Somnigroup International (TPD) Q3 2026 Earnings Report

The call was broadly positive despite several meaningful operational and market challenges. Somnigroup reported record sales, EBITDA and EPS, completed the Leggett & Platt acquisition, generated strong cash flow, expanded North American margins and outlined multiple product, synergy and store-growth opportunities. The main negatives were the substantial Dreams ERP disruption, weaker Mattress Firm and wholesale sales, international margin pressure, transportation inflation, a cautious consumer and a bedding industry expected to decline mid-single digits in the back half of the year. Highlights significantly outweighed the lowlights.

For 2026, Somnigroup expects adjusted earnings per share to be between $2.85 and $2.95 for the full year, based on a sales midpoint of approximately $8.65 billion after intercompany eliminations, with the global bedding industry expected to be down mid-single digits in the back half of the year; Tempur Sealy North America like-for-like sales are flattish, International business sales are flattish with expected sequential improvement in Dreams trends from the third to fourth quarter, like-for-like Mattress Firm sales down low-single digits, and like-for-like Leggett sales in the fourth quarter to be approximately $875 million after intercompany elimination. Legacy SGI gross margin is expected to be approximately 45%, reported gross margin slightly above 41%, adjusted EBITDA approximately $1.4 billion at the midpoint, CapEx approximately $255 million including $75 million under the Mattress Firm store refresh and brand wall program, future-year CapEx $300 million, D&A approximately $330 million, interest expense approximately $240 million, a tax rate of 25%, and diluted share count of 220 million shares for the full year and 233 million shares for the fourth quarter; Tempur Sealy brands and private label are expected to be in the mid-60% of Mattress Firm's total sales, representing about an incremental $65 million of adjusted EBITDA benefit for '26 compared to '25 and approximately $680 million of advertising investment. For 2027, the company expects adjusted EPS growth, approximately $125 million of incremental adjusted EBITDA from synergy opportunities, a run rate exit that we're targeting for '27 of $3.40, and a targeted aspirational EPS for 2028 of $5.15.