Simpson Manufacturing Co., Inc. Announces 2024 Second Quarter Financial Results

Net sales of $597.0 million

Income from operations of $132.2 million, resulting in operating income margin of 22.1%

Net income per diluted share of $2.31

Repurchased $50.0 million of common stock during the quarter

Simpson Manufacturing Co., Inc. (the “Company”), an industry leader in engineered structural connectors and building solutions, announced its financial results for the second quarter of 2024. Refer to the “Segment and Product Group Information” table below for additional segment information (including information about the Company’s Asia/Pacific segment and Administrative and All Other segment).

All comparisons below (which are generally indicated by words such as “increased,” “decreased,” “remained,” or “compared to”), unless otherwise noted, are comparing the quarter ended June 30, 2024, with the quarter ended June 30, 2023.

2024 Second Quarter Financial Highlights

• Consolidated net sales of $597.0 million decreased 0.1% from $597.6 million.
  • North America net sales of $463.0 million decreased 0.5% from $465.5 million on relatively flat sales volumes.
  • Europe net sales of $129.9 million increased 1.6% from $127.8 million, primarily due to higher sales volumes, partly offset by price decreases in some regions as well as the negative effect of approximately $0.7 million in foreign currency translation.
• Consolidated gross profit of $278.5 million decreased 3.1% from $287.5 million. Gross margin decreased to 46.7% from 48.1%.
  • North America gross margin decreased to 50.0% from 51.2%, primarily due to higher warehouse and freight costs, as a percentage of net sales, partially offset by efficiency gains in the factories.
  • Europe gross margin decreased to 35.4% from 37.4%, primarily due to higher labor, factory overhead, warehouse and freight costs, as a percentage of net sales.
• Consolidated income from operations of $132.2 million decreased 8.9% from $145.0 million. The decrease was primarily due to lower gross profits noted above and higher operating expenses including: personnel costs resulting from the increase in the number of employees supporting production, engineering and sales activities and professional fees, partially offset by lower incentive compensation. Consolidated operating margin decreased to 22.1% from 24.3%.
  • North America income from operations of $132.1 million decreased 7.9% from $143.4 million. The decrease was primarily due to a decrease in gross profits, as well as increased personnel costs and professional fees.
  • Europe income from operations of $12.1 million decreased 13.1% from $14.0 million, primarily due to decrease in gross profits, as well as higher personnel costs, partially offset by lower integration expenses.
• Net income of $97.8 million, or $2.31 per diluted share of the Company’s common stock, decreased 8.7% compared to net income of $107.2 million, or $2.50 per diluted share.
• Adjusted EBITDA¹ of $152.6 million decreased 7.8% compared to $165.6 million.
• Cash flow provided by operating activities decreased approximately $78.2 million from $197.2 million to $119.0 million, due primarily to increases in working capital.
• Cash flow used in investing activities increased approximately $49.1 million from $48.0 million to $97.1 million. Capital expenditures were approximately $79.6 million compared to $37.9 million.

1 Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to U.S. GAAP (“GAAP”) net income see the schedule titled “Reconciliation of Net Income to Adjusted EBITDA.”

Management Commentary

“Our net sales of $597.0 million were in-line with the prior year quarter in a continued challenging housing market in both the U.S. and Europe,” commented Mike Olosky, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. “In North America, both volumes and sales dollars were relatively flat year-over-year with pockets of strength in our OEM, component manufacturer and commercial end markets which were offset by weakness in national retail. In Europe, sales increased modestly year-over-year despite the difficult operating environment driven by our solutions-based selling approach that continues to fuel new customer wins and product applications. We look forward to benefiting from the attainment of defensive synergies in 2024 to drive increased profitability in Europe over time.”

Mr. Olosky continued, “While we remain optimistic in the longer-term growth prospects of the housing market, our expectation for modest growth this year has been extended out into 2025 where we expect mid-single digit growth in U.S. housing starts. For 2024, we expect U.S. housing starts to be flat to slightly down and European housing starts to be below prior year. While our strong gross margins continue to fuel our organic growth initiatives, we will monitor the market and control costs accordingly, as was evident during the second quarter. We remain optimistic that execution against our growth strategy will enable us to continue outperforming the U.S. housing market on an annual basis.”

Corporate Developments

The Company repurchased 283,273 shares of common stock in the open market at an average price of $176.51 per share, for a total of $50.0 million. As of June 30, 2024, approximately $50.0 million remained available for share repurchase through December 31, 2024 under the Company’s previously announced $100.0 million share repurchase authorization.

During the second quarter, the Company completed the acquisition of Calculated Structured Designs (“CSD”), Inc., a software development company providing solutions for the engineered wood, engineering, design and building industries in North America, Australia, and the U.K. The terms of the transaction were not disclosed.

Business Outlook

The Company has updated its 2024 financial outlook based on two quarters of financial information to reflect its latest expectations regarding demand trends, raw material costs and operating expenses. Based on business trends and conditions as of today, July 22, 2024, the Company’s outlook for the full fiscal year ending December 31, 2024 is as follows:

• Operating margin is estimated to be in the range of 20.0% to 21.0%.
• The effective tax rate is estimated to be in the range of 24.5% to 25.5%, including both federal and state income tax rates as well as international income tax rates, and assuming no tax law changes are enacted.
• Capital expenditures are estimated to be in the range of $180.0 million to $190.0 million, which includes $90.0 million to $100.0 million for the Columbus, Ohio facility expansion and the new Gallatin,Tennessee fastener facility construction with the remaining spend carrying over into 2025.

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About Simpson Manufacturing Co., Inc.

Simpson Manufacturing Co., Inc., headquartered in Pleasanton, California, through its subsidiary, Simpson Strong-Tie Company Inc., designs, engineers and is a leading manufacturer of wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and concrete construction products, including adhesives, specialty chemicals, mechanical anchors, powder actuated tools and reinforcing carbon & glass fiber materials. The Company primarily supplies its building product solutions to both the residential and commercial markets in North America and Europe. The Company’s common stock trades on the New York Stock Exchange under the symbol “SSD.” Copies of Simpson Manufacturing’s Annual Report to Stockholders and its proxy statements and other SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, are made available free of charge on the company’s website on the same day they are filed with the SEC. To view these filings, visit the Investor Relations section of the Company’s website.

Contact:

Addo Investor Relations – investor.relations@strongtie.com – (310) 829-5400

Source: Simpson Manufacturing Co., Inc.