Somnigroup International (SGI) Q1 2026 earnings summary

Executive summary

• Net sales rose 12.3% year-over-year to $1.8 billion in Q1 2026, driven by the full-quarter inclusion of Mattress Firm sales and strong international performance.

• Net income reached $104.2 million, a significant turnaround from a prior-year net loss, with adjusted net income up 28.4%.

• Adjusted EBITDA was $297 million, up nearly 20% year-over-year; adjusted EPS rose 20.4% to $0.59.

• Record first-quarter operating cash flow enabled debt reduction and supported capital returns.

• Announced agreement to acquire Leggett & Platt for $2.5 billion in stock, expected to close by year-end 2026.

Financial highlights

• Gross margin expanded to 43.1% from 36.2% year-over-year; adjusted gross margin was 43.6%.

• Adjusted net income increased 28.4% to $124.5 million; adjusted EPS was $0.59, up 20.4%.

• Adjusted EBITDA for Q1 2026 was $297 million; trailing twelve months adjusted EBITDA reached $1.36 billion.

• Record Q1 operating cash flow of $246 million and free cash flow of $186 million.

• Net debt reduced by nearly $500 million over the past 12 months; total debt at $4.6 billion at quarter-end.

Outlook and guidance

• 2026 adjusted EPS guidance of $3.00–$3.40, with sales midpoint at $7.8 billion after intercompany eliminations.

• Anticipates $1.45 billion adjusted EBITDA at midpoint, with CapEx of $225 million (including $75 million for Mattress Firm store refreshes).

• Expects 2026 reported gross margin slightly above 45% and nearly 100 basis points of net margin expansion.

• At least 50% of free cash flow to be used for dividends and share repurchases.

• Guidance reaffirmed despite challenging macroeconomic and industry conditions.