Simpson(US:SSD)2025-10-27 22:00Financial Data and Key Metrics Changes - The company reported net sales of $623.5 million, a 6.2% increase year over year, driven by a price increase and positive foreign exchange impact [4][13] - Consolidated gross profit increased 5.2% to $289.3 million, resulting in a gross margin of 46.4%, down 40 basis points from the previous year [14] - Adjusted EBITDA totaled $155.3 million, a 4.5% increase year over year, resulting in a margin of 24.9% [19] Business Line Data and Key Metrics Changes - In North America, net sales rose to $483.6 million, up 4.8% from the prior year, with a modest decline in volumes [4][13] - The OEM business delivered high single-digit volume growth, while the component manufacturer business achieved low single-digit volume growth [5][6] - The commercial business saw a mid single-digit volume decline, reflecting a weak commercial market [8] Market Data and Key Metrics Changes - In Europe, net sales reached $134.4 million, up 10.9% year over year, driven by increased volumes [8][13] - Globally, wood construction product sales were up 5%, and concrete construction product sales were up 12.8% [13] Company Strategy and Development Direction - The company is undertaking proactive strategic cost savings initiatives to align operations with evolving market demand, expecting annualized cost savings of at least $30 million [9][11] - The focus remains on innovation, customer service, and operational excellence to drive growth despite a challenging housing market [5][11] Management's Comments on Operating Environment and Future Outlook - Management expects U.S. housing starts to decline mid single digits compared to 2024, indicating a challenging market ahead [10][11] - The company remains committed to maintaining an operating income margin at or above 20% and believes it can consistently drive EPS growth ahead of net sales growth [11][12] Other Important Information - The company generated strong cash flow from operations of $169.5 million for the third quarter, enabling investments in capital expenditures and share repurchases [19][20] - The new Gallatin, Tennessee facility opened during the third quarter, expected to enhance operational efficiency [20] Q&A Session Summary Question: What were the organic volume declines in North America and volume growth in Europe? - Management indicated that global volume was down 1 point, with North America down 1.4% year to date [36][37] Question: Do you foresee continued declines in the housing market? - Management expects a flat market next year, with affordability issues impacting demand [42][43] Question: What is the breakdown of the targeted cost savings between North America and Europe? - Management suggested that the majority of the $30 million savings would be realized in 2026, with a portion expected in 2025 [45][79] Question: How will tariffs impact gross margins? - Management anticipates continued erosion in gross margins over the next couple of quarters as tariffs are fully rolled in [64] Question: What is the expected carryover pricing into 2026? - Management estimates about $30 million to $35 million of carryover pricing in 2026 [111] Question: Is the $30 million of annualized savings in addition to severance costs? - Management confirmed that the $30 million is actual savings, not including severance costs [118][120]