Simpson Manufacturing Co., Inc. Q4 FY2024 earnings call

• Michael Olosky introduced 2024 performance, noting full year net sales $2.23 billion with modest growth despite challenging housing markets in US and Europe. North America net sales grew with broad-based volume performance across end markets. Europe net sales relatively flat. Gross margin declined due to higher input and labor costs. Adjusted EBITDA totaled $520.1 million in 2024, down 6.2% y-o-y. - Matt Dunn discussed Q4 financials: consolidated net sales up 3.1% to $517.4 million. Gross profit up 3.3% to $227.7 million. Operating expenses had changes. Income from operations in North America increased, while in Europe decreased due to lower gross profit. Fourth quarter net income $55.4 million or $1.31 per fully diluted share. Adjusted EBITDA for Q4 was $102 million, up 9.9%. - Balance sheet healthy with cash and cash equivalents $239.4 million at Dec 31, 2024. Generated strong cash flow from operations. Capital allocation strategy focused on growth and shareholder returns. Investments in facilities and M&A opportunities mentioned. 2025 financial outlook discussed with operating margin range, housing start expectations, etc.

Full year 2024 net sales were $2.23 billion. North America net sales totaled $1.74 billion vs $1.72 billion in 2023 with higher sales volumes, including ~$12 million from 2024 acquisitions. Volume growth in North America exceeded US housing starts by ~600 basis points. Europe 2024 net sales were $479.2 million, relatively flat vs prior year, down ~1% on local currency basis. Globally, wood construction product sales up 3.6% and concrete construction product sales up 0.4%. North America segment net sales in Q4 increased 4.4% to $404.8 million. Europe net sales in Q4 declined 1.5% to $108.1 million.

• Full year 2025 operating margin expected in the range of 18.5% to 20.5%. - US housing starts expected to be up low single digits from 2024 levels, with the year second half weighted. - Overall gross margin expected to be slightly lower due to new warehouses, increases in labor/factory/tooling as percentage of net sales, and mix headwind. - Effective tax rate estimated in the range of 25.5% to 26.5%. - Capital expenditures estimated in the range of $150 million to $170 million, including ~$75 million for completion of Columbus facility expansion and new Gallatin fastener facility.

• Market uncertainty regarding housing market recovery not meeting expectations. - Cost pressures including input costs, labor costs, etc. - Uncertainty related to trade policies such as tariffs. - Costs associated with optimizing the European footprint.

Q: Daniel Moore asked about triangulating the outlook, specifically regarding U.S. housing starts expectations for Q1, H1 and ability to outpace the market if starts are flat to down.

A: Michael Olosky responded that when starting budgeting, Zonda's original number for 2025 total housing starts was 3.7% y-o-y growth, latest number is 2.8% and they think it may go lower, expecting the year to be second half weighted with low single-digit starts for the year and watching it closely.

Q: Timothy Wojs asked about the guidance midpoint of 19.5% OM margin, what was assumed for starts and revenue growth.

A: Michael Olosky said the midpoint represents a flat market in his opinion with continued outperformance, not giving specific revenue guidance but noting outperformance versus the market over a longer history.

Q: Kurt Yinger asked about how much input cost and investment increases are functions of investments in warehouse operations, under absorption vs general inflationary pressures.

A: Michael Olosky said it's all the above, including investments to get warehouses closer to customers for 1-day shipping, volume assumptions off due to market swings, and costs across the board going up like freight, electricity, labor, and working to offset with automation and productivity improvements. Matt Dunn added that steel has been consistent or slightly down, but everything else has gone up and they've worked to offset costs through productivity but not all.