Simpson Manufacturing Co., Inc. Q1 FY2025 earnings call

• North America net sales were $420.7 million, up 3.4%, with contributions from 2024 acquisitions and favorable comparison to prior-year net sales. • Europe net sales were $113.9 million, down 5.1%, affected by foreign currency translation and higher costs. • Component manufacturing saw volume declines but progress with acquisitions and digital solutions. • Residential had modest volume decline but focus on conversions and builder partnerships. • Outdoor living had low-double-digit growth. • National Retail saw mid-single-digit decreases but growth in e-commerce and retail space. • OEM had high-single-digit volume growth in mass timber and offsite construction. • Commercial market had low-single-digit growth driven by anchor and cold-formed steel products. • Implemented 8% price increases on certain products to offset rising costs and tariffs. • Columbus, Ohio, and Gallatin, Tennessee projects on track; Gallatin to optimize fastener sourcing. • Customer and employee engagement remain strong.

North America net sales totaled $420.7 million, up 3.4% from $406.7 million last year. Europe net sales were $113.9 million, decreasing 5.1% compared to prior year. Wood Construction product sales were up 1.7%, while Concrete Construction product sales were down 1.3%. In North America, component manufacturing volumes declined slightly, residential volume performance was down modestly, outdoor living had low-double-digit growth, national retail saw mid-single-digit decreases, OEM had high-single-digit volume growth, and commercial market had low-single-digit growth. In Europe, net sales decreased due to foreign currency translation and higher costs.

• Reaffirmed 2025 guidance with operating margin range 18.5%-20.5%. • U.S. housing starts expected to be flat-to-up low-single digits from 2024 levels. • Gross margin expected to be slightly lower due to new warehouses and cost increases, partly offset by price increases. • Effective tax rate estimated in range 25.5%-26.5%. • Capital expenditures estimated $150 million-$170 million. • Gallatin facility gain expected in third quarter. • Columbus facility grand opening in May; Gallatin facility opening in second half of 2025.

• Macroeconomic uncertainty in U.S. and Europe. • Tariff impacts and trade policy actions affecting costs and pricing. • Variability in housing market performance impacting volume and margins. • Potential effects of inventory lead times and sourcing challenges.

Q: How is tariff noise and related impact to consumer confidence impacting the outlook for US housing starts?

A: Michael Olosky and Matt Dunn discussed mixed views on housing starts, with first half expected softer than second half, and interest rate cuts as a potential driver. Guidance remains unchanged with flat to low-single digit expectations.

Q: What feedback on price increases and tone of conversations with customers?

A: Michael Olosky stated they work to explain value added, and Matt Dunn mentioned not passing full tariff impact through to balance market conditions.

Q: Steps to mitigate tariffs beyond pricing?

A: Michael Olosky discussed the Gallatin facility to balance fastener sourcing and in-source processes to reduce tariff exposure.

Q: Capital allocation and stock buybacks vs M&A?

A: Matt Dunn stated they continue to return capital via share repurchases with $75 million remaining under authorization.

Q: Annualized tariff impact and gross margin trajectory?

A: Michael Olosky and Matt Dunn explained tariff impact is small, and gross margin trajectory considers baked-in costs, pricing, and tariffs with a goal to keep margins flat.

Q: Gain from Gallatin facility and quarter it hits?

A: Matt Dunn stated the gain from Gallatin facility should hit in the third quarter.

Q: Seasonal progression of volumes and year-over-year comparison?

A: Michael Olosky and Matt Dunn discussed seasonality trends, tough year-over-year comparison due to weather and shipping days, and expected back half improvement.

Q: Trajectory of gross margins Q3 to Q4?

A: Matt Dunn explained Q2 will see partial pricing benefit, with gross margin expected to be flat for the year considering baked-in costs and pricing.