SNBR - Earnings call transcript Q2 2022 | Sleep Number Corporation

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Operator

Welcome to Sleep Number's Q2 2022 Earnings Conference Call. All lines have been placed in a listen-only mode until the question-and-answer session. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would like to introduce Dave Schwantes, Vice President of Finance, Investor Relations. you. Thank

begin. may You

David Schwantes

Investor sleepnumber.com. welcome Please Callen, conference details also Sleep to to our financial will joining the just this fiscal at call. of Schwantes, a call. the or telephone financial and being Finance refer am and the our Shelly access to may is today quarter our conference Chief results Ibach, us. Corporation is release certain of call available Financial the news XXXX be supplemental of that for website Dave this President and of President earnings release The to Thank information and Vice and be With to news afternoon, primary on me our Number are in David the ended. the period CEO; on discuss second I included release replay. Relations. purpose non-GAAP our refer Good Please recorded you and This for reconciliation in measures news discussed Officer.

over in earnings forward-looking release and and commentary certain may uncertainties XX-K Shelly include detail of results The call filings are These company's now for in in may a will and actual her forward-looking your statements outlined our vary questions our responses subject on our discussed risks to and to However, some to statements. number annual news with report the Form turn future periodic comments. other the SEC. materially. I

Shelly Ibach

joining SleepIQ was night. score you Good My afternoon, XX and our earnings for today. call thank last

May consumers to Number to purpose consumer inflation deteriorated is second that all economically consumers than the nearly X% eroding throughout highest year. all June, the a provide US rate since say annual climate across prior XXXX. quarter to sentiment value of creation declines of Overall, for our accelerated record Correspondingly the challenged, and for sentiment June, living. segments. XX% have more the versus mission Economic declined be unpredictable now Consumer their deliver levels in in is half superior business with inflation and global plummeted And operate and in Sleep conditions correlated. continue to we year. long-term As for demographic the demand The highly demand clear standard path in stakeholders. our level that low

navigating the during of performance operating reflects Our quarter this team's the business in in our agility incredible second climate. challenges

we excess end discussed QX line. the our heavily our high backlog As skewed call, of on the earnings to of composition our was

smart delays $XX units profit constrained XXXX. our up year As of what ago, in a backlog, $XXX grew operating result, quarter. delivered bed servicing from X.X%, in financial rate electronic from our while our operating XXX being, stronger-than-average excess profile. profitable was up represented softest Net we QX new a the profit components XX% during quarter weaker during million by portion is million, profit sales was the a quarter, second demand. to points as and benefited net basis again, Net XX% from a historically

demand, XXXX pressures are increase compared higher environment XX% $X.XX was with EPS These in quarter weaker and fraught including the $X. quarter and consumer ongoing ROIC XX Second flow. disruptions trailing chips updated to measurably with conditions second month low in in global business $X challenges, a were External outlook remains sentiment, cost of a record year share per a consumer diluted worsened $X.XX, the semiconductor input earnings reflected ago, XX.X%. and our

as strong preserving timely and remain electronic supply and support expectations our and liquidity strategy. advancement on than planned in cost $XXX Assumptions appropriate. allocation pricing to more million consumer of flow our prioritize include financial in deliveries to original focused actions as our our We compared we the annualized are removed a we second Accordingly, sentiment long-term unchanged half. maintaining flexibility position have taking and

customers. with a connectivity strong of and innovations built have sleep sustained life-changing foundation We our

to we expect forward, As move differentiation. continued benefit we from innovation and advancements

smart ongoing of exclusive sleepers vertically model smart flow longitudinal direct of the with to consumer engagement Our billion and generation. our XX data, millions robust hours bed of business with cash integrated platform

team's and We our the continue range initiatives to dynamics. strategic actions generate provide supply through actions Supporting taking macro prepared strategic are environments. all capacity we manage to Today, and our the for quickly to adjusting while update of experience to smaller of our demand, advantages, to Demand audience our prioritize customers' investments messaging, our and consumers and chain brand selling who progress is capability sustain being on a our buy drive I'll are strong while actions approach driving strengthen include initiatives. that our competitive a of our conversion health progression ready adapt, now. continued continuing spending an to among

from content We smart leveraging from our are -- and benefits that to health sleep beds. directly three wellness proven XXX quality links

minutes and health. from and quality our vital. per more XX restful the emotional of benefit physical night Specifically, mental, is proves our sleepers sleep science enhances sleep It smart

effectiveness We and we media mix optimizing and as for our are climate. current are business value the and the partnership partner into of NFL wellness also leaning solutions sleep their official

designed sleep. ClimateXXX deepen is in night bed temperature they body We changing also help our XX% continue October when report to too too of core The to Nearly introduced advance to sleep. life to cold hot smart or Americans the reduce being your throughout innovations. be

natural sleepers are Sleep innovative show ClimateXXX XX% to gently help smart it warms comfortable sleep temperature. works you of now bed create your First, personalized to Then feet initial ambient air asleep fall cycles. results your that Number test uses a sleeping at bed faster. microclimate a in-home this smart with body's

our new newer, bed Importantly, electronic available entire XXXX. components fewer smart and our requires we SKUs technology with portfolio also readily design users implementing ClimateXXX supports platform are This with that semiconductor platform more in new and chips.

brand assortment and of restore remain consideration bases smart improve beds. our this in full healthy smart to availability transition our challenging Sleep XXXX, the expect in we we of As bed platform and environment. interest Number's to smart

to June brand solution. sleep a a consumers buy are tracker and buy results is a who there next reduced that in months, market seeking Our and to the of more our the mattress brands there to half continues science innovation, of survey number with looking intenders are record than highlight XX lead ready other Sleep now. premium research Yet, number a Number which in relevance. broadens

trust, than have unaided ago fact, aspirational is affinity, stronger our and fit year In our quality, all and of increased. measures awareness brand value a

constraints Our the components flow position with supply win persist costs ourselves brand have disruption of new potential continue growth to increased. and we the strong and and will in support electronic health to Meanwhile, innovations global chain and sentiment recovers, as consumer.

was than For electronics allocations. unexpected anticipated supply quantities to the were suppliers in shortages. due later second from disruptions quarter, pandemic largely expected labor in the our timing Asia closures related Though, with with line

team and issues, disruptions supply with faced experiences pivots the quickly impact delivery when cost. While and these effectively increase short-term our customers

find new addition, ClimateXXX In potential impacts. and encouraged agility our with this teams of continue availability producing developing, supply are real platform our electronics And we solutions expected overcome alternative including with later year. business, beginning by qualifying and to across with parts our the shortages time to reduce

across digitization our continue to effectiveness. also efficiency advance operations rapid We and recovery, for

resources assembly chain our model. for long-term through management resilience investments and strategic of and for scarce a Number's flow advantage to opportunity goods represents holistic from The responsiveness. flexibility, distribution of and supply strengthen Sleep making fundamental are our We suppliers business

by We our pre-assembled to initiative beds of to XXX% track are year. on complete the multi-year end smart the

culture through our quality individuality of purpose to drive of sleep, well-being combined well-being with engagement, effort. society Our improve higher and team member the and health and commitment

they innovating current with dedication uncertainty navigate pivots agility, overcome and and and enabled continuing speed in and this environment. financial adapting challenges the Our us teams advance to to execute business Their disruption the are strategic long-term to while as has our our mission macro courage to our with associated initiatives.

our prospects our sleep challenging, life when improves profitable sentiment integrated compelling. changing is sleepers remain to smart and purpose, recovers. us of electronics environment opportunities position business consumer on this business vertically The connected and model supply innovations, capitalize power While

year. the remainder of on the and will David the quarter second provide additional outlook Now, detail for

David Callen

Thank you, Shelly.

highlighted, supply challenges inefficiencies. fronts: disruptive low As electronics sentiment; cost supply; on and record we are constrained timing of pressures and inflation Shelly navigating three consumer from

actions We mitigating on fronts. are all three prompt taking

profits. revised we share. XXXX our to receipts fulfillment materially $X smart to prevent continues last result, loading our costs, Consumer optimal call. bed And since earnings guidance flow have per sentiment The to level pressure electronic the and arising inefficient supply continue $X to electronics of operations dropped a As of volumes. from delivery timing

taking are these to actions teams challenges. mitigate Our

reduced which replace reductions $XX.X customers $XXX contain by projects planned financing electronic million increase for demand the with bolster in an Synchrony in another qualified annually more driving and our diligently available approximately and components supply tested, annualized our total are costs pricing demand extended more cutting working for targeted highlighted, and $XXX risks to about narrowed Taking their to August, million. $XX component million; early with forward sight of in to of share than through repurchases and million contract XXXX if of spending repurchases addition after sleep another negotiated pull actions initiatives more with include: resulting to fewer $XX warranted; costs suspended other no and Rapidly risk a just XX% actions line serve In to planned QX; price more technology. XXXX. $XX will acquiring million QX our favorable innovations partner at part million worth implemented approximately and capital Shelly with

and, financials, year. details constrained this deliveries year last please reviewing first recall again, flow in electronics of imbalanced QX the in our significantly quarter Before QX that

backlog the unusually chips QX grew smart that delivered the mix high ARU of most at approximately with adjustable a million, deliveries the high of million of mix As the in in bases. net arrival million $XXX smart prior awaiting resulting our demand backlog at a a in the constraints. sales to FlexFit supply year-over-year excess up about quarter. beginning QX, XXXX increase too most to lower our profitable Recall profitable That first versus very $X,XXX. result, $XXX of mix semiconductor despite in our beds beds of XX% The electronics for flowed $XXX XX% XX% the was in rich end rich year, the of from resulted through

than is with deliveries the the bed during demand bed a The led resulted deliveries high sales However, the QX. gross COVID of XX.X% margin from fewer and points from softer cost fewer caused electronics, is providing headwinds. improvement QX delay At profile, is of was ARU by constrained expected. uneven equivalent, uneven million smart below of XX% current XXX of deliveries XX,XXX quarter, basis of gross the sequentially second QX. of were This despite delivery than against Year-to-date demand largely flow another margin mitigant continued a prior from XXX It These inflation, dynamics. $XXX China. prior inefficiencies the to reflection XX.X%, and beds basis ARU our up due points constrained ongoing by a June normal to the electronics $XXX inefficiencies excess flow net pressures end to in smart shift year a backlog quarter in approximately more and business annualized approximately cleaner XX,XXX deliveries. smart year, of million

these since four and offset pressures fifth QX last partly a have We month. year action actions pricing next with

beyond. We reverse believe XXXX cost current temporary, supply and XX% in that chains of global and normalize to as pressures continue about are will

first in Given half, provide of more to we now in the details that flow moment. half continued the expect be the back inefficiencies QX. a gross electronics, I'll more on margin in than line in though QX pressured from with uneven

staffing $XXX reduced net cost Our cost deliveries the reflects cuts components of and also flow variable in and retail we million containment taken actions. profitable highly of quarter profit our significantly X.X% operating lower all the initiatives include incentive programs. business, across across The rate in marketing, the compensation performance slowing than more of priority cost primarily QX have of and

drivers. continue to and We demand, spending innovations sleep prioritize support fulfillment that efficiency

have liquidity challenging to We our support sufficient conditions. these of strategy through the execution ongoing

with to ended EBITDAR. currently we pressured cash, expect year-to-date. times available our than operations have we generated We in from to softer second year. $XXX operations cash has cash leverage quarter million this demand from X.X $XX liquidity and of in debt Despite delivery under macro and more $XXX $XX million the generate million of constraints million headwinds credit still While facility,

the electronics in and greater initiatives priorities high in continuing beds, to they managing flow in quarterly include guidance than of Quarterly our in continue is newest QX. backlog resistant single will QX QX the benefit the also backlog some driving of net EPS to Those the this in introduction supply next. $X of XXX,XXX uneven QX deliveries revised QX constraints $X profits decline of in delivery much Demand of improved be expected digits much year Our will deliveries and with profits first XXXX during chip that of includes constrain deliveries spending. of a and in service macro followed of the QX, flow XX% This low a by inefficient development consumer now sales growth year selling half environment the is supply. for the more double sleep headwinds year, balance resulting in year. largest of the for in smart to affected service single low by impacts significantly shape the and about the will did assumes current to spending of expected timing impact the innovations of back about digits. to flow to operational assumed with XX,XXX to later and Electronic These like XX% half. period of demand

As about a expect followed result, breakeven profitable we QX. by earnings QX

Our as actively sentiment consumer managing spending and We prioritize and to all improve. electronic long-term enable initiatives remain experience. strategic structured and our levers priorities drive our vigilant us quickly we business support customers' are our to as growth supply are

balance we line solutions. quality Operator, proven as continue near-term improve with We and lives sleep please opportunities the for open questions. to risks

Operator

comes James. [Operator with Instructions] Our from Griffin question first Bobby Raymond

line open. Your is

Bobby Griffin

walk sake any to to appreciate wanted understand through -- XQ, or happen? to or we've I what's my the struggling the if circle than EPS If bit I just everybody. year more year. I for of $X.XX given of the kind and what I'm -- for Like, profitable we've and of of what's taking earned you the basically here? just got afternoon, us is if at, $X XQ, And we're a Dave, just guess that. little that about I far get Good kind of looking pathway I details with the just you this a year progression to guidance, appreciate it's breakeven back bit questions. like -- out so little the we to flow all so the kind help

David Callen

smart profit strongest and most constrained most money a make it's is Yeah, we the quarters. unusual, X.X% by profitable smart and normally we year. our profitable year Bobby. and QX delivered increase which of beds little just then and delivered seasonally in operating Thanks, it our QX, followed Right. over one prior a where this where And half of a like were first QX, of beds those the rate was in QX in XX% very deliveries of a in didn't profitable our lot EPS

in spend the electronics largest period So, our of are year. we're to to generate to in the the consumer little deliveries facing bit need same against that going selling resistant of kind constraints the limit QX of demand from our QX. in a At time, supply a we same consumer

going about XX% in a spent our in think be lot us So, QX QX, spend that been had make against of more we more we It's to created to those it's it. don't Then created. to XX% against just in breakeven. all have about deliver to we we earnings our combined that units I demand QX. things already said and pressure

through more comes QX, backlog profitable more drop it you And when at a through much so, benefit in rate.

Bobby Griffin

Okay.

that in have as at way ARU for targeting ARU? the step up and So, should is XQ, as to to a here similar XQ the XXX,XXX XX,XXX XQ we materially that at look then right at XX,XXX look units you're

David Callen

half Bobby, I'd the did of on we little growth I say, have mix, year. of hundred first smart couple QX carry-forward the our And harsh, prior smart over but assume overall because those what all in beds. have a in back normal up That's less the general, ARU a catching didn't normal year, didn’t because beds. this are we also in half ARU No. mix QX of dollars would the a than of the

Bobby Griffin

But Okay. the in details. for -- appreciate I'll That's now, queue. helpful. further I'll the I back jump jump

David Callen

very much. Thank you

Operator

Your next from Sandler. with question Peter Piper Keith comes

Your line is open.

Peter Keith

the me. take planning is bit through? surprising afternoon, you you drive something coming profit? I pricing Good you're just input Or little excess making a guess Are little thanks. costs Hi, can was on to seeing you changes this think everyone. higher extra to price a some

Shelly Ibach

additional more the Peter. and it's prudent exception It supply appropriate environment bed Hi, with I we us and the the uneven Thanks inflationary and all when the efficiency environment this this to in say for flow than the around effectiveness it's take the takes. look input Yes, question. per lower -- of this we $XXX that believe in the the puts at is year. -- would pricing. for the cost with higher CX of smart

David Callen

little the has pricing Peter, to to not actions dampening A that eye pricing million. have absorbing an on date The the cost additional we're increases our price along passing best been I’d sure incremental make We've is simply been an add. been bit been we've doing side. demand. $XX of is, on with conservative increase our said -- I and our

others point. it's gone the significantly with industry We're in another their So below about pricing. where have still

Peter Keith

Yeah.

sense. makes That Okay.

months up launching you have October, a So kind course, on ClimateXXX while, been of that's quite you've hold the year. over of really or a XX the in in I R&D budget so. for got guess, your or ramped And last

should any maybe innovation or without and of XXXX coming market? excess to we So the XXXX mean, forward launches elevated revealing I products, some just in looking see

Shelly Ibach

and our and and this lower to date demand more And our towards platform. of assortment. add has both our reduction, next of more next ClimateXXX diagnostic new Absolutely, milestone in we're and transition of ClimateXXX reduction And full about what really components support the this important connected health in for so been XXX change high platform end add bed a XX% we the that the the here supply launches with keep components we're our well the chip. parts a beds also as introduce starts smart with capabilities smart we'll and from to will in smart reasons. reach that And to in in mind, line, is at Peter. existing year, benefits off an millions new and of it's year, quarter And halo connected able platform. also overall we this the we to And we that platform number moved the to to will line a continuing be year future. to new our new smart sleepers really excited last building excited progressing benefits to as to XXXX then a we're be making This able of be smart available has with sleepers. beginning expect we've It about this consistent the the broaden and for sleepers, our electronic fourth the today, this

Peter Keith

Thank very much. That's great you Okay. detail.

Shelly Ibach

Thank you.

Operator

next question Your comes with from Seth Basham Wedbush.

Your open. line is

Seth Basham

Thanks afternoon. and a good lot,

If half you give to for the demand trends? quarter? on back demand think wise you when how of color the demand year-over-year through more about bit a guys us could expect the shape the of you year, please do And the comparisons,

Shelly Ibach

change with saw we in dropped in which May. first record to all, the demand sentiment, correlation a in Sure. Seth, consumer of lows

quarter made in in this most environment. the consumer impacted May recovery to we with July So June as to some in respond so different was far adjustments and the demand

Seth Basham

half the back you think of And about year? as the

David Callen

decline double assumes So low said, high our single the -- guidance digits. to as I a digits of

that -- going consumer given environment, to is is current us is, not that balance increase the for prudent going assume demand the As to or the to sentiment we of it's believe, consumer the year. where

we pegged our how for that's demand. So expectations

Seth Basham

and option revamped what of thank seeing you penetration And SG&A more how that with rate Okay, it? then and for on financing as color the a give you're my Can you agreement your you. follow-up the finance result is impact some there, a rate on Synchrony.

David Callen

Yeah.

weeks with a financing increased again, our for -- Synchrony today again, we time. now partner has, offering federal number long load is we Fed I the environment -- -- for with the number that the last sure are we wanted been know of our and through of of then a of of to an as funds decades. you over XXXX. fantastic element worked sharing challenging rate go to both the that years, And extend for rate benefit equation for a important along to the of to and we sides them make our a number the support together consumer our were contract going and customers had how very and And As we has consumer

So Synchrony appreciate continuing brought certainly has we're and us years. over excited about that to strong partnership the that we the partnership

Shelly Ibach

the And penetration?

David Callen

Yeah.

Seth, bucket Our with kind change a promotions we've financing we balance those to of use think basis regular -- you we costs. and overall promotion total that I in on shared and one offers and

think any And last seen And rate overall total, not sales in XX% was it our in have of about that's normal. I year. our We decline of our penetration about financing.

Seth Basham

Got And basket that just half about second financing are quarter year? the dollar up in when of off trend at for year-over-year? how thinking in how back point, you of that following And promotions, did lastly, look they them it. you on the the

Shelly Ibach

overall speak were We of to iterated forward quite but findings, also won't they I is I started high-end the lot, in the with off, the bundles to a a they those conclusions as last at changed. And with financing and quarter. this one we would have the sentiment say the consumer learned weeks, rating, dollars from attractive, the a over testing third and be low change pretty model real few consumer six clear. we've here benefits applying specific vertically learnings of been everything is We I'll environment. the and look end, rapidly our combination sentiment the dramatically in we is really offers of is Seth, a quarter. business at it integrated

clearly pivot But then isn't to it's benefit onset and to continue of where would and that I we you was financing was way or within the in we saw the to ours than an the learn last we would able [indiscernible], Clearly also need at important advance learn in of and and this war we since to something periods quickly. be of a So say, end consumer. it all of months. whether important, the a saw the normally more That's just where breaks lot to the high have change periods a rapid value, it's low couple through business.

As lot I buy that's remarks, are It's talked in my --are it's the ready about in really there that much. a not what so marketplace. of now, narrowed intenders they to has

So extraordinary when works. value, you have it an

Seth Basham

so Thank you Okay. much.

Operator

Markets. question comes Capital from Your KeyBanc Thomas Bradley next with

line Your is open.

Bradley Thomas

I afternoon. follow couple I questions could. here good Hi, up of have

I'm you math through the right If I that the your the as XQ XX% Does half. XX% your go modeling sales in unit I to commentary, from, the it back to seem Just looks be shape like all? implications range? down think, of somewhere may

David Callen

I’m directionally myself yeah, just checking that's think on fine. -- I

Bradley Thomas

And out and been normal guidance is to in as think profits off from it a for the expectation that products have the you sounds try it supply this some bit about the a within Do the year at for the just better Thanks. estimate have a this company down, Okay. David, of backlog you're year working of model of these short backlog and as perhaps and is getting we an impact for to how more like next think what so supply the for -- to backlog, at us sales that? for about you year-end. come and year servicing for the rough

David Callen

are that wrestling Yeah. It's one ourselves. question with and great a we

there given You the that headwinds of year and course and year. through are know, tailwinds we any in there are the Brad, navigate

about equivalent We total, the be sales have $XXX started with. to already thinking highlighted line. place worth year we In with a year that particular backlog. terms of excess I've million start a lot would left of in would about That I of that that do net

dependent amount is the demand and the that and on both However, supply. timing of

And so, may benefit not we much. may that or

excess carry half we more think. demand carry that next backlog forward Let's full excess year. more that the It's we of of we benefit say, we back have the get during don't possible all into than and

modeling are that million $XXX our year factors chains absorbing, has we're we electronics I'd way increases then start costs about next in QX lot XXXX. supply some certainly put gross as out margin us, we're earnings year that So this but basis burden that our there keep That the we'll how say, terms out we to going think of you going cost QX supply our on significant been and versus at lot annualized a to with of number, burdened through. from up flow inefficient you of get the come strip maybe updated color also we've that a of year-to-date is you this margin have give points through perspective, from to our with while the basis rate And of QX, down work we're worth on points on was a gross about a year. as will XX.X% prior call that's sequentially stabilize. But XXX to still XXX rate happen this number have We progress that's year of going to starting XXXX. in thinking you one-off

Bradley Thomas

for Great. details. the all Thanks

Operator

UBS. Maheswari from with question [Operator Instructions] tool Our a next comes

line open. Your is

Atul Maheswari

for hear question. Hello, me? taking my Thanks can you

David Callen

Yes.

Atul Maheswari

for Thanks a questions. my taking lot Okay.

to you're way could that it macro the -- it backlog at on we given demand the So the on there is or quarter, like banking portion challenged be expect fourth be, this out the elevated banking of least What risk assuming order a fulfilling sounds you're especially plays for cancellations, backlog. backdrop? the

David Callen

carefully, did We call, given electronics QX, drop a change a, business. Well, flow. middle material also during the haven't consumer I we acting. would to in an the consumers that see especially period, correlation but during with the in it's the of to a sentiment QX how not with conjunction of with are a And bit monitor the what time that overall in material we cancellations really increase seen challenges

so, cancel both you and we're our continue we it rates, returns that rate to performance watch steady carefully, updated. And in fairly but and keep our we'll seeing are monitor

Shelly Ibach

Atul, our weeks X for And to bed. weeks smart is delivery a X window,

Atul Maheswari

Okay. Got it.

you As is guidance. how a my not of there follow-up confidence [indiscernible] couple you have is, question is of the very do quarters much this new conservative The miss range. lowered been but environment this guidance? that And have how uncertain, will

Atul Maheswari

confidence in much how And what?

David Callen

new the In range.

Shelly Ibach

new In range. the

Okay.

very I it. didn't hear Sorry, the end of

we've in sentiment, we that's in reflected taken know, our look half, on and the change the back at back consumer as As you half. board significant

that flow approximately will where our we we've planned sentiment And parts support that deliveries. sight electronic will the that in benefit it today, support have the and stays allocation assumed from line the we to -- that Assuming is. also which

So two think important as those significant are it. about we assumptions probably

a prudent improves, change that half. consumer sentiment we're -- as sentiment, in not environment, would put So would back head in if to from the we -- but it's we expect we that the into benefit change consumer think to we assume

Atul Maheswari

super please more. one helpful. ask it. Got I That's can, If

normalizing more or get next have how do much year? you're some chain a you then you quantification? were supply supply to couple seeing about you times much that that of year. of normalizing of that importantly margin that lost normalize, a would you if hope provide year? of this supply next think fully mentioned I How Is a visibility back, improves And to it can

Shelly Ibach

the for question, Thanks Sure. Atul.

ClimateXXX our to has flow I electronic of chip our as transition then move we challenge the specifically been year and semiconductor platform, at in chips. next mostly look And As supply, stated more move site availability forward. chip. it's when we full we also parts, of newer parts line electronic line the and the have to the utilizing more new a available we expect semiconductor and and and common we are increased as parts platform, of new less new the And we

part up and that's So everything new our platform. what to doing the towards. design of we're we've can we been that to And implementation overall working move

David Callen

but gross continued have disruption. rate yet I'd had add. we've improvement to originally margin We year, to expected some electronics see this

are has that's who improve, especially our they technology. three I than Now year have -- in to partnership Shelly but chain layers to we going supply ago. and are sight was scattered, the been still electronic And think with the to our as impactful. been disruptions those suppliers as deep our stronger of more move fewer continue line highlighted, – a it newer We

talking know, think I approaching -- QX don't year percentage about this XX maybe of we to would originally I we'd so be were I by And margin say, XX basis rate. gross points

feasible is normally to than my think the But closer I the ’XX. being first would look, in I'm year thoughts what be. you half directionally providing without we that of

ways finding growth those expecting part rate next more margin profit will gross and to efficient, the certainly year. year, next we're rate innovations, we we're certainly So all from of drive new to be gross margin will things we have both benefit improvements how be

Atul Maheswari

it. rest with helpful. Got good And That's luck the of all super that. you the for year. Thank

Shelly Ibach

you. Thank

Operator

reached the answer-session. the closing have company We the end for back question-and I to remarks. of will turn the over call

David Schwantes

Sleep performance well you with for you joining third in to quarter big. October. look XXXX Thank us dream and We discussing our today. forward

Operator

call. This conference today's concludes

disconnect. now may You

Sleep Number (SNBR) 27 Jul 222022 Q2 Earnings call transcript