Hello, everyone. Thank you for joining us, and welcome to Somnigroup First Quarter 2026 Earnings Call. Operator provided instructions. I will now hand the conference over to Lauren Avritt, Director of Investor Relations. Lauren, please go ahead.

Thank you, operator. Good morning, and thank you for participating in today's call. Joining me today are Scott Thompson, Chairman, President and CEO; and Bhaskar Rao, Executive Vice President and Chief Financial Officer. This call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve uncertainties and actual results may differ materially due to a variety of factors that could adversely affect the company's business. These factors are discussed in the company's SEC filings, including its annual reports on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements speak only as of the date on which it is made. The company undertakes no obligation to update any forward-looking statements. This morning's commentary will also include non-GAAP financial information. Reconciliations of the GAAP financial information can be found in the accompanying press release which has been posted on the company's website at www.somnigroup.com, and filed with the SEC. Our comments will supplement the detailed information provided in the release. And with that, it's my pleasure to turn the call over to Scott.

Good morning. Thank you for joining us on our first quarter 2026 Earnings Call. I'll begin with some highlights in the quarter and then turn the call over to Bhaskar to review our financial performance in more detail, and discuss our reaffirmed 2026 full-year guidance. After that, we'll open up the call for Q&A. In the first quarter of 2026, net sales increased a healthy 12% to $1.8 billion. Adjusted EBITDA increased 20% to $297 million, and adjusted EPS increased a robust 20% to $0.59 per share. We are pleased with these results, particularly against the backdrop of heightened geopolitical tensions and winter weather disruptions in the U.S., all of which weighed on industry demand. We believe global bedding demand declined mid-single digits in the first quarter, which was below our expectations that demand would be flat to slightly positive during the quarter. We believe our performance reflected the strength of our business model and its ability to perform across varying market conditions. This has allowed us to continue to extend our leadership position in the industry. Turning to our first highlight. We expanded EBITDA margin by over 100 basis points and grew adjusted EPS by 20%. We accomplished this on 12% sales growth demonstrating the operating leverage embedded in our business model. We also delivered record first quarter operating cash flow, which we deployed towards debt reduction. We ended the first quarter at 3.1x leverage, and are on track to return to our targeted range of 2 to 3x adjusted EBITDA in the next few months. Our second highlight. Our North American Tempur Sealy business outperformed the broader market. Tempur Sealy North America delivered mid-single-digit wholesale sales growth year-over-year on a like-for-like basis, driven by investments in high-quality advertising, continued momentum in our premium product line and increased balance of share at our retail partners. Looking to the back half of the year, we expect the launch of our new Stearns & Foster lineup to optimize price architecture within the broader portfolio, support higher average selling price for our retail partners, and strengthen our position at higher pricing. We expanded our offering with additional SKUs at the top of the price range, targeting the customer who has demonstrated continued resilience through this cycle. It represents a significant growth opportunity. We'll support the launch with new national and digital advertising focused on differentiated luxury product and on broader health and wellness benefits of better sleep. Our third highlight, our international business continued to capitalize on long-term growth opportunities, delivered double-digit growth on a reported basis and mid-single-digit growth on a constant currency basis. International outperformed the broader industry in the quarter, extending a multiyear track record of solid growth across our key markets. This performance reflects continued disciplined investment in distribution and marketing, a resilient supply chain, strong local execution and the strength of our Tempur brand. We're pleased with our results in a challenging environment, and our international business remains well positioned for continued growth over the long term. Our U.K.-based bedding retailer Dreams once again outperformed the market this quarter, reinforcing its position as a category leader. Strong brand awareness and share of voice, combined with effective execution, growth, solid customer engagement and healthy order volume. Our ongoing operational discipline and a continued focus on product quality and the customer experience supports further growth in this very competitive U.K. market. Our fourth highlight, Mattress Firm outperformed the broader U.S. market, supported by its scale, depth of category expertise and a well-curated merchandising assortment. Merchandising actions taken over the past year have better positioned the Mattress Firm business to meet customer needs across price points while maintaining a strong focus on quality and innovation. During the quarter, we further deepened relationships with suppliers aligned with our quality standards and marketing commitment. Our proprietary Sleep Expert model continues to differentiate the in-store experience, supported by one of the industry's largest and most highly trained sales forces, which has been augmented by ongoing technology investments. We remain on track with our previously announced $150 million store refresh program targeting completion in 2027. To date, we have spent approximately $40 million on the store refresh program, all funded from operating cash flow. Additionally, the rollout of the new merchandising program is progressing well with national depletion expected by year-end. With that, I'll turn the call over to Bhaskar.

Thank you, Scott. In the first quarter of 2026, consolidated sales were a solid $1.8 billion, and adjusted earnings per share was $0.59, up 20% over the prior year. There are approximately $26 million of pro forma adjustments in the quarter, all of which are consistent with the terms of our senior credit facility. As a reminder, year-over-year comparisons are impacted by the acquisition of Mattress Firm in early February 2025, and the related divestiture of Sleep Outfitters, and certain Mattress Firm retail locations in the second quarter of 2025. I will be highlighting like-for-like comparisons defined as reported numbers adjusted for the acquisition and divestiture impacts normalized for these items in our commentary. Now turning to Mattress Firm results. Net sales through Mattress Firm were approximately $886 million in the first quarter. Same-store sales were flat, outperforming a market we believe was down mid-single digits in the quarter. Mattress Firm adjusted gross margins decreased 360 basis points to 31.5%, including a 40 basis point headwind from the stub period. The remaining decline was primarily driven by promotional expense and product mix combined with some fixed cost deleverage. The impact of product mix on gross margin was primarily driven by increased balance of share of Tempur Sealy products as Tempur Sealy's supply contract is structured to provide a portion of Mattress Firm's economics in the form of cooperative advertising credit, which reduces Mattress Firm's operating expenses. When looked at on a conforming basis, there is no material impact on EBITDA margin from the product mix change. Mattress Firm adjusted operating margins declined approximately 230 basis points to 4.9%, including a 150 basis point headwind from the stub period. The remaining decline was primarily driven by the decline in gross margin, partially offset by the favorable cooperative advertising dollars I mentioned a moment ago. Turning to Tempur Sealy North America. North America sales grew 5% on a like-for-like basis. Like-for-like net sales through the wholesale channel increased approximately 8% in the first quarter, our sales with third-party retailers declined 4% after normalizing for four models. Like-for-like sales through the direct channel declined 12% in the first quarter, driven by reduced customer traffic at retail stores and on our e-commerce site, as we reduced our e-commerce advertising in the quarter. However, we have seen a marked improvement in recent trends. North America adjusted gross margins increased a robust 1,300 basis points to 58.3%, including a 600 basis point benefit from the stub period. The remaining increase was primarily driven by realized synergies and operational efficiencies with lower product launch costs as well. North America adjusted operating margin improved 710 basis points to 24.3% in the quarter, including a 230 basis point benefit from the stub period. The remaining increase was primarily driven by the improved gross margin, partially offset by investments in cooperative advertising as noted a moment ago. Now turning to Tempur Sealy International results. International net sales grew a robust 16% on a reported basis and 7% on a constant currency basis. Our international gross margins increased 140 basis points to 50.4%, primarily driven by favorable mix and operational efficiencies. Our international operating margin increased 160 basis points to 18.4%, driven by the improvement in gross margin and fixed cost leverage. I'd like to spend a moment discussing commodity inflation and our related pricing actions. It's historical industry practice to adjust pricing as input costs rise. Like others in the industry, we have recently announced modest pricing actions designed to offset inflationary pressures tied to oil-derived inputs, including key chemicals as well as gasoline and diesel. Importantly, the structure of our supplier contracts provide us with early visibility into inflationary cost pressures before they flow through our P&L. This visibility allows us to thoughtfully implement pricing actions to offset inflation while minimizing any material interim exposure. This is a structural competitive advantage. We expect commodity inflation will not impact Tempur Sealy's full year 2026 earnings, but will modestly magnify our normal seasonality as the timing of cost increases hit slightly before our pricing actions are fully implemented. This is by design to give our retailers time to adjust their merchandising and advertising plans. As a result, the second quarter will have an approximate $10 million headwind to Tempur Sealy profits. We expect that this will be fully offset in the third and fourth quarter with our announced pricing action taking effect following the July 4 promotional period. On a full year basis, we expect the pricing action to be dollar neutral to Tempur Sealy earnings, effectively offsetting the inflationary impact. We anticipate this will result in a $50 million pricing lift to the back half of 2026 global Tempur Sealy sales on a like-for-like basis with an expected annualized lift of approximately $100 million. Now turning to sales and cost synergy targets. In the first quarter, we achieved $15 million net benefit in adjusted EBITDA from sales synergies, and another $50 million benefit from cost synergies. In order to support the summer selling season and leveling out of manufacturing for seasonal fluctuation, Mattress Firm built their inventory of Tempur Sealy products in the quarter. The planned inventory build is reflected in intercompany sales for the first quarter. However, we never realized any sales benefit to consolidated EBITDA until Tempur Sealy products sold to Mattress Firm are sold through to the end consumer. Now moving on to Somnigroup's balance sheet and cash flow items. At the end of the first quarter, consolidated debt less cash was $4.5 billion, and our leverage ratio under our credit facility was 3.1x, demonstrating our strong cash generation and disciplined capital allocation approach. Turning to cash flow performance. In a muted market, we delivered record first quarter operating cash flow of $247 million and record first quarter free cash flow of $186 million. We have reduced our net debt by nearly $500 million over the trailing 12 months while fully supporting growth initiatives and returning over $250 million to shareholders in dividends and buybacks. We expect to return to our target leverage ratio of 2 to 3x over the next few months. Now turning to 2026 guidance. As a reminder, our guidance considers the elimination of intercompany sales between Mattress Firm and Tempur Sealy, which we expect to present approximately 23% of global Tempur Sealy 2026 sales. Intercompany eliminations in accordance with GAAP will reduce Tempur Sealy sales but be margin accretive and neutral to dollars of operating profit. Please note that we acquired Mattress Firm in February 2025. As a result, our first quarter and full year '26 reported results will reflect the impact of a little over 1 additional month of Mattress Firm financial results. We expect adjusted earnings per share to be between $3 and $3.40 for the full year. This guidance range contemplates a sales midpoint of approximately $7.8 billion after intercompany eliminations. Our annual guidance also reflects our expectation that the global bedding industry will be flat to slightly down year-over-year, the announced pricing actions across our global markets, Tempur Sealy North America like-for-like sales growing mid-single digits, international business growing mid-single digits and like-for-like Mattress Firm sales growing low single digits. We also expect reported gross margin slightly above 45%, and nearly 100 basis points of net margin expansion from operational efficiencies, including synergies and operating leverage partially offset by the impact of Tempur Sealy pricing actions, which are intended to neutralize commodity inflation dollars, and which will be margin dilutive. Our 2026 outlook also contemplates our assumption for Tempur Sealy brands and private label to be in the low 60% of Mattress Firm total sales. This represents about an incremental $40 million of EBITDA benefit for 2026 compared to '25. And approximately $700 million of advertising investments. All of which we expect to result in adjusted EBITDA of approximately $1.45 billion at the midpoint. Regarding capital expenditures. We expect 2026 CapEx of approximately $225 million, which includes $75 million of investments in Mattress Firm store refreshes and brand wall installation. We expect our CapEx to normalize to $200 million in future years. And for at least 50% of our free cash flow in '26 to go toward quarterly dividends and share repurchases. Now I would like to flag a few modeling items. For the whole year 2026, we expect depreciation and amortization of approximately $300 million, interest expense of approximately $230 million, a tax rate of 25% with a diluted share count of 213 million shares. Note that our guidance does not include any impact for the closing of the proposed combination with Leggett & Platt as the timing is dependent upon regulatory review and approval by Leggett & Platt shareholders. We expect the transaction would be accretive to adjusted earnings per share within the first year of operations before any synergies. Finally, a bit of color on guidance. The midpoint of our guidance assumes that consumer confidence, which has been pressured by geopolitical conflict will normalize as we progress through the year. If these pressures were to continue through the year-end, we would be tracking closer to the low end of our guidance. With that, I'll turn the call back over to Scott.

Thank you, Bhaskar. Well done. Before opening the call up for Q&A, I want to quickly address our recently announced agreement to combine with Leggett & Platt. As we announced last month, we signed a definitive agreement to combine with Leggett, an all-stock transaction valued at approximately $2.5 billion, including the assumption of debt. We expect this transaction to close by year-end subject to satisfactory customary closing conditions. Following the close of the transaction, Leggett is expected to operate as a separate business unit within Somnigroup, similar to Tempur Sealy, Mattress Firm and Dreams, and to maintain its offices, including its primary location in Carthage, Missouri. We're proud to have Leggett & Platt join us and believe the combination is beneficial to all stakeholders of both companies. We expect the combination to leverage the individual strengths of Somnigroup and Leggett & Platt to realize five strategic benefits. First, the combination continues our vertical integration strategy and enables us to more closely collaborate between component engineering, manufacturing, design and customer trends, supporting accelerated innovation cycles and more cost-effective consumer-centric product construction. Second, this combination provides access to incremental addressable markets beyond our current footprint, expanding Somnigroup's long-term growth opportunities and cash flow generation. Third, the combination is expected to lower Somnigroup's net financial leverage and increase its flexibility. Fourth, the combination is expected to be accretive to adjusted earnings per share before synergies in the first year post closing, and significantly increase peak earnings in a normalized bedding market. And fifth, the combination presents cost synergy opportunities. In total, we expect synergies to result in at least $100 million of EBITDA on a fully implemented annual run rate basis. With that, operator, we're done with our prepared remarks, please open the call up for questions.

Operator: Operator provided instructions for questions. Your first question comes from the line of Susan Maklari with Goldman Sachs.

I want to focus on demand, Scott, especially with the comments around pricing and consumer confidence. Can you talk about price elasticity across the business and how you're thinking of your ability to continue to drive industry relative outperformance despite all the headwinds that we are seeing on the consumer?

Sure. And thank you for your question, Susan. I think when you look at elasticity, I guess the best thing to look at is really the closing rate. And if we look at closing rate, either whether it be in our own Tempur stores or you look at Mattress Firm, it continues to improve. So what that tells me is, when customers show up at the store, they're looking for products. They then get full discovery of price and where the closing rate is going up. So it doesn't appear the elasticity is very high. I think that's probably the best evidence in looking at that particular issue. As far as outperforming the industry, as we've talked about numerous times over the years, we continue to improve our competitiveness in the marketplace. And where I look, whether it be in our recent price increase, which I think will be among the lowest by any of the manufacturers, and that has to do with the way we handle the inflation is certainly a competitive advantage. When I look at our advertising share of voice in the marketplace around the world, it continues to be top of class. From the informal feedback I get on other manufacturers, they would appear to be not dealing with the current market conditions as well and maybe being a little challenged from a capital standpoint. So certainly, our cash flows and balance sheet are a competitive advantage. So I think we'll continue to outperform the industry, and I think the industry will normalize once you get through some of the geopolitical issues that we all know about.

Your next question comes from the line of Bobby Griffin with Raymond James.

Thanks for the time, Scott. I wanted to start by asking about the Stearns & Foster launch in the second half. We've been around the business a lot and have seen several different Stearns launches, some that start and then stall. But Somnigroup's structure is much different today, with the advantages you've highlighted. Could you unpack how this launch is set up to play out and how the opportunity for that product might be different this time?

Sure. Great question, Bobby. First of all, you have to realize that we have cannibalized some of our own business as we moved Sealy Posturepedic up from a price standpoint. So we self-created that overlap. And so this is the last piece of getting our pricing architecture right between all three brands. Stearns & Foster primarily you might find interesting is being pushed by our retailers who wanted a higher price Stearns & Foster. So that is new. We also leaned into hybrids in that area, and hybrids have been good in the bedding market in the U.S., as I know you know. And quite frankly, the last Stearns & Foster hybrid, we didn't hit the mark perfectly. So that's a major upgrade. I think the other thing I would point to is with Mattress Firm as part of the family, we have very strong support from Mattress Firm, from an advertising slot commitment, training and probably a higher degree of support than we would have had without having them in the family. I think those factors probably combined with the national advertising gives us more momentum on this launch than we've probably had in any launch in Stearns & Foster's history.

Your next question comes from the line of Rafe Jadrosich with Bank of America.

I wanted to just follow up on some of the comments on pricing and the input cost inflation. Just first, can you just talk about the input cost inflation you've seen sort of year-to-date from Iran, the exposure on the chemical side, and then what you're expecting in the back half of the year? And then for that pricing that you're talking about, the $100 million annualized, is that the way to sort of think about the magnitude of the cost inflation you're facing and covering that on a dollar-for-dollar basis?

Sure. I'll let Bhaskar give you some of the details. But as you probably know, the industry has a history of passing on inflation costs through the system. Others actually passed their costs through earlier than we did, and we were the last to pass through. And my perspective is that that's passed through very effectively as it has historically. Bhaskar, you want to give, kind of, the details?

So just from a pricing standpoint or an inflation standpoint, what we've discussed in the past is the nature of our relationships and strategic partnerships that we have is that we do have some time to react, and assess and evaluate before we put price in. So from a commodity inflation standpoint, on an annualized basis, think about it as about $100 million. And as you think about the rest of the year, think about that as about $50 million. So $50 million of inflation. So what we're doing to offset that is in the second quarter, we will have some transitory impact, call it, that will be made up in the back half of the year. From a pricing standpoint, we've neutralized that impact, as you pointed out, the annualized impact of our price increase is $100 million, which for dollar for dollar, will offset the inflation that we are anticipating. However, all that said is that we do have a bit of transitory items in the second quarter. Where that is coming from, as you can imagine, given what's happening from a geopolitical standpoint, the vast majority is coming from oil-derived items. So whether it be the chemicals, diesel, purchased foam, et cetera, that's the vast majority of where we're seeing the inflation.

So I think the other thing I'd point out when you talk about the inflation is when you look at the price increase that we took, it's probably overall about a 4% increase, and a 4% increase in this business is not disruptive to customers. Because quite frankly, customers don't shop for the product but once every eight years. So it's not nearly as sensitive as something like gas prices.

That's right. I guess where I would close with that, as I mentioned, in the second quarter, we have a bit of exposure. So what we're really pleased about is our EPS growth that we saw in the first quarter, call that about 20%. And in a market that was a little bit different than what we had anticipated. We call the industry expectations down a little bit. The quarter has started off well. There are some transitory items related to the commodities that I spoke to. So as you think about the second quarter from an EPS growth standpoint, in a very challenged market we would still expect EPS growth of somewhere between 5% and 10%.

And you're going to pick up the headwind you've got on commodities in the second quarter, you're going to pick that up in the third and fourth quarter of this year. So the annual number doesn't change due to commodities, right?

That's right.

Your next question comes from the line of Peter Keith with Piper Sandler.

A nice job navigating a very fluid environment. Maybe just on the full year revenue outlook. I was just wondering if you could just kind of give us the puts and takes and how you adjusted the number slightly from a couple of months ago. It seems like you did come down maybe by $100 million lower versus prior guidance. But I'm guessing you're seeing better share gains and maybe you had factored in and then the price increase if that flows through in the revenue for the back half as well?

Great question, Peter. You've got it. It's relatively straightforward. Industry expectations call it, where we were before is kind of flat up where we're at the midpoint is, call it, flat to slightly down. So that's a drag versus where we were. You also had correct is that the price increases that we put in place for the back half of the year, that is an uplift. That's inclusive of the share gains. So net-net, we're a bit off the midpoint, call it, 7.9% previously at the midpoint, 7.8%. So just a few moving pieces.

Your next question comes from the line of Daniel Silverstein with UBS.

Could we please double-click on Mattress Firm's performance year-to-date? How is store traffic and ticket evolved over the last few months? And then on margins, what are some of the promotional investments you are making? And how are you balancing the flow-through of margins against driving additional share gains?

Sure. Mattress Firm. Same-store sales for the quarter were flat, yes, from that standpoint. Post closing of the quarter, same-store sales have been slightly up in April. Regarding promotional, I think with the relative performance, I think that's outperforming our perception of the industry for sure. Promotional investments include advertising, although advertising is slightly down and there are financing programs for customers. You asked about what's driving sales. Clearly, ASP has been a big winner. And I don't think that's just for Mattress Firm. I think that, from what we see in our mix of product sales, ASP has been very strong for the industry as higher-end customers have clearly shown up. Traffic is down. Traffic's down, I'm going to say, single digits. And I think that's consistent with our perception of the industry.

I mean what I would say, if I were to pan back a little bit, is we feel thrilled about our performance across all the geographies that we operate in, we continue to take market share versus a competitive set through execution, advertising and great product. Just focusing on North America a bit is that all in, our consolidated business captured a fair amount of share. The others performed well in a challenging environment as well. So we feel good about our relative performance in an interesting environment.

Yes, I think the other thing we should call out is that Canada and Mexico had a tough quarter. And I don't think that was company specific. I think that was market specific — they were specifically weaker than the U.S. On a consolidated basis, certainly, a strong performance.

Your next question comes from the line of Jonathan Matuszewski with Jefferies.

A recent theme that's emerged following the Analyst Day was kind of the evolution of upper funnel versus bottom funnel marketing for the industry. Curious what you're seeing — what you saw materialize in 1Q, maybe relative to the back of '25? And are you seeing retailers outside of Mattress Firm continuing to prioritize bottom funnel in terms of conversion? Or do you see progress in upper funnel in terms of overall replacement and the like?

Sure. If you look at Mattress Firm, we continue to move up the funnel, carefully monitoring that activity, but clearly leaning a little bit higher up in the funnel. Some of the other large advertisers, I think, are similarly rebalancing. And then I'd just tell you, look, it was a tough quarter for the retailers. And so in that period, quite a bit of advertising got pulled down in the industry, making our share of voice even stronger and our message even stronger. So I'd say we made some slight progress, but at the same time, it's been a pretty tough market for advertisers to advertise in.

Your next question comes from the line of Brad Thomas with KeyBanc Capital Markets.

Wanted to ask Scott about the performance at the non-Mattress Firm third-party channels that you sell into in North America. I believe you said that that was down 4% in the quarter. So it looks like maybe in line to slightly better than how the market performed. But can you just give us a sense of what you're hearing from those partners? And any specific strategies, or goals as you think about partner growth, or growth, flat growth, et cetera?

Sure. We call those the other category. And to be clear, that would be U.S. retailers non-Mattress Firm and doesn't include Canada and Mexico. That number was down 4%. And so I think you said it right, with a market that was probably down 5% plus, that is probably a slight outperformance in the other category. I think those retailers are focused on what they've always been focused on for the success of their business which is giving customers popular products, helping drive customers into their showroom and delivering on time. I think they're excited to see Stearns & Foster come. I think they know there's some upside there. Our premium line continues to do very well. Constant frustration with the other retailers is just on traffic, and I think that's universal. And they certainly appreciate the strength of our advertising. As far as additional slots, we will get some incremental slots in the new Stearns launch, but they aren't going to be material to the total revenues of North America. We haven't seen any deterioration in our positions at any of the other retailers. And I think going forward, it's really about velocity. And that goes to having a great sales force, with quality and quantity of our advertising, and quite frankly, what our competitors do and how they perform.

Your next question comes from the line of Keith Hughes with Truist.

Just want to turn back to the margins, particularly gross margins on Mattress Firm. I know there was some adjustments to be made on the comparison differences. But if you could talk a little bit more about what caused the compression in gross margin year-over-year?

Absolutely. So when you look at gross margin you have to think about the entire P&L. So let me bifurcate out what that means. So call it a few hundred basis points of a decline year-over-year. The vast majority of that is a result of the Mattress Firm entity increasing its share of the Tempur Sealy family. The way that relationship works is that there are some volume rebates, which impact gross margin. However, there are credits associated with cooperative advertising that you don't see in gross margin; you see it in the operating expense line as a reduction. When you put both of those items together, what you'll see is a smaller net decline year-over-year, and that's principally related to just leverage going through that entity.

Yes. And I'd kind of give you a watch out on some of that. We run — we think about the business in total. If Mattress Firm were an independent company, they would have negotiated some volume incentives and their P&L may look different. We don't spend a lot of time in the group slotting as to where synergies go or renegotiating incentive bonuses, or anything in Mattress Firm. So there's no question some of the benefit is showing up in the Tempur Sealy silo as you look through as opposed to Mattress Firm. So I wouldn't disaggregate the business and think about it separately because we don't run it that way. We run it as part of the Somnigroup family. Because if they had been independent, some of that contract structure might have been different. And we're not changing supply contracts, or benefiting Mattress Firm for some of that performance.

Your next question comes from the line of Jeff Lick with Stephens.

Scott, at the Analyst Day, you and the team were very deliberate about talking about prior to Somnigroup ownership of Mattress Firm, how Mattress Firm sometimes got a little aggressive with discounted pricing and playing vendors off one another. In your prepared remarks, you talked about pricing architecture. Now that you guys are up to the low 60s percent share, you're going to be running through that in the back half. I'm curious if you could just talk about how that dynamic will work and manifest itself into results now that it seems you guys are playing the role of the kind of price governor in not deteriorating price, or just —

Yes, clearly, and you're mainly talking about UPP and the pricing framework in the marketplace and making sure that all retailers honor the UPP structure. Certainly, Mattress Firm is honoring the UPP structure. And quite frankly, when they do, it's beneficial to them. As they found out, not just since we bought them but over time. And we continue to work with other retailers if they don't follow that process. Look, I think that's healthy for the category, I think it's healthy for the industry. And I think it's been a net positive and they've done a great job on pricing discipline.

Your next question comes from the line of Peter Keith with Piper Sandler.

I wanted to circle back on the chemical shortage. We've been getting a lot of questions on it. So it's only a $10 million impact for Q2, which I think is a positive. But could you address two things. Number one, how much inventory of chemicals in terms of months of supply, are you keeping on hand now? And then secondarily, with this polyol shortage, could that play out into the back half of the year, perhaps with some shipment delays or product outages. I know in the past, you've leaned more towards high-end product like back in 2021. So if you could just address the kind of the puts and takes around this polyol shortage. I appreciate it.

Yes. I'm going to take a crack at it. I think when it first showed up, there was a worst-case scenario that was worked through and mitigated. A worst-case shortage was probably an appropriate possibility. I think with what we know today, I don't think the industry is going to have shortages as far as outages from a supply standpoint. There is a pricing impact, and that's been rolled through the industry. But I'm not nearly as concerned about shortages, and I'm not hearing comments about systemic outages. That's an industry comment. When you then go to Tempur Sealy specifically, obviously, we have an advantaged situation because of our volumes, and obviously, we have a large amount of safety stock in place for these kinds of events, which you've referenced, but also possible hurricane issues and such. What do you want to say, three to four months? It varies a little bit, but for talking terms, I think three or four months. Also you can pivot to volumes to products that don't use as much of the impacted input at times. But I think from where it was a couple of months ago, that situation continues to get better and better. My outlook on that right now is that it's a pricing event, and the pricing event has generally run through the industry.

There are no further questions at this time. I will now turn the call back to Scott Thompson, CEO, for closing remarks.

Thank you, operator. To over 20,000 associates around the world, thank you for what you do every day to make the company successful. To our retail partners, thank you for your outstanding representation of our brands. To our shareholders and lenders, thank you for your confidence in the company's leadership and its Board of Directors. This ends our call today, operator. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.