Earnings call transcript: Simpson Manufacturing beats Q2 2025 forecasts

Simpson Manufacturing Company Inc. (SSD) reported stronger-than-expected financial results for the second quarter of 2025, with earnings per share (EPS) of $2.47, surpassing the forecasted $2.28. The company’s revenue also exceeded expectations, reaching $631.1 million against a forecast of $601.8 million. Following the earnings release, the stock price rose by 0.21% in aftermarket trading, reflecting investor optimism. According to InvestingPro analysis, the company maintains a GOOD financial health score of 2.81, with particularly strong marks in profitability (3.87) and cash flow management (3.29). Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels.

Key Takeaways

• Simpson Manufacturing reported an EPS of $2.47, beating the forecast by 8.33%.
• Revenue reached $631.1 million, a 5.7% increase year-over-year.
• The company expanded its digital solutions and launched new tools for project management.
• The stock price increased by 0.21% in aftermarket trading.
• Simpson Manufacturing maintained its full-year operating margin guidance.

Company Performance

Simpson Manufacturing demonstrated strong performance in Q2 2025, with net sales increasing by 5.7% year-over-year. North American sales led the growth, rising by 6.4%, while European sales saw a modest increase of 2.7%. The company’s focus on expanding digital solutions and new product launches contributed to its robust performance, despite challenges in the residential housing market.

Financial Highlights

• Revenue: $631.1 million, up 5.7% year-over-year
• Earnings per share: $2.47, up from the forecasted $2.28
• Gross margin: 46.7%
• Net income: $103.5 million
• Adjusted EBITDA: $159.9 million, up 4.8%

Earnings vs. Forecast

Simpson Manufacturing’s Q2 2025 earnings per share of $2.47 exceeded the forecast of $2.28, resulting in an 8.33% positive surprise. Revenue also surpassed expectations, coming in at $631.1 million compared to the anticipated $601.8 million, a 4.86% surprise.

Market Reaction

Following the earnings announcement, Simpson Manufacturing’s stock price experienced a modest increase of 0.21% in aftermarket trading, reaching $165.66. This movement indicates a positive investor response to the company’s earnings beat and strategic initiatives. The stock has shown resilience, trading near its 52-week high of $197.81, with a beta of 1.28 indicating moderate market sensitivity. InvestingPro data reveals the stock has delivered a 4.65% return over the past week, though it’s down 13.34% over the past year.

Outlook & Guidance

The company maintained its full-year operating margin guidance of 18.5% to 20.5%, despite anticipating slightly lower gross margins due to tariffs. Simpson Manufacturing remains committed to achieving a 20% operating margin in the long term, focusing on cost discipline and working capital management. InvestingPro Tips highlight the company’s strong dividend track record, having maintained payments for 22 consecutive years with 5 years of consecutive increases. The current dividend yield stands at 0.7%, with a healthy 7.41% dividend growth rate.

Get comprehensive insights into Simpson Manufacturing’s financial health, valuation metrics, and growth potential with a Pro Research Report, available exclusively on InvestingPro.

Executive Commentary

CEO Mike Olowski expressed confidence in the housing market’s mid-to-long-term prospects, stating, "We continue to believe in the prospects of the housing market in the mid to long term." CFO Matt Dunn emphasized the company’s dedication to customer service and innovation: "We are focused on being the partner of choice by providing our customers with world-class service, support, and innovation."

Risks and Challenges

• Tariff impacts could pressure gross margins.
• The U.S. and European housing markets face challenges.
• Managing costs and capital expenditures remains crucial.
• Competitive dynamics require continuous innovation and service improvement.
• Economic uncertainties could affect market conditions.

Q&A

During the earnings call, analysts inquired about the expected pricing increases and their impact on demand. The company anticipates approximately 8% price increases in the second half of the year, with no significant pre-buying observed. Executives also addressed questions regarding cost management and competitive dynamics in the market.

Full transcript - Simpson Manufacturing Comp Inc (SSD) Q2 2025:

Conference Operator/Moderator: Afternoon, ladies and gentlemen, and welcome to Simpson Manufacturing Company’s Second Quarter twenty twenty five Earnings Conference Call. Any statements made on this call that are not statements of historical fact are forward looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may vary materially from those expressed or implied by the forward looking statements. We encourage you to read the risks described in the company’s public filings and reports, which are available on the SEC or the company’s corporate website.

Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward looking statements that we make here today, whether as a result of new information, future events or otherwise. On this call, we will also refer to non GAAP measures such as adjusted EBITDA, which is reconciled to the most comparable GAAP measure of net income in the company’s earnings press release. Please note that the earnings press release was issued today at approximately 04:15 p. M. Eastern Time.

The earnings press release is available on the Investor Relations page of the company’s website at ir.simpsonmfg.com. Today’s call is being webcast, and a replay will also be available on the Investor Relations page of the company’s website. Now I would like to turn the conference over to Mike Olowski, Simpson’s President and Chief Executive Officer.

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Thanks, Kim. Good afternoon, everyone, and thank you for joining today’s call. With me today is Matt Dunn, our Chief Financial Officer. Today, my remarks will provide an overview of our second quarter performance and highlights from our key end markets. Matt will then walk you through our financials and our fiscal twenty twenty five outlook in greater detail.

Now turning to our results. Our net sales of $631,100,000 reflected growth over the prior year quarter in a challenging residential housing market in both The US and Europe. While our second quarter volumes were relatively flat year on year, our North American volumes once again exceeded US housing starts by approximately two forty basis points over the last twelve months. In North America, net sales totaled $492,700,000 up 6.4% from $463,000,000 last year. Our results included a contribution of roughly $9,000,000 from our twenty twenty four acquisitions.

Additionally, we benefited from a partial month contribution from the price increases that went into effect on June 2. Collectively these items offset our flat volumes. As a reminder, software services and equipment are not included in our volume calculations. Our North American volume results were mixed in the second quarter, so sales to all of our end markets continue to demonstrate at or above market growth on a trailing twelve month basis. The OEM business had a strong quarter with volume up double digits over Q2 twenty twenty four.

We saw significant growth in solutions for mass timber and continued momentum in off-site construction, including post frame, shed and modular manufacturers. In the commercial business, volumes improved mid single digits year over year, driven by the continued strong performance of our adhesive and cold form steel product lines. Our takeoff services, which generate an accurate bill of material, continue to add value and build customer loyalty helping us win additional cold form steel projects. In the component manufacturer business, we delivered mid single digit volume growth year over year. Our customer centric digital solutions and expanded equipment offering contributed to the above market performance.

In the second quarter we expanded our customer base and launched key enhancements to our digital solutions portfolio, strengthening existing partnerships and delivering greater value to our customers. Our national retail business experienced relatively flat shipment growth while point of sale performance improved with mid single digit gains. This was driven by new product listings and expanded retail space secured in late twenty twenty four. Growth was primarily fueled by our strong performance in our outdoor accents product line and anchoring products, increased e commerce activity and pro growth initiatives within our two largest retail partners. In the residential business volumes declined slightly versus last year due to continued challenging market conditions.

We remain focused on driving customer conversions and expanding product lines with a particular emphasis on delivering integrated equipment and software solutions tailored for pro suppliers and billers. Additionally, we’re encouraged by the recent momentum in the multifamily market. Finally, I’m proud to share that our dedication to relentless customer service resulted in several renewed partnership agreements with key builders and a supplier award announced in the second quarter from David Weekly Homes. Turning to Europe, our net sales of $133,400,000 increased 2.7% compared to the prior year, but decreased by $2,800,000 on a local currency basis. Although volumes were down year over year, our European business continues to outperform local markets driven by new application launches and recent customer wins.

Consolidated gross margin was 46.7% consistent with the prior year quarter despite higher input and labor costs. As a reminder, on June 2, we implemented targeted price increases in North America in direct response to rising input costs, both material and non material, as well as a portion related to recent trade policy actions. While our supply chain is primarily domestic, we do source certain components including fasteners from countries affected by the newly imposed tariffs. These increases offset some but not all of the incremental tariff related costs as of the date of our price increase announcement resulting in a modest negative impact to gross margin. Looking ahead, the expansion of tariffs on steel and related metals announced in early June could prompt additional pricing actions, which we are currently evaluating.

However, we believe that disciplined cost management, targeted pricing strategies and ongoing productivity initiatives position us to maintain our gross margins while continuing to make selective investments and enhance customer service. Our second quarter operating margin was relatively flat with the prior year at 22.2%. Consolidated adjusted EBITDA totaled $159,900,000 an increase of 4.8% year over year. Next, I’d like to touch on our three financial ambitions. First, continuing above market growth relative to U.

S. Housing starts. For 2025, we are updating our assumption for US housing starts to be down in the low single digits compared to 2024. In Europe, housing starts are expected to remain broadly in line with 2024 levels. We are focusing on continuing to grow above the market.

Next, maintaining an operating income margin at or above 20%. In a favorable growing market environment, we are confident in our ability to sustain at least a 20% operating margin. And finally, as a growth focused company with industry leading margins, we believe we can consistently drive EPS growth ahead of net sales growth, as evidenced by our year to date earnings per share increasing by approximately two sixty basis points ahead of our revenue growth. In summary, we delivered a solid quarter with revenue growth and stable volumes that outpaced the broader market despite continued macro housing headwinds. Our solid operating margin and disciplined cost control underscore the resilience of our team and our business model.

We continue to believe in the prospects of the housing market in the mid to long term. In the short term, we remain focused on being the partner of choice and maintaining our margins in this dynamic operating environment. With that, I’d like to turn the call over to Matt, who will discuss our financial results and outlook in greater detail.

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Good afternoon, everyone. Thank you for joining us on our earnings call today. Before I begin, I’d like to mention that unless otherwise stated, all financial measures discussed in my prepared remarks refer to the second quarter of twenty twenty five, and all comparisons will be year over year comparisons versus the second quarter of twenty twenty four. Now turning to our results. Our consolidated net sales increased 5.7% year over year to $631,100,000 Within the North America segment, net sales increased 6.4% to $492,700,000 In Europe, net sales increased 2.7% to $133,400,000 primarily due to the positive effect of approximately $7,000,000 in foreign currency translation, which was partly offset by lower sales volume.

Globally, wood construction product sales were up 5% and concrete construction product sales were up 9.2%. Consolidated gross profit increased 5.7% to $294,500,000 resulting in a gross margin of 46.7%, in line with the second quarter of twenty twenty four. On a segment basis, our gross margin in North America was 49.7%, marginally lower than the 50% reported in the prior year, due primarily to higher warehouse costs as a percentage of net sales. Our gross margin in Europe increased to 36.2% from 35.4, primarily due to lower material costs. From a product perspective, our second quarter gross margin was 47.1% for Wood Products compared to 47.2% and was 45% for concrete products, compared to 47.5%.

Now, turning to expenses. Total Q2 operating expenses were $154,400,000 an increase of 6.5%, driven by higher personnel costs, primarily from our twenty twenty four acquisitions, as well as variable compensation and computer software and hardware costs. As of June 30, our headcount was down slightly from the start of the year. As a percentage of net sales, Q2 twenty twenty five operating expenses were 24.5% compared to 24.3% last year. We are focused on ensuring our spending results in above market growth, while targeting an operating income margin above 20% that is consistent with our long term strategic objective.

Given the current outlook for housing starts and the recent price increases, in addition to the year to date headcount reductions mentioned above, we anticipate the cadence of SG and A investment will continue to moderate. To further detail our second quarter SG and A, our research and development and engineering expenses increased by 4.1% to $20,800,000 Selling expenses increased by 3.6% to $56,400,000 primarily due to higher travel related costs. On a segment basis, selling expenses in North America were up 6.5%, and in Europe, they were down 5.8%. General and administrative expenses increased by 9.4% to $77,200,000 largely as a result of higher personnel costs, including increased variable compensation, and computer hardware and software costs. As a result, our second quarter consolidated income from operations totaled $140,200,000 an increase of 6.1% from $132,200,000 Our consolidated operating income margin was 22.2%, generally consistent with last year at 22.1%.

In North America, income from operations increased 2.7% to $135,700,000 driven by higher net sales. In Europe, income from operations increased 29% to $15,700,000 due to reduced operating expenses on higher gross margins, including a slight favorability from foreign exchange. This resulted in our highest second quarter operating income margin in more than a decade of 11.7%, compared to 9.4% last year. Our midterm goal in Europe remains an operating income margin of 15%, predicated on improved market conditions. Our second quarter effective tax rate was 25.8%, approximately 50 basis points below the prior year period.

Accordingly, net income totaled $103,500,000 or $2.47 per fully diluted share, compared to $97,800,000 or $2.31 per fully diluted share. Adjusted EBITDA for the second quarter was 159,600,000 an increase of 4.8%, resulting in a margin of 25.3%. Now turning to our balance sheet and cash flow. Our balance sheet remained healthy with cash and cash equivalents totaling $190,400,000 at 06/30/2025, up $40,100,000 from our balance at 03/31/2025, due to higher net income and lower inventory levels. Our debt balance was approximately $374,500,000 net of capitalized finance costs, and our net debt position was $184,100,000 We have $450,000,000 remaining available for borrowing on our primary line of credit.

Our inventory position as of 06/30/2025, was $586,600,000 which was down $32,200,000 compared to our balance as of 03/31/2025, with lower pounds of inventory on hand. Our disciplined capital allocation strategy ensures that our investments are aligned with market dynamics and long term value creation. We generated strong cash flow from operations of $124,700,000 for the second quarter. This enabled us to invest $39,900,000 for capital expenditures, including our investments for facility upgrades and expansions, pay $11,800,000 in dividends to our stockholders and pay down $5,600,000 of our term loan. In addition, we repurchased 216,645 shares common stock at an average price of $161.55 per share for a total of 35,000,000 As of June 30, dollars 40,000,000 remained available for repurchases through year end 2025 under our $100,000,000 authorization.

Next, I’ll turn to growth investments. We held the grand opening of our expanded Columbus, Ohio facility in May. The project finished on time and under budget. Our Gallatin, Tennessee facility is scheduled to open in the 2025 and is expected to become fully operational by the end of this year. This facility will play a critical role in helping to support growth and enhance operational efficiency across our fastener product lines.

As a reminder, this new greenfield expansion will enable us to manufacture approximately 50% of our fastener products in house. This shift to primarily domestic production will reduce our tariff exposure, improve responsiveness to customer demand, enable us to more effectively compete for larger projects with short lead times that we could not historically fulfill with imported passengers. Additionally, we are continuing to integrate our twenty twenty four acquisitions. At the same time, we are evaluating potential M and A opportunities in alignment with our strategic objectives. Next, I’ll turn to our 2025 financial outlook.

Based on business trends and conditions as of today, July 28, we are reaffirming our guidance for the full year ending 12/31/2025 as follows. We continue to expect our operating margin to be in the range of 18.5% to 20.5%. Additional key assumptions include our revised expectation for U. S. Housing starts to be down in the low single digit range from 2024 levels.

Additionally, we are expecting a slightly lower overall gross margin based on the recently imposed tariffs, which we anticipate will be partly offset by the price increases that went into effect on June 2, as well as the addition of new facilities as a percentage of net sales. Our margin guidance also includes a projected benefit of 12,000,000 to $13,000,000 from the sale of the original Gallatin, Tennessee property based on a contracted sales price of $19,100,000 Next, interest expense on our term loan, which had borrowings of $374,500,000 as of 06/30/2025, is expected to be approximately $2,000,000 including the benefit from interest rate and cross currency swaps, mitigating substantially all of the volatility from changes in interest rates. Interest on our cash and money markets is expected to offset this expense. Our effective tax rate is estimated to be in the range of 25.5% to 26.5%, including both federal and state income tax rates based on current laws. And finally, we are reducing our capital expenditures outlook to be in the range of $140,000,000 to $160,000,000 which includes approximately $70,000,000 to $75,000,000 for the completion of both the Columbus facility expansion and the new Gallatin Fastener facility.

In closing, we performed well in the first half of twenty twenty five. We are focused on achieving our financial ambitions through the balance of the year despite ongoing macroeconomic uncertainty, and we’ll continue to monitor our investments to ensure that they are aligned with market conditions. We also remain committed to returning at least 35% of our free cash flow to stockholders, reinforcing our emphasis on balancing growth with maximizing stockholder returns. As always, we are focused on being the partner of choice by providing our customers with world class service, support and innovation. With that, I will now turn the call over to the operator to begin the Q and A session.

Conference Operator: Thank you. We will now be conducting a question and answer please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment please while we poll for questions. Thank you. Our first question comes from the line of Dan Moore with CJS Securities. Please proceed.

Dan Moore, Analyst, CJS Securities: Thank you. Good afternoon, Mike and Matt, and thanks for taking the questions.

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Good morning, Dan.

Dan Moore, Analyst, CJS Securities: Maybe start, just make sure, I heard correctly. I think you said a $9,000,000 contribution in the quarter from acquisitions and then the balance of revenue growth predominantly price with volumes relatively flat. Is that the right way to kind of think about the buckets in the quarter?

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Dan, this is Matt. The $9,000,000 from acquisitions in the quarter is correct, which is acquisitions we acquired last year that we haven’t quite anniversaried. There was a little bit of exchange rate help in the quarter as well from Europe, I think about $7,000,000 and then pricing was really the balance of it. Volume, largely flat.

Dan Moore, Analyst, CJS Securities: Perfect. Thank you. And then margins, obviously, solid quarter generated in op margins of 22 a little over 22%, bringing the H1 margin to nearly 21%. Yet, we’re kind of maintaining the full year outlook with 19.5 at the midpoint. I realize there’s seasonality.

Q4 is usually lighter, but it implies a bit of a step down. Just are you expecting you talked about maybe the gross margin headwind from tariffs, but is there anything else? And is there maybe a little bit of conservatism built in and kind of an uncertain macro environment?

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Actually, Dan, you said it perfectly well in that last statement, a lot of uncertainty. When you look at the market, the forecast that we get from Zonda and the message we hear from our customers, second half is going to be a little bit tougher. There is a second round of or another round of tariffs that went in impact after we announced our price increase in April that we need to think through. And just a lot of unknowns and we want to make sure that we’re doing everything we can to hit our guidance.

Dan Moore, Analyst, CJS Securities: Helpful. I appreciate it. And then this is more of a housekeeping question, but maybe just what drove the reclassification of expenses? And does it have is there any implication for the overall level of spend or investment going forward?

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: No, there was a change that we made as we brought on primarily as we brought on a new CTO mid last year, and wanted to align kind of where the work was happening and where the leadership was. So we moved some dollars from one bucket within SG and A to another, but essentially a left pocket, right pocket and no real change in the work being done or the spend, just more of a kind of a housekeeping thing like you said.

Dan Moore, Analyst, CJS Securities: Okay. And then maybe one or two quick ones on cash flow and capital allocation. You got a little bit of an inventory benefit in the quarter. How should we think about kind of working capital more generally for the balance of the year? And then you continue to buy back stock, you know, with the stock having pulled back a bit.

I think you said $40,000,000 left on the authorization. The foresee potentially replenishing that? Or is that sort of $100,000,000 as we think about that as what you have left to work with for the balance of the year? Thanks again for taking all the questions.

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Yeah, I’ll take the last part there on the stock repurchase. We’re sitting at $60,000,000 through the front half of the year against our $100,000,000 authorization from the board. Think, like in our outlook, there’s a lot of uncertainty, but we remain focused on returning free cash flow to shareholders and being opportunistic when we have that opportunity. So I think the authorization for the year is clear and we’re always looking to do what we can there from the standpoint of being opportunistic. So nothing specific there yet, but more to come.

Dan Moore, Analyst, CJS Securities: Helpful. And just kind of working capital as we think

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Sorry. Working capital, I think, seasonally, the higher volume quarters for us are Q2 and Q3, where we tend to work down inventory a bit. There’s a lot of wildcards out there about steel pricing and inventory levels. So as you know, we tend to try to hedge steel prices through inventory more so than a specific hedging program. So we remain vigilant and opportunistic in the market based on what we see from a steel standpoint and also knowing that the volume forecast is a bit variable.

So I think not a whole lot different than where we’ve been from that standpoint. Cost of inventory certainly is going up on imported items from a tariff standpoint. So while the dollars may be going up a bit, the pounds are flat to down.

Dan Moore, Analyst, CJS Securities: Got it. Okay. I’ll circle back if there’s any follow ups. Thank

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: you. Thanks, Dan. Thanks, Dan.

Conference Operator: Thank you. Our next question comes from the line of Tim Wojs with Baird. Please proceed.

Tim Wojs, Analyst, Baird: Hey, guys. Good afternoon. Nice job.

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Hey, Dan. Good afternoon, Tim.

Tim Wojs, Analyst, Baird: Maybe just first just a clarification. On the North America business, were volumes up in Q2? Or is that organic number predominantly price?

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: The volumes are pretty much flat on the quarter, Tim. The revenue number is driven by price, the carryover of the acquisitions, which generally don’t have volume if you think about equipment and software, which was two of the big acquisitions from last year, they don’t factor into volume calculation. And then the last piece is a little bit of exchange rate help coming from Europe.

Tim Wojs, Analyst, Baird: Okay. But I guess in North America, I mean, I guess what I’m trying to get at is you only had a couple of weeks of price, I think in the quarter. So I’m just trying to square the 5% with only a couple of weeks of price relative to your pricing increasing kind of flat volumes. It seems like there’s something there that I’m missing.

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Tim, if you look at year to date volumes, North America, we are down roughly 1% versus prior year.

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Year to date basis. Year to date.

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Yeah, year to date down 1% versus prior year North American volumes.

Tim Wojs, Analyst, Baird: So the price contribution was like mid single digits in the quarter?

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Yes, think that’s right. I mean, volume on the quarter, I think it’s up slightly in North America because we were down a little bit in the first quarter. So maybe we’re getting a point of volume in North America, getting a point from the acquisitions and then the balance is pretty much pricing in the quarter.

Tim Wojs, Analyst, Baird: Okay. Okay. And the reason I’m clarifying is because I think the price realization actually accelerates or fully anniversaries into the back half of the year, right? So if we would assume kind of flattish volumes, you should actually get more pricing realization in the third and fourth quarter relative to Q2?

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Yes, there was only essentially three weeks and change of the quarter is where the price increase was in effect in Q2.

Tim Wojs, Analyst, Baird: Okay. Okay, got you. And then I guess when you’re thinking about just kind of a more difficult housing

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: kind

Tim Wojs, Analyst, Baird: of market, has your ability to take share changed at all, either positively or negatively? Or is it pretty similar to one in the market was growing two or three years ago? Do you guys have to do anything differently? Yeah.

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Position doesn’t change, Tim. I think when the market’s growing like crazy, it’s all about service and making sure that the job site’s up and running. When the market slows down and there’s a big emphasis on affordability, it’s doing everything we can to help our customers be successful. It’s value engineering. It’s looking at lower installed cost.

It’s looking at things like our Esterframe saw that helps develop cut packages. It’s better software that can develop a more accurate bill of material and reduce waste. So the overall business model I don’t think changes much. But what we emphasize in a fast growing market versus a market where maybe you’ve got more time to and there’s more emphasis on affordability, there is a different emphasis within the business model.

Tim Wojs, Analyst, Baird: Okay. And then just on the headcount that you mentioned, is it lower because of normal attrition? Or did you guys do something maybe more structural with the organization?

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Yeah. Tim, we’ve been leveraging attrition to help us get to that point where we’re below prior year.

Tim Wojs, Analyst, Baird: Sounds like that will continue?

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Yes. I mean, we are committed to the guide and we’re committed to getting to 20% with a little bit of help from the market. And until things pick up, we need to be very cost disciplined. And that’s one of the ways we’re being cost disciplined.

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Okay.

Tim Wojs, Analyst, Baird: Sounds good. Thank you guys for the answers.

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: All right. Thanks, Tim. Thanks, Tim.

Conference Operator: Thank you. Our next question comes from the line of Kurt Yinger with D. A. Davidson. Please proceed.

Kurt Yinger, Analyst, D.A. Davidson: Great. Thanks and good afternoon. Just wanted to, I guess, stick with pricing to start. Maybe you could just confirm, is the 8% kind of weighted average increase in North America still the right way to think about kind of the back half as that’s fully implemented for a quarter? And then secondly, you kind of referenced some of the incremental tariff headwinds relative to when you announced the price increases.

I guess going forward, how do you kind of balance competitive dynamics? You alluded to affordability just a minute ago, versus that end goal of making sure the business is positioned to maintain a 20% operating margin?

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Kurt, you’re right. The weighted average age versus 8% is the right way to think about it. That was our the net of the kind of the published list price increases that went out in early April and were implemented in June. In terms of how we think about it going forward, I’ll let Mike jump in here.

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Kurt, when we look at it, we’re focused on helping our customers win. We’re focused on making sure that we’re delivering great service and innovative solutions. And our products are adding a lot of value associated with that. So we believe that’s worth a modest premium. At the same time, we’re doing everything we can to make sure that we can control costs.

So in a slow to low growth market, we can get close to that 20% operating income.

Kurt Yinger, Analyst, D.A. Davidson: Got it. And when you think about that modest premium and ensuring you’re not out of whack with that kind of traditional spread. I guess from a competitive standpoint, does it feel like or are you seeing increases out there that would allow you to make another move of a smaller magnitude or something like that?

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Mean, Curt, I would say, just stepping back, our connector business is largely sourced with US steel, like the tariffs don’t have a direct impact, although impact steel prices. I think where we see bigger tariff impacts is on imported items in fasteners and anchors. And we compete against a number of different competitors in those space, some of which are similar footprint to us and that some is domestically sourced and some is imported, others are exclusively imported. So we’re watching what’s happening with various competitors in the space, where we’re positioned in the market and trying to strike that balance. So obviously, we’re getting additional tariff costs from the tariffs that were announced June 4, the additional 25% on imports.

We have not announced any pricing related to that, obviously, because our price increase was announced in April. So it’s something we’re watching very closely. Think ultimately, just kind of depends where that all nets out and where we see competition and making sure that we’re delivering what we need to deliver, but at the same time, focused on affordability challenges in the market and making sure that we continue to deliver good customer service.

Kurt Yinger, Analyst, D.A. Davidson: Okay. Okay. That’s great. And then could you maybe just talk about kind of order progression through the quarter? Anything visible to you guys in terms of maybe a little bit of pre buying ahead of the price increase?

We saw May and June starts obviously sequentially weaker. Have you kind of seen that same type of progression on a year over year basis in your business? Can you just talk maybe a little bit more about that from a monthly perspective?

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Yeah. So Kurt, we did not see any substantial pre buying. And when we look at the market forecast for the second half of the year and how our second half is starting, it’s very much in line with the market forecast. So things are definitely softer.

Kurt Yinger, Analyst, D.A. Davidson: Okay, perfect. And then just lastly, I think you mentioned customer expansion in the component manufacturer space. Can you maybe just provide a little bit more color there. And then I think you’d also referenced maybe some improvements on the software side. So any detail there would be great.

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: Yeah. So we continue, we believe, to make really good progress on the software perspective. We’ve got a couple areas we’re working on to improve the engineering part of our truss solutions. We’re also working on tools that can help our customers manage their overall project list. We’ve got tools that we’re working on to help them improve basically the supply chain and the manufacturing of the trusses.

And we’re making good progress in that space. When we

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: look at the solutions that

Mike Olowski, President and Chief Executive Officer, Simpson Manufacturing Company: we have today, it’s a really good fit for a lot of customers. And as a result, we continue to pick up share and deliver the value proposition that we’ve been delivering everybody else.

Kurt Yinger, Analyst, D.A. Davidson: Okay, perfect. Appreciate the color. Thank you.

Matt Dunn, Chief Financial Officer, Simpson Manufacturing Company: Thanks, Kurt.

Conference Operator: Thank you. There are no further questions at this time. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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