and December 31, 2025. (3) Interest at one month SOFR index plus 10 basis points of credit spread adjustment, plus 85 basis points. (4) New finance lease obligations are a non-cash financing activity. As of March 31, 2026, 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 $ 1,190.00 million revolving credit facility, a $ 500.0 million term loan facility, a $ 625.0 million Delayed Draw Term A Loan, a $ 1,600.0 million Term B Loan (which was initially placed in escrow, net of an original issue discount, and released upon the consummation of the Mattress Firm Acquisition) and an incremental facility in an aggregate amount 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 also contains a $ 60.0 million sub-facility for the issuance of letters of credit. The Company had outstanding borrowings of $ 426.5 million under the revolving credit facility as of March 31, 2026. Total availability under the revolving facility was $ 762.7 million, after a $ 0.8 million reduction for outstanding letters of credit, as of March 31, 2026. 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"). 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. As of March 31, 2026, the Company had fully drawn down the Accounts Receivable Securitization with borrowings of $ 89.5 million. Borrowings under this facility are classified as long-term debt within the Condensed Consolidated Balance Sheets at March 31, 2026, based on the Company's ability and intent to refinance on a long-term basis. (6) Stockholders' Equity (a) Treasury Stock. As of March 31, 2026, 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 months ended March 31, 2026 or 2025. The Company acquired 0.3 million and 0.7 million shares upon the vesting of certain restricted stock units ("RSUs") and performance restricted stock units ("PRSUs"), which were withheld to satisfy tax withholding obligations during each of the three months ended March 31, 2026 and 2025, 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 $ 26.2 million and $ 37.5 million in treasury stock acquired for the three months ended March 31, 2026 and 2025, respectively. (b) Accumulated Other Comprehensive Loss ("AOCL"). AOCL consisted of the following: Three Months Ended March 31, (in millions) 2026 2025 Foreign Currency Translation Balance at beginning of period $ ( 99.4 ) $ ( 187.2 ) Other comprehensive (loss) income: Foreign currency translation adjustments (1) ( 14.2 ) 29.7 Balance at end of period $ ( 113.6 ) $ ( 157.5 ) Pensions Balance at beginning of period $ 1.0 $ 0.4 Other comprehensive income: Net change from period revaluations (2) — 0.6 Balance at end of period $ 1.0 $ 1.0 (1) In 2026 and 2025, there were no tax impacts related to foreign currency translation adjustments and no amounts were reclassified to earnings. (2) In 2026 and 2025, there were no tax impacts related to pension adjustments. 16 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) (7) Other Items Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: (in millions) March 31, 2026 December 31, 2025 Wages and benefits $ 118.5 $ 130.6 Unearned revenue 99.7 105.3 Sales returns 89.6 91.7 Advertising 68.8 92.8 Taxes 46.1 43.3 Other 187.4 172.8 $ 610.1 $ 636.5 (8) Stock-Based Compensation The Company's stock-based compensation expense for the three months ended March 31, 2026 and 2025 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 March 31, (in millions) 2026 2025 PRSU expense $ 4.4 $ 3.5 RSU expense 5.1 4.3 Option expense 2.1 0.6 Total stock-based compensation expense $ 11.6 $ 8.4 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 2026, the Company granted PRSUs as a component of the long-term incentive plan ("2026 PRSUs"). The Company has recorded stock-based compensation expense related to the 2026 PRSUs during the three months ended March 31, 2026, 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 March 31, 2026 and 2025 were 24.3 % and 33.5 %, respectively. The Company's effective tax rates for the three months ended March 31, 2026 and 2025 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. 17 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 March 31, (in millions, except per common share amounts) 2026 2025 Numerator: Net income (loss) attributable to Somnigroup International Inc. $ 104.2 $ ( 33.1 ) Denominator: Denominator for basic earnings per common share-weighted average shares 210.3 194.9 Effect of dilutive securities 2.3 4.0 Denominator for diluted earnings per common share-adjusted weighted average shares 212.6 198.9 Basic earnings (loss) per common share $ 0.50 $ ( 0.17 ) Diluted earnings (loss) per common share $ 0.49 $ ( 0.17 ) 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 0.8 million shares for the three months ended March 31, 2026, and an immaterial amount of shares for the three months ended March 31, 2025. 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 : Mattress Firm, Tempur Sealy North America and Tempur Sealy International. These segments are strategic business units that are managed separately. The Mattress Firm segment consists of retail stores and distribution centers located in the U.S. 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 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. The following table summarizes total assets by segment: (in millions) March 31, 2026 December 31, 2025 Mattress Firm $ 8,021.6 $ 7,929.7 Tempur Sealy North America 5,885.1 5,717.9 Tempur Sealy International 1,569.6 1,542.3 Corporate 2,740.9 2,588.7 Inter-segment eliminations ( 6,677.6 ) ( 6,177.9 ) Total assets $ 11,539.6 $ 11,600.7 18 Table of Contents SOMNIGROUP INTERNATIONAL INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (unaudited) (continued) The following table summarizes property, plant and equipment, net, by segment: (in millions) March 31, 2026 December 31, 2025 Mattress Firm $ 283.3 $ 270.7 Tempur Sealy North America 590.4 609.9 Tempur Sealy International 106.2 110.8 Corporate 29.9 27.8 Total property, plant and equipment, net $ 1,009.8 $ 1,019.2 The following table summarizes operating lease right-of-use assets by segment: (in millions) March 31, 2026 December 31, 2025 Mattress Firm $ 1,357.3 $ 1,344.9 Tempur Sealy North America 299.3 315.2 Tempur Sealy International 217.3 215.9 Corporate 2.5 2.8 Total operating lease right-of-use assets $ 1,876.4 $ 1,878.8 The following table summarizes segment information for the three months ended March 31, 2026: (in millions) Mattress Firm Tempur Sealy North America Tempur Sealy International Corporate Eliminations Consolidated Net sales $ 885.9 $ 563.5 $ 352.1 $ — $ — $ 1,801.5 Inter-segment sales 2.8 299.3 0.1 — ( 302.2 ) — Total net sales and inter-segment sales $ 888.7 $ 862.8 $ 352.2 $ — $ ( 302.2 ) $ 1,801.5 Inter-segment royalty expense (income) — 8.7 ( 8.7 ) — — — Gross profit 272.9 326.4 177.6 — — 776.9 Advertising expense 30.9 91.6 27.9 — — 150.4 Other selling and marketing expense 153.9 62.0 56.1 6.1 — 278.1 General, administrative and other expenses 54.7 41.1 33.8 37.3 — 166.9 Equity income in earnings of unconsolidated affiliates — — ( 5.1 ) ( 0.5 ) — ( 5.6 ) Operating income (loss) $ 33.4 $ 131.7 $ 64.9 $ ( 42.9 ) $ — $ 187.1 Interest expense, net 60.0 Other expense, net ( 10.2 ) Income before income taxes $ 137.3 Depreciation and amortization (1) $ 23.5 $ 30.1 $ 8.6 $ 10.3 $ — $ 72.5 Capital expenditures 47.3 7.6 5.5 0.1 — 60.5 (1) Depreciation and amortization includes stock-based compensation amortization expense. 19 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 March 31, 2025: (in millions) Mattress Firm Tempur Sealy North America Tempur Sealy International Corporate Eliminations Consolidated Net sales $ 593.7 $ 706.2 $ 304.8 $ — $ — $ 1,604.7 Inter-segment sales — 130.1 0.2 — ( 130.3 ) — Total net sales and inter-segment sales $ 593.7 $ 836.3 $ 305.0 $ — $ ( 130.3 ) $ 1,604.7 Inter-segment royalty expense (income) — 6.2 ( 6.2 ) — — — Gross profit 191.2 240.0 149.3 — — 580.5 Advertising expense 33.6 83.6 25.7 — — 142.9 Other selling and marketing expense 101.5 68.0 46.6 3.6 — 219.7 General, administrative and other expenses 49.3 48.1 30.7 81.4 — 209.5 Equity income in earnings of unconsolidated affiliates — — ( 4.8 ) — — ( 4.8 ) Operating income (loss) 6.8 $ 40.3 $ 51.1 $ ( 85.0 ) $ — $ 13.2 Interest expense, net 61.3 Other expense, net 1.2 Loss before income taxes $ ( 49.3 ) Depreciation and amortization (1) $ 16.7 $ 30.8 $ 7.4 $ 11.2 $ — $ 66.1 Capital expenditures 9.2 8.0 6.1 0.7 — 24.0 (1) Depreciation and amortization includes stock-based compensation amortization expense. The following table summarizes property, plant and equipment, net by geographic region: (in millions) March 31, 2026 December 31, 2025 United States $ 884.4 $ 889.3 All other 125.4 129.9 Total property, plant and equipment, net $ 1,009.8 $ 1,019.2 The following table summarizes operating lease right-of-use assets by geographic region: (in millions) March 31, 2026 December 31, 2025 United States $ 1,649.8 $ 1,653.1 All other 226.6 225.7 Total operating lease right-of-use assets $ 1,876.4 $ 1,878.8 20 Table of Contents