Somnigroup International Inc. (SGI) 2Q26 First Take

Equity Research 6 August 2026 | 7:59AM EDT

Somnigroup International Inc. (SGI): 2Q26 First Take

2Q Adj. EPS Roughly In line with Our Estimate: SGI reported 2Q adjusted EPS of Susan Maklari | $0.58, roughly in line with our $0.59 estimate and FactSet consensus of $0.58. The Goldman Sachs & Co. LLC variation vs our model came from sales down 3% vs GSe -1%, ($0.01). Other factors Charles Perron-Piche, CFA to the quarter included higher other income offset by the adj. EBIT margin at 11.9%, | charles.perron- 34bps below our model, +/- $0.02. Results reflect ongoing weakness in broader Goldman Sachs & Co. LLC

industry demand offset by the benefits of company-specific investments in Rhea Bhatia | innovation, marketing, and the Mattress Firm store refresh to deliver relative Goldman Sachs India SPL outperformance. We also highlight a continued focus on cost controls helping to Galilee Best drive profitability despite inflation and other operating headwinds. Given the | Goldman Sachs & Co. LLC backdrop, the mid-point of the 2026 adj. EPS guide was lowered by 6% to $3.00 vs our $3.05 estimate and consensus of $3.14. On the call, we’ll look for more details on: 1) recent and upcoming product launches across brands, 2) initial response to the 3Q North America and International price increases, 3) channel inventories, competitive dynamics, and any implications from recent industry filings, 4) the Mattress Firm store refresh and Tempur brand wall install, 5) supply chain, input costs, operating leverage, and other factors to margins, and 5) any updates on LEG acquisition.

Outperformance in North America Offset by Weakness in International and Mattress Firm: North America revenues declined 6% YOY, vs our -3% forecast, with the wholesale channel off 6% and direct down 7%. However, the adj. EBIT margin at 26.7% was up 400bps YOY and ~240bps above our estimate as synergies from Mattress Firm, mix and operational efficiencies partially offset inflation and co-op advertising expense. International sales grew 2% (+1% on constant FX), in line with our model, with direct -1% and wholesale +7%. That said, the adj.operating margin was ~310bps below our forecast and down 120bps YOY to 12.4% as negative price/cost was partially offset by operational efficiencies. Mattress Firm sales declined 3% vs our model -1% while the adjusted EBIT margin contracted 130bps YOY to 6.5% vs GSe at 7.0% given unfavorable mix, consumer financing costs and store investments.

Balance Sheet Allows for Financial Flexibility: The company ended the quarter with net debt/EBITDA of 3.0x vs 3.1x in 1Q and 3.8x in 2Q25, including $112mn in cash. Free cash flow was $182mn in the quarter. Management expects the ~$2.5bn all-stock acquisition of Leggett to close by the end of 3Q26 subject to customary closing conditions. On the call, we will look to get management’s thoughts on share buybacks and other priorities for capital allocation following the announced LEG

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Goldman Sachs Somnigroup International Inc. (SGI)

SGI Price Target: -- Price: $69.58 Upside: --

NR GS Forecast 12/25 12/26E 12/27E 12/28E Market cap: $14.8bn Revenue ($ mn) 7,476.5 7,796.8 8,137.5 8,538.0 Enterprise value: $17.4bn EBITDA ($ mn) 1,316.4 1,397.0 1,519.5 1,667.1 3m ADTV: $208.1mn EBIT ($ mn) 1,018.7 1,082.1 1,206.8 1,340.8 United States EPS ($) Americas Homebuilders & Building P/E (X) Products EV/EBITDA (X) FCF yield (%) 4.0 4.8 6.1 7.0 Dividend yield (%) 0.8 1.0 1.0 1.1 Net debt/EBITDA (X) 2.2 1.9 1.5 1.0

3/26 6/26E 9/26E 12/26E EPS ($)

Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 5 Aug 2026 close.