Simpson Manufacturing Co., Inc. Q3 FY2025 earnings call

• Net sales were $623.5 million, a 6.2% increase year-over-year, driven by a June price increase and foreign exchange. - In North America, net sales rose 4.8% with an estimated $30 million contribution from the June price increase, but volumes were modestly lower. - In Europe, net sales increased 10.9% due to increased volumes. - OEM business had high single-digit volume growth led by mass timber solutions. Launched CS Producer, a cloud-based truss production management software. - National retail volume slightly down but point-of-sale improved; Outdoor Accents, fastener solutions, etc., were strong. - Residential volumes declined slightly but new business secured; multifamily demand a bright spot. - Commercial volumes declined mid-single digits but cold-formed steel connectors and adhesive anchor lines grew. - Recognized with two supplier awards from Do it Best and SouthernCarlson. - Undertaking strategic cost savings initiatives to generate at least $30 million annualized savings with $9M-$12M one-time charges in 2025.

North America: Net sales reached $483.6 million, up 4.8% year-over-year. Volume was modestly lower due to soft housing markets. Gross margin was 49%, slightly lower than the prior year. Europe: Net sales were $134.4 million, up 10.9% year-over-year or 4.3% on a local currency basis. Volume growth outpaced the market. Globally, wood construction products sales were up 5% and concrete construction product sales were up 12.8%. Gross margin for wood products was 46.2% (down from 46.3% prior year), and for concrete products was 48% (down from 49.7% prior year) due to increased tariffs.

• Operating margin expected in the range of 19% to 20% for fiscal 2025. - U.S. housing starts expected to be down in the mid-single-digit range from 2024 levels; Europe housing starts expected relatively consistent with 2024. - Strategic cost savings initiatives to deliver at least $30 million annualized savings. - Capital expenditures outlook in the range of $150 million to $160 million, including completion of Columbus facility expansion and Gallatin fastener facility. - Board amended share repurchase program, authorizing additional $20 million for repurchases in 2025 and a new program for 2026 to repurchase up to $150 million.

• Macroeconomic uncertainties in housing markets in the U.S. and Europe. - Impact of tariffs on gross margins, with continued erosion expected over the next few quarters. - Continued softness in residential and commercial construction markets affecting volumes.

Q: 6% revenue growth in Q3, organic volume declines in North America and volume growth in Europe?

A: Global sales growth 6.2% with ~5 points from pricing, ~1 point from foreign exchange, <0.5 point from acquisitions; North America volume down 1.4% year-to-date, Europe volume grew.

Q: Catalysts for housing market next year?

A: Market expected flattish, taking cost actions to reach 20% operating margin.

Q: Cost savings breakdown and impact?

A: At least $30 million annual savings, bulk in SG&A, $9M-$12M one-time costs in 2025.

Q: Gross margin trajectory and Gallatin facility?

A: Tariffs expected to fully roll in over quarters, Gallatin facility ramping up end-to-end process.

Q: Volume performance and market outperformance?

A: North America residential down mid-single digits but gaining share; expect above-market growth.

Q: Pricing carryover and 2026 guide?

A: ~$30M-$35M carryover pricing in 2026, volume a key variable for Q4 margin.