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Bhaskar Rao

Thank you, Scott. In the fourth quarter of 2024, consolidated sales were approximately $1.2 billion and adjusted its earnings per share was $0.60. We have $45 million of pro forma adjustments in the quarter, all of which are consistent with the terms of our senior credit facility.
These adjustments are largely comprised of costs incurred for professional fees related to the acquisition of Mattress Firm. In the unexpected, foreclosed distribution Scott previously mentioned, including transition and wind-down costs.
Turning to North American results. Net sales in the fourth quarter were consistent to the prior year. On a reported basis, the wholesale channel was consistent and the direct channel is 3%. North American adjusted gross profit margin improved to 40.8%, primarily driven by operational efficiency.
North American adjusted operating margin declined to 14.8%, driven by operating expense the leverage from investments and advertising and fully reserving the balance sheet for the event Scott mentioned a moment ago.
Now turning to international. Net sales increased 14% on a reported basis and 13% on a constant currency basis in the fourth quarter. As compared to the prior year, our international gross margin improved to 58%, driven by operational efficiencies in favorable mix.
Our international operating margin improved to 21.2%, driven by the improved gross margin and operating expense leverage, partially offset by a decline in our Asian joint venture performance as it manages through a weak Chinese market.
Now moving on to the balance sheet and cash flow items. At the end of the fourth quarter, consolidated debt less cash was $2.1 billion and our leverage ratio under our credit facility was 2.3 times. Within our historical target range of 2 times to 3 times.
Fourth quarter, we generated operating cash flow of $129 million. Following the close of the Mattress Firm transaction, our net leverage was approximately 3.5 times. We expect to return to our target leverage range of 2 times to 3 times and for share repurchases to be minimal over the near term.
We should note that under the terms of our credit facility, our leverage calculation going forward will include the benefit of run rate synergies. Our expectation is that we will realize at least $100 million in annual run rate synergies by 2028.
Before I discuss the 2025 outlook in detail, I want to highlight how we are reflecting the transaction in our guidance. Our guidance considers the previously announced divestiture and the elimination of intercompany sales between Mattress Firm and Tempur Sealy.
We expect the intercompany sales to represent approximately 18% of global Tempur Sealy 2024 sales. Intercompany eliminations will reduce Tempur Sealy sale, but will be a sorry, will be margin accretive and neutral to EPS. Please note, these two factors will import will impact our reported sales going forward.
I will be highlighting like for like to normalize these items in some of the guidance commentaries that follows. We also expect first year synergies to benefit of approximately $10 million primarily realized in the back half of the year, with an anticipated ramp in subsequent years.
I should also note there will be some P&L landscaping across COGS and operating expenses to align accounting policies to the two organizations. Please refer to the investor presentation posted to our website this morning for further detail on the impact of this policy alignment and other acquisition-related items.
As we begin reporting Mattress Firm and our consolidated results in the first quarter, we will maintain our historical reporting segments with the addition of a new segment for the Mattress Firm business. Now turning to our 2025 guidance.
We expect adjusted EPS to be in the range of $2.60 to $3 which at the midpoint is a 10% growth versus 2024. Our guidance is based on sales after intercompany elimination to be between $7.5 billion and $7.8 billion on a reported basis.
Our guidance also reflects Our expectations of the global betting industry will be stable versus the prior year, which implies slight headwinds in the first half and recovery in the second half of 2025. Our like for like Tempur Sealy sales growing slightly and on a reported basis down high-teens due to the acquisition factors previously discussed.
Our Tempur Sealy North America sales to be flattish on a like for like basis, driven by the outperforming the industry due to the continued momentum of our product and channel strategies. And comping over the foreclosed distribution and prior floor models which combined represent mincing headwind in North America Tempur Sealy sales.
Our international business growing low single digits, which includes the continued momentum of our omnichannel expansion strategy and a slight headwind in the first quarter as we lap prior to your launch. We also expect high single digit growth on a constant currency basis in our international segment.
And our like for like matches firm sales growing slightly supported by in-store initiatives to drive average order value in conversion. We also expect reported gross margins to be similar to recorded 2024 gross margin, which includes a $15 million dollar headwind from foreign exchange.
$730 million of advertising investment, which implies a slight step up in temporal advertising. All resulting in a just an EBITDA of approximately $1.3 billion to $1.4 billion. Regarding capital expenditures, we expect 2025 cap act of approximately $250 million including $50 million of investments to refresh mattress from stores.
Over the long term, we expect normalized run rate Somnigroup CapEx to be approximately $200 million. Lastly, I would like to flag a few modeling items.
For the full year 2025, we expect D&A of approximately $295 million to $305 million. Interest expense of approximately $265 million to $275 million. On a tax rate of 25% with a diluted share count of $210 million shares.
With that, I'll turn the call back to Scott.

Scott Thompson

Thank you, Bhaskar. Great job. Before turning the call over for Q&A. I'd like once again to express my long-term optimism about the recently completed acquisition of Mattress Firm. We have collaborately worked with Mattress Firm for over 35 years, and we are thrilled to welcome them into our organization and unlock incremental benefits to all stakeholders.
Let me conclude by taking a step back to share our long term perspective. We've seen our markets performing below their historical trend line growth, and despite this, our execution has led to adjusted earnings per share growth.
We believe 2025 will benefit from continued execution. And the Mattress Firm transaction. Looking beyond this year, we are planning for markets to return to growth while simultaneously realizing incremental benefits from the Mattress Firm transaction and continued industry leading execution.
We're internally targeting sales to grow at a compound annual growth rate of mid-single digits starting in 2026. This indicates Somnigroup adjusted EPS would increase from the $2.80 the midpoint of the guidance for 2025, to approximately $4.85 by 2028. A compound annual growth rate of 20%.
That ends our prepared remarks operator. Please open the call up for questions.

Question and Answer Session

Operator

(Operator Instructions)
Susan Maklari, Goldman Sachs.

Susan Maklari

Thank you. Good morning, everyone.

Scott Thompson

Good morning, Susan.

Susan Maklari

Good morning, Scott. I want to start with your expectations for some normalization in the industry this year. I guess, can you talk a bit more about what is driving that outlook, given the macro environment that we're coming into the year with and the state of the consumer, and then just talk a bit about your ability to execute against that and how we should think about first half versus second half.

Scott Thompson

Sure, thank you for the question. Look, I mean, I would say we're still in that bouncing around the bottom which we've used, here for the last couple of years where you have starts and stops. I would expect the first half of the year to be a little bit less robust, than the back half.
We had a strong period, towards the end of last year and the start of this year. And then ran into a little bit of a, air pocket during President's Day, which I think has been well reported. It's a little bit slow or muted during President's Day, but.
We're continuing to see what I call steady business, but I wouldn't say we're expecting normalization, really until you get to 2026. I think some of that is driven based on new product. We're very optimistic about the Sealy launch. Some of the Sealy products been in the market for a while.
So this is, as we mentioned the largest launch in Betty history. That product is, just now getting on the floors and where it's being placed. It's being well received.
But we're continuing to, be we'll call it cautious, near term and optimistic long term. Now for some reason the market is different than we expect. I think as the business model is relatively flexible. And we can flex up if we need to, or we can flex down, if the market tells us that's what we need to do.

Operator

Rafe Jadrosich, Bank of America Securities.

Rafe Jadrosich

Hi, good morning. Thanks for taking my question. I just wanted to follow up on the long term guidance that you provided, the $485. Can you give a little bit more color on how much of that is accretion maybe relative to core TPX?
And is that assuming $100 million of synergies, or is that just getting operating leverage on Mattress Firm? And then just, so I know it's a long question, but then the mid-single digit growth you're assuming is that industry or is that TPX and then industry something below that. Thank you.

Scott Thompson

Great, let me talk for a while and I'm sure I'm going to miss some of the 12 questions in there and clean me up a little bit. Look, we want to give you a perspective. I wouldn't call that quote guidance, but look, this is such a transformational acquisition. We knew we'd blow up people's models.
And we thought we ought to put something out there to give people, put something that's, tell you kind of internally, generally it's got $100 million of synergies in it over the period, with what I call a slow start, for lots for some reasons we can talk about in a second, primarily and that the FTC wouldn't let us talk to each other for a while, so the teams are just now getting back together.
And shows the industry, getting back to normal, and looks in the 5% we'll call it for talking terms, that's our revenue growth in the perspective. May be conservative, may not, I think we mentioned that there may be pent up demand we don't know yet, but I think it's a good baseline assumption.
And then I hope the teams are going to work harder and have a bigger synergy number, over time, but I think that could give you a good idea of internally, what we're targeting. So you want to speak to some of that?

Bhaskar Rao

Absolutely. So just a little bit of a double tap. So when you think about the category, think about it globally, as Scott mentioned is that we would expect to grow market share ahead. From a category standpoint, so as you think about that globally and anywhere between 3% to 5% as mentioned.
Also synergies absolutely is that we're in for at least $100 billion over that period and yes there is a component of incremental productivity going through a manufacturing process. So both leverage as those units start to become come back.
Interestingly, at the end of 2028, assuming the category assumptions units, we don't have to add any more incremental capacity or incremental CapEx to be able to support that level of business. As I think about the rest of the investments as we continue to support our brand through advertising, also we had called out that we're going to invest some dollars in refurbing the mattress from stores.
So, that cash flow is embedded in that as well as the incremental depreciation that would come to that. So you put all that together, you get to a mid-single digit growth on the top line with EPS growing at 20% CAGR.

Operator

Bobby Griffin, Raymond James.

Bobby Griffin

Good morning, everybody. Thanks for taking my questions and congrats on getting the deal done.

Scott Thompson

Thank you.

Bobby Griffin

So I guess I want to first foster hit on just the core Tempur Sealy, manufacturing efficiencies and kind of your view of the gross margins that we saw in fiscal year '24. Is that a fair starting base? Where do you think things are? Is the business over earning on some aspects, under earning on others? Just kind of level set us then.
And then my second part I'm going to do a two part question that Scott loves the 260 low end of guidance versus reporting 255, can you maybe just connect that? Is that just industry down again in '25 just, that basically flat despite having mattress from in there just curious on the on the low end of guidance the drivers behind that.

Bhaskar Rao

So, maybe I'll start with from a gross profit standpoint. Absolutely, Bobby, is it that, when I think about the opportunities and from a go forward standpoint on a Tempur Sealy standalone and just from a definitional standpoint, we'll introduce a like for like.
The like for like is everything outside of acquisition items. So yeah, nice gross margin expansion in the in the fourth quarter caught over 100 basis points and if I think about the big driver of that, it's really the productivity and the leverage going through the plants and as an expectation going forward is I would think about that on a like for like basis as we get into '25 and beyond on the Tempur Sealy standalone basis.
What I would further say is as it relates to non-recurring good guys, in fact, if you look at our fourth quarter, we did eat some items, so we called out the foreclosed business, the large big box retailer that is now fully reserved, so that was about a $10 million of bad debt we had to step over.
Also the abrupt foreclosure of our OEM business or a piece of our OEM business and that cost us a couple of percent in the fourth quarter as it relates to top line. So in fact when I look at the fourth quarter. We're pleased with how revenue came in, international was super exciting, as well as the landscaping across the P&L gross profit continues to be a great story. A bit of the leverage, however, that deleverage is really talking about fully protecting our balance sheet.

Scott Thompson

So you really what you're saying is, you're under earning on your assets in '25. And then you had a question on guidance, the low end of guidance and with Mattress Firm in the pot.

Bhaskar Rao

So when I think about the 260 to 280, is a long year. We talked about the category. When I think about it's been a past two weeks, I think since the acquisition, we remain getting our head around us. So I think specifically the question is what would you have to believe, as it relates to hitting that low end of guidance. I think we feel good about the industry.

Scott Thompson

(multiple speakers) I would say the low end of the guidance is protecting us a little bit that if 2025. The industry is down, as opposed to bouncing around the bottom might be the, I think that high level to say.

Bhaskar Rao

The other interesting things here is, it's been a couple of years in the making and we're excited about the, as Scott said, the Mattress Firm coming into the family. There are some open items we still got to work through so the vestiture's are happening.
And the expectation is that by May first is that the vestiture's both on the Mattress Firm side as well as the sleep op footer side is that those will be transferred or those will be part of the mattress warehouse family. You put all that together, as Scott mentioned as well is that President's Day is less than stellar, is that we expect that the accretion or the acquisition will start to be accreted in in the second quarter and for obviously the balance of the year and beyond.

Operator

Peter Keith, Piper Sandler.

Peter Keith

Hey, thanks. Good morning. Nice finish to the year. Congrats on the acquisition. If we just think about that EPS range for the full year of 260 to 280, is there a way you could break out how you're contemplating the EPS accretion from that mattress from acquisition?

Bhaskar Rao

Absolutely. So, just leveraging off the last question that came at us is, the expectation is that the acquisition would start to be accreted, beginning in the second quarter and ramping throughout the year. A couple of items that are happening is, as I mentioned, is the dive through the stores, so that's a body of work as well as it's just a process you got people involved so it's a process that we have to work through.
And you think about looking forward to continued relationship with Mattress Warehouse. So when I think about the accretion starting in the second quarter and then ramping as you go into the third and fourth.

Operator

Michael Lasser, UBS.

Good morning. This is Dan Silversteinr for Michael.

Scott Thompson

Great. Good morning.

Thanks so much for taking our question. Our question is on the potential for synergies beyond the $100 million that you've identified, specifically around advertising. Do you think you could see some benefit from consolidating your buying power, or will you lean in further and explore some new opportunities? Thank you.

Scott Thompson

Sure. On synergies, it's just everybody's ground, I mean the $100 million are the cost synergies. We haven't ever budgeted any revenue synergies that would be in addition to the extent of revenue synergies and then specifically on your question, you're drilling down on advertising. There's no question that advertising is a is a big bucket and a big opportunity.
I think, on a consolidated basis Somnigroup will be the largest betting advertiser in the United States by a factor of two. Okay, to be clear, so it's a big number, it's a strong competitive, we'll call it weapon or asset for us, and it is a focus point.
I think the synergies and advertising come in in two ways. Yeah, buying power, and we'll call that kind of a dollar synergy, just a traditional volume versus price. But I think the big unlock is the quality of advertising and to an extent the coordination of the advertising so that one plus one equals more than two, when you spend it.
And I think both teams will work collaboratively together. To get that efficiency and. It will take a little while, when I say a little while I talk quarters, not years, but I think that there's a great opportunity, but primarily in the effectiveness of advertising more than just the absolute dollars, of course it'll flow through the income statement through improved sales both for us. And I believe the industry.

Operator

Keith Hughes, Truist Securities.

Bhaskar Rao

Keith are you here?

Scott Thompson

Always got a mute button. Can you hear me now?

Keith Hughes

Yeah I can hear you now. Sorry about that. So building on the last question, I know you haven't been able to, as you said, talk really talk to mattress so much during the trial. At what point do you think you will have a better view of what other things you could do together is that something at the beginning of next year? How long do you think it will take?

Scott Thompson

Oh, it's not going to take that long, and to be just get everybody grounded, during the trial, basically the teams were not talking. And so everything having to do with synergies got shut down seven months ago. Yes, so we got a little bit of a start and then when we went to litigation, we'll call it walls were put up and these would be hard walls and so we're just getting restarted.
There are groups that are meeting starting next week to get to get re-engaged. And I think, we'll know a lot more by the end of the second quarter, and by the end of the third quarter, I think we'll know a lot longer, okay. So no, I don't think it's going to take very long.
But as you can see in Bhaskar's prepared remarks, we're not, budgeting an aggressive amount of realizing synergies in the first year, letting the teams get together, make sure that we have buy-in from both sides. Any time you're doing synergies, this affects people.
And that means when I say affects people that don't mean their jobs are going away. I mean they have to change what they're doing or the way they're doing it, by the way. But I think we'll get some of that implemented this year.
We'll get full benefits in 2026, and I think we'll have a robust funnel, of activity for several years from a synergy standpoint. So I think we got a pretty good idea, what we want to look at, but we need to process it, through both organizations and get buy in.

Operator

Seth Basham, Wedbush Securities.

Seth Basham

Thanks a lot. Good morning and congratulations. Just on the long term guide, Scott, in terms of 20% EPS growth, maybe you could break that down for us, and tell us how much you expect from deleveraging. In other words, how much growth do you expect over the time period in EBITDA versus EPS? Thank you.

Scott Thompson

Okay, I'll let Bhaskar give you, the details. If I remember that particular calculation doesn't have any stock fly back in it. I think we just threw the cash and the leveraging just to make the model call simple. That's right. But on the EBITDA growth, do you have that number on the top of your head or would it be similar.

Bhaskar Rao

(multiple speakers) What does happen is as Scott said from a capital allocation standpoint we don't have any buyback in it, top line or EPS growing at that 20%. However, we will be generating cash flow in that period and what we've assumed is that we feel that we will, pay down debt. However, the vast majority of the growth is coming from EBITDA. Yeah, you got to have the EBITDA growth double digit.

Scott Thompson

That's right. But there's still coming from the leveraging, nothing coming from stock buyback or future creative acquisitions. So I think it's a relatively conservative computation. But it is fair we did benefit for cash flow and reduced debt.

Bhaskar Rao

That's right. So that's again, vast majority coming from EBITDA growth. With the delta being just debt paid down, no share buyback.

Operator

Bradley Thomas, Capital Market.

Bradley Thomas

Hi, good morning. Congrats again on closing the deal here. My question was just, Scott, if you could talk a little bit about the recent trends that you've been seeing at Mattress Firm, and if you could talk a little bit how you're thinking about same store sales for the business in 2025 and then maybe lastly if you could just address the leadership transition underway and thanks.

Bhaskar Rao

Sure, let me take a crack at some of those. First of all, on trends, which again I think it's been fairly well published, we've got a, we'll call it a benefit in the fourth quarter with the peaceful transition of government in the US which may not have been expected.
And we'll call it the Trump bump, and I think he saw that in various places, and that went through certainly December, went through January, and then I'm going to call it the activities in Washington, which have created some uncertainty in the US and maybe the world, began to kind of felt like it probably hit the market like right at February 1, okay.
And President's Day in the US was less robust or muted compared to expectations. No question some of that is weather, but weather does not explain what I would call the muted impact for President's Day overall.
So, again, not too troublesome. Kind of what we've been seeing as we get these starts where there's clear solid growth for a period of time. Year over year and then you hit a period where it's soft and it's negative and so we that's kind of what I call the current trends.
On the same source sales growth, on the same source sales growth at Mattress Firm. Generally the history of Mattress Firm is share gain, we'll call it minor share gain, but share gain, and so they're same store sales growth is going to be dependent, somewhat on the market.
And then we have not gotten into their real estate strategy in detail and store expansion and all of that and some of that may or may not have an impact on how we think about it. So it's a little early, to say. But most of their most of their same store sales will be dependent on market.
Then I think the third part of your question was management change. We recently made a change in the leadership at Mattress Firm. We'll continue to work with the team at Mattress Firm and make sure that we've got the right team, people in the right positions with the right authority, for success in the future, and that's my day job right now and we'll have that knocked out. I mean, within a quarter, I think we'll be able to give you some more information in that area.

Operator

Jonathan Matuszewski, Jefferies.

Jonathan Matuszewski

Great, good morning, and thanks for taking my question. It was a follow up on synergies, recognizing kind of those hard walls are just coming down now, but just curious about kind of the cadence of that realization, obviously $10 million in the second half, that'll ramp in '26 and '27.
But just try understand how the buckets will evolve over time in terms of, what that $10 million is initially coming from, whether it's logistics or manufacturing efficiencies or life cycle management, et cetera. And kind of how those buckets evolve as those synergies ramp in '26 and '27. Thanks so much.

Scott Thompson

Okay. Let me talk about the process and then you kind of answer his question. Let me make sure that people understand the process. The process is each leader of each of the each of the companies will get together and form a committee and in their area of responsibility, they will come up with proposed synergies and then they will present them to top management to for us to kind of pick which ones we want to go after.
And so like operations and logistics, actually they're meeting next week. And actually they probably met a little bit this week, with the big groups, next week. Those two leaders will work their group, merchandizing will be working. And then of course accounting we'll call back office stuff.
I suspect most of the really quick hits of back office kind of stuff they're easier to consolidate. But once you give them some perspective.

Bhaskar Rao

Absolutely. So just to put some color on the $10 million again you got it right back half primarily loaded and where I think of that coming from is let's call it sourcing initiatives principally in those corporate type of functions where we get the power of scale. So think about it that way.
Also, I would imagine that from there's going to be a bit of manufacturing efficiencies as well now that we can being observant from a firewall standpoint, however, we can more easily work with each other. I imagine that there are some opportunities that lie in that area in 2025.
As I think about the cadence, let's call it a slow build. Let's say again, big round numbers. We got a $10 million, let's say it doubles a little bit more than doubles thereafter, and then filling the filling the gap in that terminal year of ['20] of the third year.

Scott Thompson

But I mean, but to get $10 million in your numbers this year with already, going to be in the second quarter by the time you're doing an implementation, what you're actually getting done is much bigger than $10 million, and you'll get the wraparound effect in '26, even. Just for the start of the year.

Bhaskar Rao

And plus a little bit more, yeah.

Operator

Laura Champine, Loop Capital.

Laura Champine

Thanks for taking my question and sorry if it's duplicative. I'm juggling calls this morning, but once you digest Mattress Firm, what's your outlook for retail location growth? Call it '26 and beyond in across your platforms US and UK.

Scott Thompson

Yeah, great question. Let me do dreams first of all because I'm very familiar with home for a while. They still have opportunities in the UK for store expansion, and that team has a long term plan, for what would I guess I'd call it, single digit percentage growth in stores. Something like that so.
So they still got that opportunity. In the Mattress Firm real estate, we've not gotten into the details of their stores. They have a very sophisticated department, they just worked through their real estate, over a number of years that we've got confidence in.
But we haven't been fully through that and we have not seen any store level data. We'll start that next week and so I don't really have a perspective, at this point. So you know I'm going to say, let's just call it store count flat today would be kind of my guess.
Again, not fully a knowledgeable of the detail, but within that quite a bit of rotation, from some markets that are that are over concentrated and then new markets or new areas where there are growth opportunities, but we'll have more information on that in detail throughout the year as we get we'll call it fully informed on their real estate strategy.

Operator

Phillip Blee, William Blair.

Phillip Blee

Hi, good morning. Appreciate your time. Can you talk a bit more about the upcoming Sealy launch? How do you think about that brand's growth potential this year compared to Tempur Sealy over the past few years during their product launches, and what kind of contribution that can have this year?
And then Bhaskar on the margins side, I know that there's a lot going on with gross margin this year, but how should we think about any headwinds related to, brand mix going forward? Thank you.

Scott Thompson

Thank you. Yeah, as Sealy is the largest brand in the US and this largest betting lodge in the US, and Sealy has been challenged, in 2025, as the product, we left it in the marketplace. It was its last year before end of life, and so this is a big refresh. And I would expect the growth potential for Sealy, in 2025 to probably exceed, Stearns and Foster and Tempur. I'm looking at Bhaskar, (multiple speakers)
But I think that would be our expectation. Because of the freshness of the product, the innovation that's in it and the excitement that we feel through the retailers and where it's been placed, it's performance. But I think the other thing that's going to impact that is, I think you know this is that Sealy is generally lower ASP than Tempur Stearns and Foster.
And over the last few years, the lower end customer has been more challenged. So, it will be impacted some by that, but, I think even with that I would expect Sealy growth to be more than Tempur Stearns and Foster this year.

Bhaskar Rao

When I think about gross margins and just some drivers, let's talk about temper for a moment for 2025 on a like for like basis. I would think productivity again continues to drive. I would expect again a lock for basis temper to grow about 100 basis points, maybe a little bit above.
The primary item of that is going to be the productivity, which will be offset by some commodities sitting here today, it looks like we're going to have a bit of commodities that when, however, you put those two together, it's still going to be favorable for us.
The other item that we call that was FX. So within going through gross margin line is that there are some countries geos where we buy in US dollars. The US dollar is strong relative to those currency, so causing us an FX headwind of about $15 million.
And then finally I would say a couple of items, four models will be a headwind for us in the first half. And I'll close it down with the mix sitting here today is that we've assume the industry, the category is going to be kind of stable, which would imply a little bit down, a little bit up in the back half.
So we're not assuming that that low end consumer comes back, which would be great for EBITDA, however diluted to rate. So at this point we're not considering any of that, but the one thing to be mindful of is that mix will be favorable for a couple of reasons.
One, the foreclosed business that we talked about foreclosed business was associated with some of our OEMs as well as the big box. And then the other item that will be that will help from a favorability standpoint is the international sitting here today is expected to grow a bit faster, which will be favorable as well. That's all in a Tempur Sealy like for Life, which should drive at least a 100 basis point of growth.

Operator

William Rutter, Bank of America.

William Rutter

Hi, I just have one. I was wondering if you'd given any thought to the new potential reciprocal tariffs that, may be put into place, and if you've done any work around what that, could mean if the, policies that were announced last Thursday, so February 13, were put in place in terms of margin headway. That's it. Thanks.

Bhaskar Rao

When I think about tariffs, they are moving around a lot. You're right. I mean whether it's the reciprocal tariffs or the Canada Mexico tariffs, the ones that we're thinking about or they're out there in China, the aluminum steel.
The way that we're thinking about it is what, today, it feels like, maybe one of those has stuck around China, relatively de minimis as it relates to how we're thinking about it currently because it's not only the impact of the tariff. We do have good relationship with our suppliers and we do have some lag in between when that tariff is enacted and when it goes forward or when it gets when we see it in our P&L and it gives us an opportunity to think about from a pricing standpoint of there.
So that's a lot of words to say that things are moving around and we do have what we have visibility on and what has stuck, we have that we have that forecast as it relates to the reciprocal tariffs is the one thing I would that that often comes to mind is, our adjustable based business I believe one of those countries that that may be impacted by that is Vietnam.
So again we have flexibility, we have the opportunity to move things around, but what we see in front of us is, a lot of uncertainty as it relates to that and there's also the upside as well. So when tariffs, they go both ways so as those tariffs and those finished goods are coming into the US, so it's an opportunity for us as well.

Scott Thompson

Yeah, I mean. Obviously it's complicated right now, but yeah, we're going to benefit from any tariffs that are put on imports, so that's kind of we call that a good guy. In our terminology, then probably just tariffs in general, the ones that get our components and stuff from a competitive standpoint, it's actually an advantage to us because of our size and our volume, it's easier for us to deal with the suppliers.
On that issue than the smaller people who don't have that bi. So as much as it's a kind of a we call it a pain from a competitive position standpoint, I think if it's actually it puts us in a better competitive position relatively speaking.
And then all of it is all before you do any mitigation and from an industry standpoint the industry has a History of if you have true cost increase in your components. The industry passes that on, to the consumer if that's what ends up happening.
And then quite frankly, all our suppliers are working through this and, working on where to move production and when we're talking about components and stuff, most of what you're talking about, that production can be moved, within a reasonable period of time. It's not like the auto industry we can't move it very quickly.
So all in all, the way I think about it with no guarantees because I don't think any of us know exactly where things are going to land is we may have a little impact for a quarter or two when depending on how the tariffs land, but within a few quarters I would expect the impact to be insignificant because the mitigating factors in our competitive position.

Operator

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

Scott Thompson

Thank you, operator. To our 20,000 associates around the world, including our new 8,000 matches firm employees. Thank you for what you do every day.
To make Somnigroup successful. To our retail partners. Thank you for your outstanding representation of our brands. And to our shareholders and lenders, thank you for your confidence Somnigroup's leadership team and its board of directors. This ends our call today operator.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.