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, primarily driven by a price increase and positive foreign exchange impact [6][20] - Consolidated gross margin was 46.4%, slightly down from the previous year, reflecting higher input costs [14][21] - Adjusted EBITDA totaled $155.3 million, a 4.5% increase year over year, resulting in a margin of 24.9% [15][25] - Net income was $107.4 million, or $2.58 per fully diluted share, compared to $93.5 million, or $2.21 per fully diluted share in the prior year [24] Business Line Data and Key Metrics Changes - North America net sales increased 4.8% to $483.6 million, with a contribution of approximately $30 million from a price increase [6][20] - In Europe, net sales reached $134.4 million, up 10.9% year over year, driven by increased volumes [12][20] - The OEM business saw high single-digit volume growth, while the Component Manufacturer business achieved low single-digit volume growth [8][12] Market Data and Key Metrics Changes - North American volumes were modestly lower, reflecting broader market conditions, including significantly lower housing starts [7][20] - In Europe, sales performance outpaced the market, with a solid 4.3% growth on a local currency basis [12][20] 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 [13][29] - The focus remains on innovation, customer service, and operational excellence to drive solid results despite a challenging housing market [8][18] Management Comments on Operating Environment and Future Outlook - Management expects U.S. housing starts to decline mid-single digits compared to 2024, indicating a more extended slow market [16][44] - 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 [17][29] 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 [26] - The Board authorized a new share repurchase program for 2026 to repurchase up to $150 million worth of shares [27][80] Q&A Session Summary Question: What were the organic volume declines in North America and how did volume growth look in Europe? - The company reported a global volume decline of 1% for the quarter, with North America down 1.4% year to date [38][39] Question: Do you foresee continued declines in the housing market? - Management indicated that the housing market is expected to be flat next year, with affordability issues impacting demand [42][44] Question: What is the breakdown of the targeted cost savings between North America and Europe? - The company did not provide a detailed regional breakdown but indicated that most of the savings would come from SG&A [63][64] Question: How much carryover pricing is expected next year? - The company anticipates about $30 million to $35 million of carryover pricing in 2026 [85] Question: What is the expected impact of tariffs on gross margins? - The company expects continued erosion in gross margins over the next couple of quarters as tariffs are fully rolled in [57][58]