Simpson Manufacturing Company, Inc.

Greetings, and welcome to the Simpson Manufacturing Company third quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your cell phone keypad. As a reminder, this conference is being recorded. It is now my pleasure to hand the call over to Kim Orlando with Adder Investor Relations. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to Simpson Manufacturing Company's third quarter 2024 earnings conference call. Any statements made on this call that are not statements of historical fact are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may vary materially from those expressed or implied by the forward-looking statements. We encourage you to read the risks described in the company's public filings and reports, which are available on the SEC's or the company's corporate website. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that we make here today, whether as a result of new information, future events, or otherwise. On this call, we will also refer to non-GAAP measures such as adjusted EBITDA, which is reconciled to the most comparable GAAP measure of net income in the company's earnings press release. Please note that the earnings press release was issued today at approximately 4.15 p.m. Eastern Time. The earnings press release is available on the Investor Relations page of the company's website at ir.censimmfg.com. Today's call is being webcast, and a replay will also be available on the Investor Relations page of the company's website. Now, I would like to turn the conference over to Mike Oloski, Census President and Chief Executive Officer.

Thanks, Kim. Good afternoon, everyone, and thank you for joining today's call. With me today is Brian Magstad, our Chief Financial Officer. My remarks today will provide an overview of our third quarter performance and updates on our end markets. Ryan will then walk you through our third quarter financials and fiscal 2024 outlook in greater detail. Before we jump in, I'd like to take a moment to share our deepest condolences with all of those who were impacted by Hurricane Helene and Hurricane Milton this past month. It's unfortunate circumstances such as these that inspire our mission to provide solutions that help people design and build safer, stronger structures. In staying true to our founders' core values, We are pleased to be in the position to assist with the recovery efforts through donations to both the American Red Cross and Samaritan's Purse to help the affected communities recover and rebuild. While the storms are impacting our sales in the Southeast region, I'm pleased to report that none of our employees were injured in the storms and that our facilities did not sustain any damage. Our thoughts continue to be with all of those that were affected by these tragic events. Now turning to our results. Our third quarter net sales totaled $587.2 million, which was above the prior year quarter despite the housing markets in both the U.S. and Europe remaining under pressure. Importantly, we continue to outperform the U.S. housing market. Our trailing 12-month North American volume growth exceeded U.S. housing starts by approximately 500 basis points as a result of our growth strategy. North American volumes for third quarter were relatively flat with last year, which led to net sales of $461.4 million versus $456.8 million in the third quarter of 2023. This includes a small benefit from our recent acquisitions. While product mix drove a higher average sales price per pound in the quarter, customer mix resulted in greater volume discount supply. To further break down our North American volume performance, the national retail market saw high single-digit improvements due to our home center merchandising, additional shelf space, and customer Salesforce education efforts. We saw component manufacturer volumes improve modestly over last year as we have continued to increase our market share by onboarding multiple trust component manufacturers. Our commercial and residential markets both experienced low single-digit declines due to difficult market conditions. We achieved mid-teens volume growth year-over-year in the OEM market as we have continued to gain market share, though it remains a relatively small contributor to our revenues today. Turning to Europe, our third quarter net sales of $121.2 million increased by 1.8% or 1% on a local currency basis year-over-year. Our European business also outperformed the local market as we benefited from new customer wins and product applications. On a consolidated basis, our third quarter gross margin declined to 46.8% from 48.8% in the third quarter of last year, though remained approximately 160 basis points above the pre-COVID run rate. We continue to make investments in our people, engineering, equipment, software, and other capabilities to provide even better support to our customers in anticipation of an acceleration housing starts in the midterm. While our resultant operating margin declined by approximately 290 basis points to 21.3% versus last year, it remained approximately 500 basis points above the pre-COVID run rate. In regard to future SG&A investments, we will continue to monitor the market and control costs accordingly. Consolidated adjusted EBITDA totaled $148.3 million for the quarter, a decline of 6.6% year-over-year. Now turning to our growth initiatives, which are underscored by our company ambitions, including strengthening our values-based culture, being the business partner of choice, striving to be an innovative leader in the markets we operate, continuing above-market growth relative to U.S. housing starts, returning to the top quartile of our proxy peer groups for operating income margin, and longer term, returning to the top quartile of our proxy peer groups for return on invested capital. As a reminder, our market-focused approach enables us to better serve our customers and identify new product and application opportunities. I'd now like to highlight some of these new business wins within our five end-use markets during the quarter, which are a direct result of the investments we've been making in our business to drive above-market performance. Beginning with the national retail space, our home center customers are increasing their shelf space of Simpson product to better serve their end customer. We expanded our off-shelf merchandising efforts, resulting in new carts for anchors and fasteners in hundreds of additional store locations. In the component manufacturer market, we are committed to ongoing investment and growing our offering in this space to bring a more comprehensive set of solutions to the market. This was evident with the expansion of our equipment offering through the acquisition of Monet de Sceaux and our continued investment in software solutions. Monet de Saw is the leading manufacturer of large saws used in the fabrication of trusses within the U.S. and Canada. Much like Simpson, Monet's goal is to provide customers with the latest technology and best quality products with fast and reliable support and dependable maintenance. By acquiring Monet, we expand our truss business by offering quality saws and proprietary saw interface software directly to our existing component manufacturing customers. Monet also gives us an entry point to new customers. And as discussed in our last call, our acquisition of CSD further enables us to offer a more complete suite of software solutions for our customers. In the residential market, we continue to gain market share in the Northwest by partnering with a large pro-dealer customer. This benefits not only our connector business, but also our anchor and fastener products in each location, helping us increase our attachment rates. Additionally, we hosted purchasing teams and leaders from several national customers of our Gallatin, Tennessee facility to discuss opportunities with our innovative fastening solutions to our production plant and perform hands-on demonstrations. Each event included a visit to our future Gallatin facility job site, driving home our commitment to investing in future growth and manufacturing in the USA. Our dedication to relentless customer service was recognized with several supplier awards announced in the third quarter, including awards from Do It Best, Southern Carlson, and David Weekly Homes. In the commercial market, our field support and dedication to educating engineers, distributors, and contractors continues to earn specifications and generate demand in the field. Some recent examples include product specifications for a casino, a peer project, and several structural steel buildings. Additionally, during the quarter, we acquired Quick Frames USA, the leader in engineered structural roof frames within the U.S., Canada, and Mexico, which provide top-quality steel connection products to commercial contractors. And finally, in the OEM market, we developed a national relationship with a leading building products manufacturer to provide connectors and fasteners for their offsite construction solutions. We also saw continued growth in mass timber, providing connection solutions on several projects, including our newly offered temporary bracing for mass timber. The M&A pipeline remains active as we continue to evaluate tuck-in opportunities within our core competency that help us accelerate traction on our key growth initiatives. In regard to our facility investments, the expansion of our Columbus, Ohio facility remains on track to become fully operational in early 2025. The completion of our newly constructed fastener facility in Gallatin, Tennessee will follow in late 2025. Before I conclude, I'd like to highlight a few important corporate developments. As many of you know, our CFO, Brian Magstad, announced his intention to retire effective at the end of the year 2024. Brian joined Simpson in 2004 and has been an integral part of the company for the past 20 years and helped champion our strong culture. On behalf of the entire Simpson team, I'd like to thank Brian for his invaluable contributions to the company that have resulted in extraordinary growth, improved profitability, and increased stockholder value. We wish him all the best in his retirement. Our comprehensive search for a new chief financial officer continues, and we hope to have some positive news to share with you in the near future. Lastly, we are pleased to commemorate our 30th anniversary as a publicly traded company by ringing the NYSE closing bell in September. Since we went public back in May of 1994, We have evolved from approximately $150 million in annual sales to a world leader in structural solutions with greater than $2 billion in annual sales and a total compounded annual growth rate in our stock of approximately 15%. I am incredibly proud of all that Simpson has accomplished and want to express my gratitude to our team members, valued customers, suppliers, and stockholders for all of their contributions to our success over the years. In summary, despite near-term macroeconomic challenges, we remain optimistic in our ability to outperform U.S. housing starts, which we now expect to decline in the low single-digit range from 2023 and grow in the low single-digit range in 2025. European housing starts are expected to decline in the high single digits compared to 2023, with meaningful growth pushed out further into 2026 and beyond. As usual, we'll provide our 2025 outlook on our Q4 results call in February. With that, I'd like to turn the call over to Brian, who will discuss our third quarter financial results in greater detail.