Simpson Manufacturing Company, Inc.

Greetings and welcome to the Simpson Manufacturing Co. Inc. First Quarter 2025 Earnings Conference Call. At this time, all participants are in a 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 telephone keypad. It is now my pleasure to introduce your host, Kim Orlando, with Investor Relations. Thank you, Kim. You may begin.

Good afternoon, ladies and gentlemen. and welcome to Simpson Manufacturing Company's first quarter 2025 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 risk described in the company's public filing and reports, which are available on the SEC 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 gap 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.simpsommfg.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, Simpson's President and Chief Executive Officer.

Thanks, Kim. Good afternoon, everyone, and thank you for joining today's call. With me today is Matt Dunn, our Chief Financial Officer. Today, my remarks will provide an overview of our first quarter performance and highlights from our end markets. Matt will then walk you through our financials and fiscal 2025 outlook in greater detail. Now turning to our results, our net sales of $538.9 million reflected modest growth over the prior year in a highly uncertain macroeconomic environment in both the US and Europe. Over the past 12 months, I'm pleased to report that our volume performance in North America once again exceeded US housing starts by approximately 420 basis points. Net sales in North America total $420.7 million, up 3.4% from $406.7 million last year. Results included a contribution of roughly $9 million from our 2024 acquisitions and a favorable comparison to prior year net sales, which were negatively affected by the timing of volume discount estimates. Collectively, these items more than offset a modest decline in our volumes. Absent these factors, North American sales were relatively flat year over year. As a reminder, software services and equipment are not included in our volume calculations. Our North American volume results were mixed in the first quarter. though sales to all end markets continue to demonstrate above-market growth on a trailing 12-month basis. In the component manufacturing market, volumes declined slightly versus last year. We saw solid results from our acquisition of calculated structure designs and made progress aligning operations and sales to prepare for the scalability of our broadened digital solutions offering. We continue to execute our digital solutions roadmaps to satisfy key component manufacturing customers and leverage our equipment offering to reach opportunities in this market. This has resulted in the conversion of several small to mid-sized trust manufacturing customers in the first quarter. In residential, volume performance was down modestly. We continue to focus on conversions and line expansions while also deepening builder partnerships through professional services, digital solutions, and equipment. Additionally, our outdoor living category had low double-digit growth from a prior year, showing a strong start to the spring building season. We attribute this to our growing product offering and intentional marketing sales efforts to reach pro and DIY customers. The national retail market saw mid-single-digit decreases. We offset a slow market by driving growth in e-commerce, new anchor product listings introduced last year, and additional retail space gained in our two largest retailers. In OEM, we delivered high single-digit volume growth year-over-year with strong sales growth in mass timber and offsite construction solutions. OEM remains a relatively small contributor to our overall revenue, with significant opportunity for share gains. And finally, in the commercial market, we improved volumes broadly across the business, resulting in low single digit growth over last year, despite a challenging commercial market. This momentum was driven by the strong performance of our anchor and cold form steel product lines. Turning to Europe. Our net sales of $113.9 million decreased 5.1% compared to prior year and decreased by $1.3 million on a local currency basis. On a volume basis, we believe our European business has continued to outperform the local markets, supported by new applications and customer wins. Consolidated gross margin modestly improved to 46.8% from 46.1% in Q1 2024, despite higher input and labor costs. Additionally, the timing of volume discount estimates just discussed had an unfavorable impact in the prior year. When excluding this factor, gross margin would have been relatively flat year on year. Further product and customer mix have and will continue to be a gross margin headwind. Next, I'd like to take a moment to discuss some recent pricing dynamics in the marketplace. As previously announced in early April, we implemented target price increases at a weighted average rate of approximately 8% across certain wood connectors, fasteners, and mechanical anchor products in the U.S., Since our last pricing change, which was a decrease a few years back, we have experienced significant increases in our cost from our cost of goods to labor, energy, transportation, and equipment. Additionally, while we are largely domestically sourced, we procure fasteners and a limited number of other products from countries that are subject to the recent announced tariffs. Accordingly, the price increases were an effort to offset both rising costs across non-material and material categories, as well as a portion related to the current trade policy actions. The increases will go into effect on June 2nd, following a 60-day notice period to our customers. We understand that rising prices are especially challenging in a construction market where affordability remains a key concern. Therefore, we have and will continue to minimize additional increases. These price increases combined with strong cost discipline and productivity improvements will help us generally maintain our current gross margins and make selective investments to provide even better customer service. Our first quarter operating margin expanded by 90 basis points to 19% over the last year, reflecting investments that were more commensurate with our volumes and overall market performance in 2025. Consolidated adjusted EBITDA totaled $121.8 million, an increase of 3.8% year-over-year. Looking ahead, we will remain disciplined in cost management to protect our margins while prioritizing the retention of our valued customers and highly skilled workforce to support long-term execution. Next, I'd like to highlight our strategic growth plan in the context of our three financial ambitions, which are continuing above-market growth relative to U.S. housing starts, maintaining an operating income margin at or above 20%, and driving EPS growth ahead of net revenue growth. We believe our business can deliver a 20% operating margin in a growing market environment. For 2025, our outlook for U.S. housing starts is to remain flat to up in the low single-digit range from 2024 levels, with growth weighted towards the second half of the year. and Europe housing starts are expected to remain broadly in line with 2024, with more substantial recovery anticipated in 2026 and beyond. As a growth-focused company with industry-leading margins, we believe we can consistently drive EPS growth ahead of net revenue growth. We also remain committed to returning at least 35% of our free cash flow to shareholders, reinforcing our balanced approach to capital allocation. Before I conclude, I'm proud to share that both customer and employee engagement remain strong as evidenced by recent survey results, showing high levels of satisfaction and connection across both groups. These findings reflect the success of our strategy to inspire our employees and relentlessly serve our customer while also advancing our first two company ambitions, strengthening our values-based culture and being the business partner of choice. In summary, we were pleased to deliver above-market growth in a challenging environment. Our focus on cost discipline while improving our position in diversified end markets has strengthened our business through the cycle, particularly in a soft housing market. We remain confident in the mid- to long-term housing outlook and believe Simpson is well-positioned to capitalize on future growth. With that, I'd like to turn the call over to Matt, who will discuss our financial results and outlook in greater detail.