Sleep Number Q4 net loss $0.24/diluted share; FY22 EPS $1.60 vs $6.16 prior year

Fourth Quarter Overview • Net sales were $498 million, up 1% compared with $492 million last year • Gross profit decreased 3% to $272 million, or 54.7% of net sales, compared with $280 million or 56.9% of net sales for the prior year • Net loss per diluted share of $0.24, compared to net income per diluted share of $0.47 last year

Full Year Overview • Net sales decreased 3% to $2.11 billion in 2022; full year demand declined 13% versus the prior year, partially offset by the delivery of excess backlog • Gross profit decreased 9% to $1.2 billion, or 56.9% of net sales, including the impact of year-over-year input cost increases and inefficiencies from semiconductor chip constraints, partially offset by pricing actions • Diluted EPS of $1.60, compared to $6.16 last year

The company expects 2023 diluted EPS of $1.25 to $2.00. The 2023 outlook assumes net sales are flat to down mid-single digits versus the prior year. The outlook assumes gross margin rate improves by more than 150 basis points versus 2022. The company expects to generate over $100 million of operating cash flow for the year and positive free cash flows. The company anticipates 2023 capital expenditures of $50 million to $60 million and is planning no share repurchases during the year.