Executive Summary

Q2 2025 delivered 52.5% net sales growth to $1.88B on consolidation of Mattress Firm, with adjusted EPS of $0.53; the company raised FY2025 adjusted EPS guidance to $2.40–$2.70 .
Results vs consensus: revenue slightly below, EPS above, EBITDA below; revenue ~$1.8808B vs ~$1.8926B estimate*, EPS $0.53 vs ~$0.512* and EBITDA ~$250M actual vs ~$295M estimate*; performance driven by Mattress Firm integration, international momentum, and Sealy launch, offset by launch costs and foreclosed distribution .
Mattress Firm synergies ahead of plan: revenue mix shift adding ~$20M incremental 2025 EBITDA (total ~$40M yoy) with cost/run-rate synergy path to ≥$100M by 2027; consolidated leverage at ~3.56x; dividend maintained at $0.15 .
Guidance drivers/catalysts: higher Somnigroup brand share at Mattress Firm (low-50s), $700M advertising, tariff mitigation via pricing, and international growth; management flagged Q3/Q4 EPS phasing with heavier advertising in Q3 providing setup for Q4 .

What Went Well and What Went Wrong

What Went Well

Mattress Firm integration ahead of plan: “smoothest combination I’ve ever experienced,” revenue synergies accelerating (Tempur Sealy share at Mattress Firm moving to low‑50s in 2025, ~$40M EBITDA benefit; ~$20M incremental vs prior expectation) .
International strength: Tempur Sealy International net sales +15% to $293.6M; operating margin +110bps to 13.6%, supported by new product launches and distribution expansion .
Mix/structural margin improvement in North America: adjusted gross margin +1480bps to 55.0% from elimination of intercompany Mattress Firm sales and operational efficiencies; adjusted operating margin +430bps to 22.7% .
Innovation/AI: $25M equity investment and multi‑year extension with Fullpower‑AI Sleeptracker through 2036 to deepen smartbed ecosystem and sleep analytics platform .

What Went Wrong

GAAP profitability diluted by transaction/transition items: net income down 6.7% and diluted EPS down 21.7% YoY, with non‑GAAP adjustments for business combination charges, disposition losses, transaction costs, and supply chain transition .
North America wholesale softness and foreclosed OEM distribution: wholesale down $320.8M driven by a 30.8% intercompany elimination impact and a 6.7% decline from a customer acquisition that foreclosed $57.3M of distribution .
EBITDA vs consensus: adjusted EBITDA tracked below consensus*, reflecting launch costs and transitional headwinds; estimated Q2 tariff headwind ~$5M as price actions lag implementation .

Financial Results

Consolidated Performance vs Prior Periods and Estimates

Metric	Q2 2024	Q1 2025	Q2 2025	Q2 2025 Consensus
Net Sales ($USD Millions)	$1,233.6	$1,604.7	$1,880.8	~$1,892.6*
Diluted EPS ($)	$0.60	$(0.17)	$0.47	~0.512*
Adjusted EPS ($)	$0.63	$0.49	$0.53	—
Gross Margin (%)	42.0%	36.2%	44.0%	—
Adjusted Gross Margin (%)	42.0%	42.2%	44.2%	—
Operating Margin (%)	14.0%	0.8%	9.6%	—
Adjusted Operating Margin (%)	14.6%	11.4%	11.9%	—
EBITDA ($USD Millions)	$224.1	$78.3	$243.8	~$295.4*
Adjusted EBITDA ($USD Millions)	$231.4	$247.9	$290.7	—

Note: Asterisk (*) indicates values retrieved from S&P Global.

Segment Net Sales and Channel Mix

Metric	Q2 2024	Q1 2025	Q2 2025
Tempur Sealy North America Net Sales ($M)	$978.4	$706.2	$638.4
Tempur Sealy International Net Sales ($M)	$255.2	$304.8	$293.6
Mattress Firm Net Sales ($M)	—	$593.7	$948.8
Wholesale Channel ($M)	$950.5	$698.7	$642.7
Direct Channel ($M)	$283.1	$906.0	$1,238.1

Additional mix KPI: “Direct sales as a percent of net sales increased to 66% as compared to 23%” .

Selected KPIs and Balance Sheet/Liquidity

KPI	Q1 2025	Q2 2025
Total Debt, net ($M)	$5,033.0	$4,916.7
Consolidated Indebtedness less Netted Cash ($M)	$4,958.8	$4,853.5
Leverage (Consol. Indebtedness less Netted Cash / Adjusted EBITDA per credit facility) (x)	3.51x	3.56x
Cash from Operations ($M)	$106.4 (Q1 only)	$292.5 (six months YTD)

Non‑GAAP adjustment detail: Q2 adjustments include $17.6M business combination charges, $13.9M loss on disposal, $9.2M disposition‑related costs, $4.9M transaction costs, and $1.3M supply chain transition costs; adjusted tax provision $(32.8)M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	FY 2025	$2.30–$2.65	$2.40–$2.70	Raised
Sales after intercompany eliminations	FY 2025	~$7.3–$7.5B	Midpoint ~$7.4B	Maintained (clarified midpoint)
Gross Margin	FY 2025	Slightly above 44% (implied)	Slightly above 44%	Maintained
Adjusted EBITDA	FY 2025	~$1.20–$1.30B	~$1.27B midpoint	Tightened (midpoint)
Advertising Investment	FY 2025	~$700M	~$700M	Maintained
CapEx	FY 2025	~$225M; $150M Mattress Firm refresh over 3 years	~$200M; $25M refresh in 2025; $150M over 3 years	Lower 2025 CapEx
G&A	FY 2025	—	~$295–$300M	New disclosure
Interest Expense	FY 2025	~$260–$270M	~$260–$265M	Slightly lower
Tax Rate	FY 2025	~25%	~25%	Maintained
Diluted Share Count	FY 2025	~210M	~210M	Maintained
Dividend	Q3 2025	—	$0.15/share payable Sept 5, 2025	Announced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology initiatives	Smartbed innovation and Tempur product refresh; set up for Sealy launch	$25M investment in Fullpower‑AI; Sleeptracker exclusive through 2036; unlocks unified platform and faster innovation	Expanding strategic AI footprint
Supply chain & tariffs	Anticipated reciprocity/steel/aluminum exposure; flexible mitigation; price actions	~$750M COGS at risk reduced ~50% via supplier moves and cost sharing; 2% price increase offset begins Q3; ~$5M Q2 headwind	Mitigation largely in place; modest Q2 impact
Product performance (Sealy)	Largest Posturepedic launch “floored by Memorial Day,” national ad campaign	Launch took longer early in Q2, but exited Q2 with strong velocity; Sealy likely to outpace Tempur in near term; slight margin mix pressure possible	Building momentum; watch mix
Regional trends	International strong, +14% in Q4; expanding distribution	International +15% revenue; +110bps op margin; continued advertising investment	Sustained strength
Regulatory/legal synergy gates	FTC walls delayed synergy work through litigation	Teams re‑engaged; path to ≥$100M run‑rate cost synergies by 2027; revenue synergies ahead	Synergy cadence accelerating
R&D execution/health features	Tempur Breeze/Adapt; smart base analytics	Fullpower partnership extends sleep analytics; unified platform at Mattress Firm to simplify RSA experience	Platform consolidation improves execution
Macro/consumer	Choppy demand; Presidents’ Day muted; confidence volatility	Q2 started soft then improved; early Q3 trends encouraging; industry likely down mid‑single digits in 2025	Stabilizing with upside bias late year

Management Commentary

“We are pleased to report another solid quarter of market outperformance, driven by the successful combination with Mattress Firm… and robust sales growth for our international business” .
“This has been the smoothest combination I’ve ever experienced… we’re realizing both cost and sales synergies ahead of our purchase assumptions” .
“We now expect Tempur Sealy to represent approximately below 50% of Mattress Firm’s total sales… resulting in $40,000,000 benefit to 2025 adjusted EBITDA” .
“We’re on track to realize at least $100,000,000 in annual run rate net cost synergies, with $15,000,000 expected in 2025” .
On Sealy launch: “Largest bedding launch in industry history… exited the second quarter with solid momentum” .
On tariff exposure and mitigation: steel (adjustables) and textiles; supplier moves and modest price actions offset targeted costs .

Q&A Highlights

Demand trajectory: Q2 began soft then improved; early Q3 trends encouraging; management expects Q3 EPS “mid‑80s” cents with heavier advertising, balance in Q4 .
Revenue synergies & flow‑through: Mattress Firm share mix shift drives ~$20M incremental 2025 EBITDA; flow‑through on incremental revenue ~30–35% per management .
Margin mix: Sealy may grow faster than Tempur near term, potentially slight gross margin rate headwind; mix still favorable considering foreclosed distribution and international growth .
Tariffs: exposure primarily steel/textiles; mitigation via supplier shifts and pricing; Q2 onetime headwind ~$5M .
Modeling items: FY G&A $295–$300M, interest $260–$265M, tax 25%, ~210M diluted shares; leverage expected ~3.35x exiting 2025 .

Estimates Context

Q2 2025: Revenue ~$1.8808B vs consensus ~$1.8926B (slight miss); Primary EPS $0.53 vs ~$0.512 (beat); EBITDA ~$250M actual vs ~$295M estimate (miss)*. Drivers: inclusion of Mattress Firm and international strength; headwinds from Sealy launch timing, foreclosed distribution, and tariff lag .
Q3 2025 setup: consensus revenue ~$2.061B, EPS ~$0.858*; management phasing implies heavier ad spend in Q3 and stronger EPS in Q4 .
FY2025: consensus revenue ~$7.53B, EPS ~$2.69, EBITDA ~$1.31B*; company guidance midpoint EPS $2.55–$2.55 implied earlier moved to $2.40–$2.70 now, with EBITDA midpoint ~$1.27B .