SGI - NYSE

Good morning, ladies and gentlemen, and welcome to Somnigroup International Inc Fourth Quarter 2025 Earnings Call. At this time, all lines are in a listen-only mode. If anyone has any difficulties hearing the conference, I would now like to turn the conference call over to Aubrey Moore, Investor Relations. Please go ahead. Thank you, operator. Good morning, and thank you for participating in today's call. Joining me today are Scott Thompson, Chairman, President and CEO, and Bhaskar Rao, Executive Vice President and Chief Financial Officer. This call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve uncertainties and actual results may differ materially due to a variety of factors that could adversely affect the company's business. These factors are discussed in the company's SEC filings, including its annual

reports on Form 10-Ks, and quarterly reports on Form 10-Q. Any forward-looking statement speaks only as of on the date it from which it is made. The company undertakes no obligation to update any forward-looking statements. This morning's commentary will include non-GAAP financial information. Reconciliations of this non-GAAP financial information can be found in the accompanying press

release.

Which has been posted on the company's website at www.familygroup.com and filed with the SEC. Our comments were supplement with detailed information provided in the press release. Finally, before I turn the call over to Scott, I want to take a moment to share that this is my final earnings call in this role. I am transitioning to Somnigroup International Inc vice president consumer and market intelligence. I am pleased to say that Lauren, many of you know well, will be leading investor relations going forward. It has been a privilege to work closely with our investor community and I am confident Lauren will continue to serve as a strong partner going forward. And with that, it is my pleasure to turn the call over to Scott.

Aubrey, you for your outstanding contributions to investor relations. Maybe even a bigger thank you for you jumping into your new role at SGI.

That is important to our future success. Moving on to today's earnings call. Good morning. Thank you for joining us on our fourth quarter and full year 2025 earnings call. I will begin with highlights the quarter and full year and then turn the call over to Bhaskar to review our financial performance in more detail and discuss our 2026 guidance and our updated three-year EPS targets. After that, I will open the call up for Q&A. In 2025, we achieved record net sales and adjusted EBITDA. While our adjusted EPS increased a robust 20%. Year over year, net sales were up approximately 55% to $1,900,000,000. Adjusted EBITDA was up approximately 59% to $349,000,000, adjusted EPS was $0.72 per share. This financial performance was particularly notable given it was achieved while the industry is at a record low and underperformed our expectations. 2025 proved to be another challenging year for the bedding industry. We estimate the US industry trend declined mid-single digits in the fourth quarter and full year. The non-US markets we operate in were similarly challenged. After multiple year headwinds, we are confident the bedding industry will normalize to at least historical growth trends in the near future. Our conviction in our industry outlook is supported by our demand-driven innovation, compelling advertising, the industry's pent-up product demand, growing health and wellness trends, consumer confidence, and future growth in housing formation. We will continue to strive to win market share gains, drive cost efficiencies, and prudently allocate capital, all to deliver shareholder returns. Before turning the call over to Bhaskar, let me highlight several notable achievements in 2025, which marked a transformational year for Somnigroup International Inc. Our first highlight is the successful execution of the Mattress Firm combination and transition to Somnigroup International. We made significant progress with the combination in our first year, and we are still in the early stages of realizing all of the benefits. We brought all of our business units together through a holding company structure with unified management and a shared business strategy and focus. This structure allows us to operate effectively while maintaining a large degree of independence at the business unit level. Building upon the successful combination of Mattress Firm, we were able to accelerate the pace of sales and cost synergies, exceeding our initial expectations. We now expect to deliver $225,000,000 in total EBITDA synergies.

Dollars 125,000,000 in cost synergies,

and a 100,000,000 from sales synergies. Bhaskar will provide more color on the increase in our cost synergy outlook in just a moment. We have seen in it our position as the largest bedding company in the world, allowing us to drive economies of scale, streamline operations, reduce product cost, invest in advertising, and fully support industry partners. Lastly, this transaction drove earnings derisk distribution volatility, as we are now 65% direct to consumer, and positioned us for sustainable growth. Our second highlight is the strength of our operating model, which allows us to aggressively execute its long-term growth initiatives while remaining responsive to current market conditions. In 2025, we drove share gains across all business segments, extending our lead as the world's largest bedding company. Our competitive advantage underpin these strong results and include our diverse portfolio of trusted brands and innovative products, unmatched global scale and vertically integrated business model, a broad omnichannel reach, with our products sold through tens of thousands of third-party retail stores worldwide, and direct to consumer. And finally, our strong cash generation and disciplined capital allocations, which supports it reinvestment in the business, returning cash to shareholders, deleveraging, and providing dry power to capitalize on compelling opportunities, such as our recent investments in Full Power and Kingstown. The third highlight is the outperformance of our US Tempur-Sealy business, supported by innovative new products, targeted advertising initiatives, expanded distribution. In 2025, we launched our all-new Sealy Posturepedic line, the largest launch in our history, with over 65,000 more samples shipped. The launch is performing well, and the new collection is driving meaningful sales growth. This year also marked the first national advertising investment to support the Sealy brand and product, amplifying Sealy's share of voice and driving valuable customer traffic industry-wide. As we look ahead to 2026, we are excited to continue investing in national advertising designed to drive traffic to retailers and reinforce our commitment to innovation with the launch of our new Stearns & Foster products in the back half of the year. Fourth highlight is that Mattress Firm's full year performance outpaced the broader US market, driven by our refined merchandising strategy, strengthened supplier relations, and exceptional in-store execution. Since closing the acquisition, we have elevated Mattress Firm's merchandising. Our focus has been on curating a portfolio of complementary products that deliver exceptional quality and value across all price points. We deepened partnerships with some suppliers who not only met our quality standards, but also actively supported Mattress Firm success through differentiated offerings and traffic-driving advertising initiatives. We also activated multiple initiatives to deliver retail excellence including optimizing marketing strategies, enhancing the in-store experience, and leveraging our best-in-class retail talent, supporting them with quality sales tools, and training to provide customers with targeted sleep solutions. Additionally, we are making steady progress on our plan to invest $150,000,000 between 2025 and 2027 to refresh certain Mattress Firm stores bringing them up to our brand standards. Further, we have ramped installation of Tempur brand walls which lead to improved customer engagement and education. These brand walls placed at both Mattress Firm and other retailers have proven to be a worthwhile investment by driving higher retail ASP. We made substantial progress in expanding this initiative in 2025, and we remain firmly on track to complete the rollout across all Mattress Firm stores nationwide at the end of the year. As previously mentioned, we undertook a new advertising strategy for Mattress Firm to harmonize the message with Somnigroup International Inc initiatives, culminating in the launch of our new Mattress Firm advertising campaign, Sleep Easy. In 2025, we introduced new campaign iterations into the marketplace over the last quarter and continue to achieve all-time high market research scores. Key performance indicators consistently indicate the campaign is having a measurably positive impact on customers' impression of Mattress Firm and brands being presented, enhancing awareness and triggering consumers' interest in bedding, benefiting all bedding retailers. Campaign's strong performance has already prompted two non-Somnigroup International Inc vendor partners to commit additional advertising dollars directly to Mattress Firm. To capitalize on the opportunity both our scale and our new messaging platform now clearly represents for bedding brands. We are pleased with these preliminary results and expect to see additional momentum as the campaign becomes more established in the market. Our fifth highlight is related to our international business. We saw impressive sales growth, demonstrating the long-term global growth opportunity ahead. Our Tempur International business delivered low double digit sales growth in the quarter or on a constant currency basis

by single

digit sales growth in the fourth quarter and full year, outpacing the broader industry while navigating a challenging market. This marks our third consecutive year of solid growth across all key international regions, driven by the refreshed Tempur product lineup, standard distribution reach, and enhanced marketing investments. Dreams, our UK-based retail brand, also posted another solid year of market outperformance driven by conversion and increased order volume. Full year performance was supported by robust same-store sales and strategic new store openings. The team continued to deliver operational efficiencies

Into 2026. And with that, I will turn the call over to Bhaskar. Thank you, Scott. In 2025, consolidated sales were $1,900,000,000 and adjusted earnings per share was $0.72, up 20% over the prior year. There are approximately $10,000,000 of pro forma adjustments in the quarter, all of which are consistent with the terms of our senior credit facility. As a reminder, we have aligned accounting for store occupancy cost across Somnigroup International Inc, which resulted in Tempur Sealy reclassifying their store occupancy cost from operating expense to cost of goods sold. We have adjusted prior year Tempur Sealy financial information included in today's earnings release to reflect the change for ease of comparability. As a reminder, year-over-year comparisons are impacted by the acquisition of Mattress Firm in 2025 and the related divestitures of Sleep Outfitters and certain Mattress Firm retail locations in 2025. I will be highlighting like-for-like comparisons defined as reported numbers adjusted for the acquisition and divestiture impacts to normalize for these items in our commentary. Declined mid single digits in a quarter Mattress Firm's adjusted gross margin was 32.4% and adjusted operating margin was 5.4%. Turning to Tempur Sealy North American results, like-for-like net sales through the wholesale channel increased approximately 6% in the fourth quarter. Normalizing for the previously disclosed Orkos distribution, our sales with third-party retailers were flattish on a like-for-like basis, outperforming the broader industry by a solid margin. Like-for-like net sales through the direct channel declined 7% in the fourth quarter as our direct Tempur stores underperformed our expectations and our e-commerce sales faced comps. North American adjusted gross margins increased 2,000 basis points to 59.5%, primarily driven by the elimination of the intercompany sales to Mattress Firm from Tempur Sealy. On a like-for-like basis, points versus the prior year. North American gross margins increased 250 basis points, primarily driven by operational efficiencies and mix as the premium consumer demonstrated continued resilience. North American adjusted operating margins improved 1,300 basis points to 27.6%, primarily driven by Mattress Firm intercompany sales elimination. On a like-for-like basis, North American adjusted operating margins increased 450 basis points versus the prior year, primarily driven by the improvement in gross margin and fixed cost leverage. Now turning to international results. International net sales grew a robust 13% on a reported basis and 9% on a constant currency basis. Our international gross margins increased 40 basis points to 51.1%, primarily driven by operational efficiencies, offset by modest headwinds from a competitive UK marketplace. Our international operating margin increased 110 basis points to 22.4%, driven by the expansion in gross margins and fixed cost leverage. Now turning to our sales and cost synergy targets. In 2025, we achieved a $60,000,000 benefit in adjusted EBITDA from sales synergies ahead of our initial expectations. We exited the year at a low 60% of Mattress Firm's total sales, averaging mid-fifties for the full year. At the same time, Purple and Kingsdown both grew share at Mattress Firm. We will see the wraparound effect of Tempur Sealy share gains in 2026 resulting in an incremental $40,000,000 of EBITDA benefit and positioning us to confidently deliver on our $100,000,000 run-rate sales synergy target. Since we have held Mattress Firm sales flat and estimating this balance of share opportunity, we expect the synergy benefit to grow as we start to see the US bedding industry normalize. On cost synergies, I am excited to share that we are increasing our estimate to $125,000,000 with $20,000,000 realized in 2025, $55,000,000 expected in 2026, and an incremental $50,000,000 in 2027. Our increased cost synergy outlook is principally being driven by increased expected savings from logistics and supply chain activities. Now moving on to Somnigroup International Inc's balance sheet and cash flow items. At the end of the fourth quarter, consolidated debt less cash was $4,600,000,000 and our leverage ratio under our credit facility was 3.2 times, down nearly a third of a turn versus the Mattress Firm acquisition date, demonstrating our strong cash flow generation and disciplined capital allocation. We expect to return to our target leverage range of two to three times in the next six months. We also expect lower market interest rates will drive improved cost of our variable rate debt, which will add to future EPS growth. Finally, as we announced this morning, we are increasing our quarterly dividend 13% to $0.17 in 2026. This marks the sixth consecutive year of dividend increases reflecting our confidence in sustained cash generation. Now turning to guidance. As a reminder, our guidance considers the elimination of inter sales between Mattress Firm and Tempur Sealy, which we expect to represent approximately 23% of global Tempur Sealy 2026 sales. Intercompany eliminations in accordance with GAAP will reduce Tempur Sealy sales but be margin accretive and neutral to dollars of operating profit. Please also note that we acquired Mattress Firm in February 2025. As a result, our first quarter and full year 2026 reported results will reflect the impact of a little over one additional month of Mattress Firm financial results. We expect adjusted earnings per share to be between $3.00 and $3.40. This guidance range contemplates the sales midpoint of approximately $7,900,000,000 after intercompany eliminations. Our annual guidance also reflects our expectation that the global bedding industry will go slightly versus the prior year driven by low single digit growth in the first half of the year, Tempur Sealy North America sales growing mid single digits on a like-for-like basis, and reported sales to be impacted by the intercompany elimination I referenced a moment ago, international business growing mid to high single digits, as our legacy international continues to drive new distribution through its product strategy and Dreams continue to drive share in a competitive UK market, and our like-for-like Mattress Firm sales to grow low to mid single digits. We also expect reported gross margin slightly above 45%, driven by approximately 100 basis points of net margin expansion from operational efficiencies including synergies and fixed cost leverage. Our 2026 outlook also contemplates our assumption for Tempur Sealy brands and private labels to be in the low 60% of Mattress Firm total sales, this represents about an incremental $40,000,000 of EBITDA benefit for 2026 compared to 2025, and approximately $720,000,000 of advertising investments, all of which we expect to result in adjusted EBITDA of approximately $1,450,000,000 at the midpoint. Regarding capital expenditures, we expect 2026 CapEx of approximately $250,000,000, which includes $75,000,000 of investments in Mattress Firm store refreshes and brand wall installations. We expect our CapEx to normalize to $200,000,000 in future years, and for at least 50% of our free cash flow in 2026 to go to quarterly dividends and share repurchases. Now I would like to flag a few modeling items. For the full year 2026, we expect D&A of approximately $315,000,000, interest expense of approximately $225,000,000, on a tax rate of 25%, with a diluted share count of 214,000,000 shares. Lastly, we are raising our 2028 target EPS to $5.15 representing a 24% compound annual growth rate from 2025. We are also targeting mid-single digit annual sales growth and double-digit annual adjusted EBITDA growth over that period. With that, I will turn the call back over to Scott. Thank you, Bhaskar. Well done. Now I want to quickly address our proposed position of Leggett & Platt before opening the call up for Q&A. We welcome Leggett & Platt's board willingness to engage in discussions and conduct customary due diligence, which is currently underway. Somnigroup International Inc remains committed to pursuing a transaction that will deliver substantial value to shareholders of both companies. They are further. I would like to headline let's lastly, topic. that we will be hosting an Investor Day in New York on March 4. During that day, we expect to share more information on our three-year EPS target, our strategic vision for Somnigroup International Inc, discuss growth initiatives for Tempur Sealy, Mattress Firm, and Dreams, and provide additional details on our capital allocation strategy. With that, operator, that ends your call. Please open the call up for questions.

Thank you, ladies and gentlemen. We will now begin the question and answer. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Susan Maklari from Goldman Sachs Canada. Your line is now open. Good morning, everyone.

Good morning.

Good morning, Scott. My question is around the outlook for demand. Can you talk a bit about the state of the consumer, how you are thinking about the shape of demand as we come into 2026 and how you are thinking of the drivers and the potential for out or underperformance relative to the guide for Tempur North America sales to be up low single digits on a like-for-like basis?

Sure, Susan. Thank you for the question. I mean, first thing, in demand, I would say our estimates are for our $3.03 for 2026. You know, one of the foundations of it is is basically a flat market. We did not call a turn in there. And if we had obviously, the flow-through on that guidance would be significant. But we thought considering the fourth quarter came in a little light from the industry standpoint from our expectations, that probably flat was the right way to go into the year. And then we will we will see how how demand develops. If you are talking about how what are we thinking about? Jeez. Fourth quarter, again, came in a little bit less from an industry standpoint than we expected. And if you look at the start of the first quarter, it is kind of a tale of two cities. If you look at the pre-President's Day holiday period, call it January 1 to, I do not know, February 10 or so, you know, we had tough weather, and I hate talking about weather obviously. But if you talk about short periods, you always have to think about it. And it was tough weather in the US. And the way I always look at that is I look at loss days, and if you look at Mattress Firm, we had 5,000 days of store losses that were incremental to last year. So to be clear, that is not like rain or something. That means this weather was so bad, the store did not open. So we lost 5,000 days of sales during that period off of a possibility of 90,000 days. So it is about a 6% headwind incrementally in store closings. So as you would expect during that period, Mattress Firm's same-store sales were were slightly down. But then as soon as you get into the present holiday period, which we will call that, you know, February 11 forward, sales have been very robust. When I say very robust, I mean double digits, robust. Driven by strong AOV, driven by Tempur, and the result is looking at US Mattress Firm sales because that is kind of the best index for consumers and it has real-time data, is now we are running positive. Clearly, a customer is in the market wanting to buy. Same-store sales at Mattress Firm to start the quarter. So when I look at it, looks like a bedding market and a consumer that that wants the market to grow. And we have got to get out of our way, whether it be some drama in Washington or whether it be, you know, an unusually strong storm, slows you down a little bit. But it it does feel like it is a market that is that is poised for growth. If I could add on to that, then the way to think about the quarter, when you put all that together, is from a first quarter sales standpoint, we would expect something in and around positive 14% or a little over $1,800,000,000 with EPS growing in and around 20%. Operator, next question.

Your next question is from Robert Kenneth Griffin from Raymond James. Your line is now open.

Good morning, guys. Thanks for taking the questions. And Aubrey, congrats on the new positions. It has been great working with you over the last few years. I guess Bhaskar and Scott, for my question, I want to maybe unpack the guide a little bit. And, Bhaskar, can you help us and just kinda clean some things in the model in terms of, like, what is left on the customer transition as well as I know we have the wraparound benefit of Mattress Firm and some of the divestitures. And I guess I am asking in the context, if I take the cost synergies, the EBITDA benefit from, the floor shift, as well as our guest at what the one month, the Mattress Firm is, we can walk our way pretty close to the midpoint just on those. So is there anything I am missing on an offset, or is the way to view that more just conservative the model? Like, just want to make sure we are thinking about all the parts the right way. Sure. Let me let me give it a try, and then you can, follow-up as necessary. So when I think about this fundamentally, it is all based on a industry that is flat to slightly up. On top of that, what we have is share gains in in all of our geos. So internationally growing high single, and in in North America, call it that mid single. And that would get you, let us call it, in and around $7,900,000,000. When you go forward from a gross profit standpoint, well, let us talk about the stub period. So the stub period, you are correct, is about one month shy relative to prior year and call that in and around, call it $280 or so million dollars net. When you think about from a profitability standpoint is we are going to continue to support those brands. We call that about $720,000,000 of advertising to continue to support from a launch standpoint. What is embedded in there is, is very nice gross profit improvement, let us call it about 100 basis points, on a year-over-year perspective. And the principal drivers of that is couple of things. One is productivity through the plans, and on top of that would be the the the synergies that we have. And as noted in the prepared material, we have taken that number up. About $25,000,000 on a year-over-year basis. There is a bit of a headwind associated with, let us call it, commodities. That would offset from a gross profit standpoint. But if you add all those pieces up, I think fundamentally, the the foundation being industry, market share gains, and margin expansion, it gets you to in or around the midpoint. Operator, next question.

The next question is from Rafe Jadrosich from Bank of America. Your line is now open. Hi. You have Victoria on for Wave Research. Thanks for taking taking our question. I was wondering if you could talk a little bit more about the elasticity of demand and, how did price increase impact your volume?

Yeah. You know, we we took quite a bit of price over the last couple of years. And I cannot really see any significant impact from from a volume standpoint. This is an industry that has always been very efficient in passing actual cost, commodity cost increases through the channel. And it looks like it is continued to do that.

The next question is from Daniel Arnold Silverstein from UBS. Your line is now open.

Thank you and good morning. Appreciate you taking our question. Maybe just to build on Robert’s question, if we kind of expand that out to 2028 target, is the raise there just the additional synergies? Or has anything else changed on kind of the outlook on the pace of an industry recovery or Somnigroup International Inc's growth against that industry? Thank you. Great question. Some of it is synergies and the success that we have achieved in synergies. Plus what we see going into the funnel from from a synergy standpoint, primarily in the area of logistics. Mhmm. And and advertising. The other probably big driver would be when we look at our relative competitive position, and it is a little early in the reporting quarter to have all the numbers and have the industry fully analyzed. But we think we took a major step forward from a competitiveness and and everywhere we look, I would highlight that we are growing in all of our geos. And those are in markets that we believe had a tough tough fourth quarter. Again, I guess it is confidence in our competitive position and synergies are the main drivers. And I mean, again, if the if the industry turns in '26, which we did not embed in our our guidance. Our guidance range would be light. Now to wrap around the the perspective of $5.15, what we are excited about is the ability to take it up in light of an industry in 2025 that did not achieve what we thought it would be when the original April was put out there. So we did have some wins, as Scott said, competitive positioning, revenue synergies, cost synergies, etcetera, that allowed us to take the number to $5.15. And then at the conference in New York, here in a few weeks, we will we will give you more detail in the buildup to to that $5.15. To I think it will give you more confidence that that raise was appropriate.

Thank you. The next question is from Peter Jacob Keith from Piper Sandler.

Thanks. Good morning, everyone. And congrats to Aubrey and to Lauren. Want to just ask about the lack of product launches in the first half. With the gross margin guide of 100 basis points, could we see a little bit of excess gross margin expansion in the first half with no product launches and then the opposite of that in second half. And then, Scott, also, product launches usually are a big sales driver, so you are anticipating gaining market share, Tempur North America. I guess, can you walk us through the rationale on that? Because product launches usually are nice sales accelerating. Yeah. Lot in that question. I will start with it, and, Bhaskar, you can you clean me up. You know, when you do a product launch, yeah, you do get more sales. But those sales are obviously much lower profit margin closer more to breakeven. So it is kind of a mixed bag. If if you look what is in the marketplace, we have got great products in the marketplace. The Sealy Posturepedic launch, the Tempur stuff. We do have a small launch later in the year, Stearns & Foster. But from a competitive standpoint, we feel very good about our the launches. So I think we are well positioned to continue to take share of what we have got in the market back with advertising. You want to talk to gross margin? Absolutely. Peter, good question. So when I think about the full year, if I were to step back, on the sales and, let us call it, the EBIT or the fall-through line, it is effectively a push. But there is some first half, back half phasing. So think about it as a sales headwind in the first half, call it about $20,000,000 or so. And effectively reversing in the back half. And from a margin standpoint, you are correct. There is the if you look at it in isolation, the gross profit will be impacted more so in the first half of the year versus the back half of the year. However, we are also, again, as we announced the synergy opportunity and the productivity is, is that that as the year progresses, is those things will progress as well. Fundamentally, when you look at the full four models in and of itself, yes. First half, back half impact. Net full year, basically nothing.

Thank you. Your next question is from Bradley Bingham Thomas from KeyBanc Capital Markets.

Hi, good morning. Thank you for taking the question. The question is about the changes at Mattress Firm from a consumer and an operational perspective. Scott, it does feel seem like even with same-store sales having slowed a bit in the fourth quarter that that is more a function of the industry and that Mattress Firm is still really outperforming. But I was hoping you could just comment a little on how you measure the new lineup is resonating with the consumer and then how we should think about kind of the pace of change that we are putting in place and then maybe just finally, any more details that you could share on the timing of Purple, Kingsdown, some of the other changes that you are doing here this year? Thank you. Sure. So I mean, to summarize the question, can you tell me everything you know about Mattress Firm? Just kidding. Look, from everything we see Mattress Firm continues to take share, both in the fourth quarter and start of the first quarter. So I would say that is evidence of, resonating with with with customers. As far as performance, you are seeing share growth, and we will call the family brands, the Tempur Sealy brands, particularly Tempur. You are seeing growth in Kingsdown, which is doing a great job for us. And you are seeing growth in Purple. And there is, some there is a test going on in Kingsdown. Considering expanding it. And then the new Purple high end bed will be hitting the floor Mattress Firm, I think, late late first first quarter. We get a lot of feedback from our RSAs and I think the merchandising changes have been well received both in store and with consumers. And Nectar is doing well. I to mention Nectar. Has been has been doing well in the floor. So overall, I could not be happier with our merchandising changes both the way they have been executed, the pace they have been executed, and and how the market that has received

Thank you. Your next question is from William Reuter from Stephens. Good morning. Thanks for taking my question. Aubrey and Lauren, congrats on the new roles. And Scott, nice to reconnect with you. It has been a long time.

Question, Scott, I was wondering now that you have had Mattress Firm, pretty much for an entire year, you had mentioned on your prepared remarks about some marketing step up from some of your partners. Just curious, you know, how you are seeing, you know, know this is a little sensitive, but just owning Mattress Firm that, you know, the competitive dynamics or the strategic dynamics, any any thoughts there on how that kinda meshes with your original expectations when you bought it? Yeah. I have got a couple of things. Great question, and and good to hear from you. I guess starting starting with the advertising. You know, we completely changed the the advertising message and the approach. It is kind of it is built in in a way that, there is a Mattress Firm message. And then you can kinda plug in a branded product into into the ad and get a, you know, a one two punch. Obviously, we are doing that with the family brands, the Tempur, Sealy, Stearns & Foster. But we are also doing it with with other brands. Well, third-party brands. And that has been effective. In fact, it has been so effective that other manufacturers are giving us incremental support incremental outside of, we will call it, normal support to take some positions in those ads. Because they are seeing when they do, it it drives traffic not only on the Mattress Firm floor, but it also drives their brand at other third-party retailers. So it is become a very it is a very effective way for them to get to market and so could not be happier with the way that program has worked. And I I think, I think the third-party manufacturers who participated in it are happy with that too. As it relates to, I will call it, channel dynamics or those kind of things, we we have a term called other other, because it is a short way to say, how are the other retailers doing in the US that are not Mattress Firm? And how are the sales of Tempur Sealy products? We call it other other. And if you look at other other, our other other sales, we think that they are outperforming the general market. So we think we are taking share in the other other area too. And so I am not seeing any significant channel conflict. I think everybody understands that advertising we are doing is helping drive product not just at our retail stores, but throughout the industry. And found good support. It is probably gone better than I probably initially thought. Was not too worried about it, but you have got to work work through it. So no. I think I think the Mattress Firm acquisition, you know, you could take the price, you take the performance, you take the synergies that have been realized. I think we would say that it has been very good from our standpoint. Thanks very much for taking the question. Best of luck.

Thank you. Your next question is from Robert Kenneth Griffin from Raymond James. Hey, guys. Thanks for holding me back in the queue.

Scott, I just you know, we spent a lot of time on North America, but, honestly, international could just continues to be a a bright spot there with robust kind of constant currency growth on top of a really good quarter last year. Understand you guys did a lot of work on the product portfolio, but help us understand, like, how much is new door growth versus how much is throughput or slot velocity? And then when we think about the international, like, you still see a robust amount of new door potential, or is it more discontinuing the velocity? Just help us think about the sustainability of what is turning into a nice bright spot in the story. Yeah. I mean, great call out. International has been growing for a couple of years. Very strong, again, in not a great market, which is is particularly impressive. As as you know, from an international standpoint, we do not have a large balance of share internationally. So it is a long-term growth trajectory that we we could very, bullish on. Bhaskar, do you know the split between new distribution and because we are getting both internationally. Ask Absolutely. So when you think about the growth over the last couple of years, it is been principally at its existing distribution. And what existing distribution looks like is perhaps a few more slots in in in stores that we are in. But really improving the velocity per slot on where we are at. And really what that does is that we have to prove we have to prove ourselves in the international market. As Scott said, we have relatively low share relative to the US. Also, a very difficult execution. The borders, they are not states. They are countries. So it is a it is a it is a tougher slug. So the key there is making sure you have the right product, advertise ahead of that, to educate the retailers and the consumers. Therefore, you get the incremental slots within the store. Prove yourself in those stores, and then get into new. So when I think about the next leg of growth internationally, continue to do what we are doing, but also expand the distribution outside of our historic footprint.

Thank you. There are no further questions at this time. I will now hand the call back over to Scott Thompson for the closing remarks.

Thank you, operator. To our 20,000 associates around the world, thank you for what you do every day to make the company successful. To our retail partners, thank you for your outstanding representation of our brands. To our shareholders and lenders, thank you for your confidence in the company's leadership and its board of directors. This ends the call today, operator. Thank you.