Simpson Manufacturing Company, Inc.

Greetings and welcome to the Simpson Manufacturing Co. Second 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 you require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Kim Orlando with Addo Investor Relations. Thank you, Kim. You may begin.

Good afternoon, ladies and gentlemen, and welcome to Simpson Manufacturing Company's second 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 statement. 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.stinsonmfg.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 Olasky, Stinson'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 second quarter performance and highlights from our key end markets. Matt will then walk you through our financials and our fiscal 2025 outlook in greater detail. Now turning to our results. Our net sales of $631.1 million reflected growth over the prior year quarter in a challenging residential housing market in both the U.S. and Europe. While our second quarter volumes were relatively flat year on year, our North American volumes once again exceeded U.S. housing starts by approximately 240 basis points over the last 12 months. In North America, net sales totaled $492.7 million, up 6.4% from $463 million last year. Our results included a contribution of roughly $9 million from our 2024 acquisitions. Additionally, we benefited from a partial month contribution from the price increases that went into effect on June 2nd. Collectively, these items offset our flat volumes. As a reminder, software, services, and equipment are not included in our volume calculations. Our North American volume results were mixed in the second quarter, so sales to all of our end markets continue to demonstrate at or above market growth on a trailing 12-month basis. The OEM business had a strong quarter with volume up double digits over Q2 2024. We saw significant growth in solutions for mass timber and continued momentum in offsite construction, including post-frame, shed, and modular manufacturers. In the commercial business, volumes improved mid-single digits year over year, driven by the continued strong performance of our adhesive and cold-formed steel product lines. Our takeoff services, which generate an accurate bill of material, continue to add value and build customer loyalty, helping us win additional cold-formed steel projects. In the component manufacturer business, we delivered mid-single-digit volume growth year over year. Our customer-centric digital solutions and expanded equipment offering contributed to the above-market performance. In the second quarter, we expanded our customer base and launched key enhancements to our digital solutions portfolio, strengthening existing partnerships and delivering greater value to our customers. Our national retail business experienced relatively flat shipment growth while point-of-sale performance improved with mid-single-digit gains. This was driven by new product listings and expanded retail space secured in late 2024. Growth was primarily fueled by our strong performance in our outdoor accents product line and anchoring products, increased e-commerce activity, and pro-growth initiatives within our two largest retail partners. In the residential business, volumes declined slightly versus last year due to continued challenging market conditions. We remain focused on driving customer conversions and expanding product lines with a particular emphasis on delivering integrated equipment and software solutions tailored for pro suppliers and builders. Additionally, we're encouraged by the recent momentum in the multifamily market. Finally, I'm proud to share that our dedication to relentless customer service resulted in several renewed partnership agreements with key builders, and a supplier award announced in the second quarter from David Weekly Homes. Turning to Europe, our net sales of $133.4 million increased 2.7% compared to the prior year, but decreased by $2.8 million on a local currency basis. Although volumes were down year over year, our European business continues to outperform local markets, driven by new application launches and recent customer wins. Consolidated gross margin was 46.7%, consistent with the prior year quarter, despite higher input and labor costs. As a reminder, on June 2nd, we implemented targeted price increases in North America in direct response to rising input costs, both material and non-material, as well as a portion related to recent trade policy actions. While our supply chain is primarily domestic, we do source certain components, including fasteners, from countries affected by the newly imposed tariffs. These increases offset some but not all of the incremental tariff-related costs as of the date of our price increase announcement, resulting in a modest negative impact to gross margin. Looking ahead, the expansion of tariffs on steel and related metals announced in early June could prompt additional pricing actions, which we are currently evaluating. However, we believe that disciplined cost management, targeted pricing strategies, and ongoing productivity initiatives position us to maintain our gross margins while continuing to make selective investments in enhanced customer service. Our second quarter operating margin was relatively flat with the prior year at 22.2%. Consolidated adjusted EBITDA totaled $159.9 million, an increase of 4.8% year-over-year. Next, I'd like to touch on our three financial ambitions. First, continuing above-market growth relative to U.S. housing starts. For 2025, we are updating our assumption for U.S. housing starts to be down in the low single digits compared to 2024. In Europe, housing starts are expected to remain broadly in line with 2024 levels. We are focusing on continuing to grow above the market. Next, maintaining an operating income margin at or above 20%. In a favorable growing market environment, we are confident in our ability to sustain at least a 20% operating margin. And finally, as a growth-focused company with industry-leading margins, we believe we can consistently drive EPS growth ahead of net sales growth, as evidenced by our year-to-date earnings per share increasing by approximately 260 basis points ahead of our revenue growth. In summary, we delivered a solid quarter with revenue growth on stable volumes that outpaced the broader market despite continued macro housing headwinds. Our solid operating margin and disciplined cost control underscore the resilience of our team and our business model. We continue to believe in the prospects of the housing market in the mid to long term. In the short term, we remain focused on being the partner of choice and maintaining our margins in this dynamic operating environment. With that, I'd like to turn the call over to Matt, who will discuss our financial results and outlook in greater detail.