Simpson Manufacturing Co., Inc. Q4 FY2025 earnings call

• Safety: Achieved total recordable incident rate <1.0 for second consecutive year. - 2025 Performance: Net sales $2.3B, up 4.5%; ~3% from pricing, 1% from acquisitions, 1% from foreign exchange; partially offset by 1% volume decline. - Segment Performance: OEM had double-digit volume growth; component manufacturing grew in low single digits; commercial flat; residential saw digital expansion; national retail had mid-single-digit decline; Europe net sales up 4.3%. - Milestones: 2026 marks 70 years of Simpson Strong Tie. - Digital Initiatives: CS Producer cloud-based software launched, extending capabilities into production planning.

Full year 2025 net sales were $2.3 billion, up 4.5% from 2024. North America net sales were $1.8 billion, up 4.5% including ~$60 million from pricing actions. North American volumes were down due to lower housing starts. Europe full year net sales totaled $499.6 million, up 4.3% year over year. OEM business had double-digit volume growth. Component manufacturing grew in low single digits. Commercial business volumes were essentially flat. Residential business volume declined modestly but saw digital solution expansion. National retail had mid-single-digit decline in shipments.

• 2026 consolidated operating margin expected in range of 19.5 to 20.5%. - Slightly lower overall gross margin due to tariffs and increased depreciation costs. - Expected $3 million to $5 million of footprint optimization costs in Europe and $10 to $12 million benefit on sale of vacant land. - Effective tax rate estimated in range of 25% to 20%. - Capital expenditures outlook in range of $75 million to $85 million.

• Market fluctuations affecting housing starts and regional mix. - Tariff impacts on costs. - Foreign exchange effects on operating expenses.

Q: Can you talk about the upside and downside cases to your outlook for flat North American housing starts? And can you also add some more color to your expectations for Simpson's growth?

A: Will, as you know, housing market forecast has had swings. Our view is conservative with flattish assumptions. We've outpaced market from volume perspective historically.

Q: How are you guys thinking about the end market outlook, specifically on the commercial side and national retail?

A: Commercial market growth anticipated to be flattish or up 1-2%. National retail market forecast flat to low single digit. Our businesses aim to outperform these markets.

Q: Can you dive into the gross margin outlook for 2026, expecting a slightly lower gross margin percent?

A: Price increases in 2025 provided $100 million annualized, ~$60M realized in 2025. Tariffs add ~$100 million annualized cost. Mix of pricing and tariff costs leads to slightly lower gross margin in 2026.

Q: What about the $30 million cost reduction, did any of that hit and prove beneficial in Q4?

A: A little help in Q4 but offset by onetime costs. Expect absolute operating expense dollars to be down 10-15 million in 2026 with leverage from cost savings initiatives.

Q: Can you provide more color on software and services monetization in 2026?

A: Focus on component manufacturing software, takeoff tools, and estimating services. Early days but seen as part of longer-term growth story.