Somnigroup International Inc. Status update

Lauren, please go ahead. Good morning, and welcome to the Somnigroup International Business update call regarding the closing of our acquisition of Leggett & Platt.

Joining me today are Scott Thompson, our Chairman, President, and CEO, and Bhaskar Rao, our Executive Vice President and CFO. Before we begin, I would like to remind you that this call contains forward-looking statements within the meaning of federal security laws, including statements about expected synergies, accretion, future financial performance, and capital allocations. These statements involve risks and uncertainties, and actual results may differ materially from those expressed or implied. Please refer to our SEC filings for a full description of the risks and factors that could cause results to differ. With that, I will turn the call over to Scott.

Thank you, Lauren, and good morning, everyone. Today is a significant day. We have officially closed the Leggett & Platt transaction, and I am pleased to welcome the Leggett & Platt team to the Somnigroup family. This milestone marks the next chapter in our strategic journey, and one we believe strengthens Somnigroup's competitive position around the world. A few facts on Somnigroup post-closing. Over $11 billion in trailing 12-month sales. Over $750 million trailing 12-month net income. $20 billion enterprise value. $15 billion market cap. Over 170 manufacturing plants around the world. 2,800 plus retail stores with various formats customized for each international market. Over 40 e-commerce websites selling direct-to-consumer with aggregate sales of over $500 million per year. 36,000 talented associates led by a very experienced management team. Customers, both retail and wholesale, in over 100 countries.

We are building a special vertically integrated company with numerous competitive advantages, outstanding cash flow generation attributes, a diversified customer base, and a passionate workforce dedicated to customers in various markets and industries. What we see in Leggett & Platt is a company with 143-year-long legacy of exceptional people, world-class manufacturing, strong commitment to customer service, and best-in-class expertise in bedding components. They also have a long track record as one of our most important suppliers. We know them well, and they know us well. That familiarity is an asset as we move forward as a combined company. First and foremost, the combination deepens our vertical integration, and it adds significant scale, expanding sourcing opportunities, enhancing operational flexibility to a portfolio of assets that is already industry-leading.

It also extends our reach across industries beyond bedding, which will provide the company solid free cash flow and growth as markets normalize and new strategies are implemented. Strategically and economically, this is the right deal at the right time with the right partner. Let me take you through how this transaction advanced the strategic pillars we outlined at our investor day last March. Global scale and vertical integration, relentless consumer-centric innovation, relentless cash generation, disciplined capital allocation, and a uniquely favorable position in the $120 billion global bedding market's recovery. The Leggett & Platt acquisition checks every one of these boxes. Most directly, it strengthened our vertical integration advantages. Leggett & Platt is a primary supplier of important components to the bedding industry, and particularly to our own manufacturing operations. They supply innerspring units, specialty foam, and other key components to producers around the world.

Bringing their capabilities in-house further fortifies our supply chain in an uncertain world and allows us to optimize cost and drive quality end-to-end in the supply chain. The combination brings component engineering closer to mattress design and closer to the consumer insights we generate every day across our retail platform. That proximity supports accelerated innovation cycles and means we can develop more cost-effective and consumer-centric products. In addition to expanding our addressable market in bedding, Leggett & Platt product portfolio includes automotive seating systems, furniture components, geo components, and hydraulic cylinders. Also allow us to participate in industries beyond global bedding.

These diversified sales streams, as well as Leggett & Platt's geographic footprint, broadens our earning space and mitigates reliance on any single category, product, or geographic market. I'm going to say a word about how we intend to operate Leggett & Platt within the Somnigroup portfolio. Leggett & Platt will operate as a standalone business unit within Somnigroup, consistent with our approach with Tempur Sealy, Mattress Firm, and Dreams. We believe this decentralized operating model is one of our structural advantages. It allows each business unit to stay close to its customers and markets, and quickly respond and develop strategies in an ever-changing world, while also benefiting from Somnigroup's expertise, scale, strong balance sheet, and operational leverage. A word on leadership. First, we're very fortunate that Leggett & Platt has an experienced workforce dedicated to quality and customer service, which is led by a strong, committed executive team with depth and a passion to succeed.

To enhance their leadership structure, you most likely saw we announced the appointment of Tyson Hagale as president of Leggett & Platt. Tyson is a 25-year Leggett & Platt veteran with a broad expertise across all corners of the business, including strategic planning, operational leadership, and M&A. Most recently, he served as president of the Bedding Products segment, delivering results and operational improvements through some of the most dynamic conditions the industry's ever seen. He knows Leggett & Platt well, including the non-bedding components. Karl Glassman will continue to lead Leggett & Platt as the CEO over the near term, working closely with Tyson and Somnigroup executives as we bring the companies together.

I'm looking forward to working with Karl and Tyson. Moving to near-term strategic initiatives, we expect some early wins. We have long believed that high-quality innerspring systems represent a meaningful point of differentiation, an important feature for customers. While the mattress category has traditionally emphasized finished product branding, we see the opportunity to elevate awareness of underlying technologies and components that contribute to comfort, support, durability, and overnight sleep quality. Simply put, what is in your mattress matters. As a result, we're working to amplify the differentiated innovation by incorporating Leggett & Platt innerspring branding on the exterior of selected mattress products. We believe this approach helps highlight the value of the technology inside the mattress while creating greater transparency and confidence for customers at the point of purchase.

This initiative will initially roll out with our launch of the all-new Stearns & Foster collection this fall, and represents an important step in our broader strategy to increase consumers' recognition of the premium components and engineering that differentiates our products. We believe stronger visibility of the Leggett & Platt innerspring technology can enhance the consumer shopping experience, support our retail partners' merchandising efforts, and further reinforce the value proposition of mattresses that incorporate our technology. Ultimately, we view this as much more than a branding initiative. It is a reflection of a strategic vision behind the acquisition of Leggett & Platt's bedding business and the unique capabilities that the transaction creates. By bringing ownership of innersprings, the heart of the bed, into the portfolio, we are now able to more closely integrate component innovation and mattress design, driving consumer engagement.

We believe that position enables us to set higher standards for innovation, durability, quality, and transparency across the industry while creating connection between the technology inside the mattress and the magic consumers experience every night. We should also note that Mattress Firm, as it continues to focus on customer first, recently communicated to its supplier base new and more stringent merchandising criteria, including the qualification of key component inputs. Both Leggett & Platt's innerspring systems and the foams produced by ECS, their specialty foam operations, have been qualified under these enhanced standards. This is direct validation of the quality and consistency that Leggett & Platt brings to our supply chain. I'll say it again, what is inside your mattress matters. In closing, I want to leave you with a few key thoughts. We are the leading vertically integrated bedding company in the world.

We now forge our own steel, create our own springs and foam. We design and build our own products. We develop and market our brands and sell our products, which cover all price points in a balanced omni-channel format across the world. We believe that the $120 billion global bedding market remains structurally intact and positioned to normalize from its historically depressed levels. Let's be clear, the bedding market has experienced an extended period of weakness, and we have used that time deliberately to build the platform you see today, while also growing adjusted EPS and deleveraging. We're investing ahead of the recovery in building our brands, driving upper funnel advertising, and strengthening our infrastructure. It is not a question of if the bedding market is going to turn around.

It's a question of when, and whether you are positioned to lead when it does, and we are positioned to win and win big. With that, I'll turn the call over to Bhaskar.