Simpson(US:SSD)2025-02-11 02:50Financial Data and Key Metrics Changes - For the full year 2024, net sales were $2.23 billion, reflecting modest growth over 2023 levels despite challenges in housing markets in the US and Europe [11] - Consolidated adjusted EBITDA totaled $520.1 million in 2024, a decline of 6.2% year-over-year, resulting in an adjusted EBITDA margin of 23.3% [18][37] - Consolidated net sales increased 3.1% year-over-year to $517.4 million in Q4 2024 [29] Business Line Data and Key Metrics Changes - In North America, net sales totaled $1.74 billion, up from $1.72 billion in 2023, driven by higher sales volumes [12] - The national retail market saw mid-single-digit increases, while the component manufacturing market improved in the high single-digit range [13][14] - In Europe, net sales were $479.2 million, relatively flat compared to the prior year, with a decrease of about 1% on a local currency basis [16] Market Data and Key Metrics Changes - North American volume performance exceeded US housing starts by approximately 600 basis points [11] - European business outperformed the local market on a volume basis, driven by new applications and customer wins [16] Company Strategy and Development Direction - The company aims to maintain an operating income margin at or above 20% and drive EPS growth ahead of net revenue growth [21][23] - Investments in Tennessee and other facilities are expected to enhance production capabilities and improve service delivery [25][42] - The company is focused on being the business partner of choice and striving to be an innovative leader in its markets [20] Management's Comments on Operating Environment and Future Outlook - Management expects US housing starts to improve in the low single-digit range for 2025, with growth weighted towards the second half of the year [22] - The company remains committed to returning at least 35% of free cash flow to shareholders despite market headwinds [23] - Management expressed confidence in the company's ability to outperform US housing starts, even in a declining market [27] Other Important Information - The company appointed Angela Drake as an independent non-employee director effective January 1, 2025 [26] - The company generated strong cash flow from operations of $117.7 million in Q4 and $339.8 million for the full year of 2024 [39] Q&A Session Summary Question: Outlook on US housing starts and margin guidance - Management indicated that the outlook for housing starts has softened, with expectations for low single-digit growth in 2025, and emphasized the need to monitor market conditions closely [51][54] Question: Changes in gross margin outlook - Management acknowledged that the gross margin outlook has been impacted by market conditions and ongoing investments, but remains committed to protecting margins [55][56] Question: Working capital and cash flow expectations for 2025 - Management provided guidance on capital expenditures for 2025, indicating a focus on completing ongoing projects and evaluating future investments based on market conditions [59][60] Question: Share gains relative to historical performance - Management noted that the company has historically outperformed housing starts and expects to continue this trend, leveraging investments made in the business [75][76] Question: Impact of higher input costs and pricing strategy - Management discussed the need to potentially adjust pricing in response to inflationary pressures and tariffs, while also working to offset costs through productivity improvements [80][84]