SOMNIGROUP INTERNATIONAL INC. (SGI)

Tempur Sealy International, Inc. is a designer, manufacturer, distributor and retailer of bedding products, with a stated goal of improving the sleep of more people around the world. It draws on more than a century of experience and sells its products in over 100 countries. The company was incorporated in Delaware in September 2002 and is led by a strategy of earnings growth, high return on invested capital and strong free cash flow. It invests in research and development, brands and distribution, and returns capital to shareholders through quarterly dividends and share repurchases. It also considers acquisitions that complement its core business.

The company reports two segments, North America and International, managed separately by geography, with corporate expenses presented separately. North America covers the U.S., Canada and Mexico. International covers Europe, Asia-Pacific and Latin America outside Mexico. Its product brands are Tempur-Pedic (proprietary Tempur pressure-relieving material), Sealy (including Sealy Posturepedic), Stearns & Foster and Cocoon by Sealy (an online offering priced below $1,000). It also sells non-branded private label and OEM mattresses, pillows, other bedding products and components. Its retail brands include Tempur-Pedic stores, Sleep Outfitters, Sleep Solutions Outlet, Dreams in the U.K. and SOVA in Sweden. It also earns royalties by licensing the Sealy, Stearns & Foster and Tempur brands and technology, which generated about $32.3 million in 2023.

Products reach consumers through an omni-channel model with two main channels, Wholesale and Direct. Wholesale serves third-party furniture and bedding retailers. The Direct channel includes more than 750 company-owned stores (including those held through international joint ventures), e-commerce sites and call centers, and represented 23.9% of 2023 net sales. Dreams has over 200 U.K. stores and manufactures most of the bedding it sells, and Sleep Outfitters has over 100 stores across five U.S. states. The company advertises on television, digital media and print, and cooperates with some retailers on advertising. Sales show modest seasonality, generally lower in the second and fourth quarters. In 2024 it plans to launch Tempur-Pedic Adapt mattresses in North America and to complete a new Tempur product rollout across over 90 international markets.

The company operates a global manufacturing and distribution network with about 12,000 employees. In 2023 it opened its largest facility in Crawfordsville, Indiana, to support branded and OEM products. Raw materials for Tempur products, including chemicals, additives and textiles, come from third-party suppliers under supply agreements. Sealy and non-branded products rely mainly on polyurethane foam, textiles and steel innerspring components, and adjustable bases come from a limited number of suppliers whose component chains originate in China. It has four research and development centers, three in the U.S. and one in Denmark, plus a product testing facility. It competes with bedding manufacturers in a concentrated U.S. market and a fragmented international market, on price, quality, brand recognition, availability and performance, and faces online direct-to-consumer entrants, retailer private labels and Asian imports. Its principal executive office is at 1000 Tempur Way, Lexington, Kentucky.