Sleep Number Corporation (NASDAQ:SNBR) Q3 2023 Earnings Call Transcript

Dave Schwantes: Yes. This is Dave again. Just to give a little more color on how we’re thinking about that. I think we talked in the remarks about a demand environment that may not improve next year. We’re not signaling exactly where we think it’s going to be, but what I would say is we certainly could generate positive free cash flow next year with a lower sales number than this year. I’m not going to peg exactly where that number is, but a couple of things to think about next year. Number one, we are expecting a pretty significant reduction in CapEx. Now, this year we’re going to do $60 million, I’d expect a materially lower number next year. And that CapEx number will be also meaningfully below our depreciation number.

So, we do have a lot of non-cash items in our P&L, including depreciation, and that will help with just cash flow generation next year. Again, we gave you largely how we think about next year at a real high level. We’re looking at a gross margin rate approaching 60%. We’re looking at OpEx, which is $50 million lower than this year. And I think — and like I said, we’ll give more clarity to how we probably think about the exact top-line in February, but I think we’ve given you some good guideposts to do modeling. And, I think when you do the math on that, you’ll recognize that we certainly can generate positive free cash flow with those variables next year in a lower demand, lower net sales environment.

Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the call back over to the Company for closing remarks. Please go ahead.

Dave Schwantes: Thank you for joining us today. We look forward to discussing our fourth quarter 2023 performance with you in February. Sleep well and dream big.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining and you may now disconnect your lines.