Simpson Manufacturing Co., Inc.

Simpson Manufacturing Co., Inc. operates exclusively in the building products industry, designing, engineering, and manufacturing structural solutions primarily for wood and concrete construction. The Company markets its products domestically in North America, primarily in the United States and Canada, serving the residential construction, commercial construction, original equipment manufacturer, component manufacturer, and national retail markets. Internationally, the Company's operations are predominantly located in Europe, where it markets products to residential construction, commercial construction, and OEM markets. The Company's sales remain influenced by activity levels in the U.S. residential construction industry, with the North America Segment accounting for approximately 77.8% ¹ of net sales for the fiscal year ended December 31, 2025. The Company has continuously manufactured structural connectors since 1956 and believes it benefits from strong name recognition of the Simpson Strong-Tie brand in residential, light industrial, and commercial markets.

Simpson is a category creator in the building products space, and in the U.S., 25 of the top 30 builders (based on number of housing starts per year) are engaged in its builder program. The Company encounters a variety of competitors that vary by product line, end market, and geographic area, including many regional or specialized companies as well as large U.S. and non-U.S. companies or divisions of large companies, though no single company competes across all product lines and distribution channels. Since 1956, through the Simpson Strong-Tie brand, the Company has led the industry in the wood connectors products space and has a growing presence in both the concrete and fastener markets in the U.S. and Europe. The Company has successfully increased its market share over the years through designing and marketing end-to-end construction product systems, product availability with delivery in typically 24 hours to 48 hours, strong customer support and education, extensive product testing capabilities, strong relationships with engineers that get products specified on the blueprint, strategic partnerships with builders, and active involvement with code officials.

The Company generates revenue by designing, manufacturing, and selling high-quality, high-performing structural products that are cost-effective and easy to install. Revenue is recognized when control of a product is transferred to a customer at a point in time, generally when goods are shipped and the related invoice is generated. The Company sells its products through multiple channels including dealers, home centers, wood component manufacturers, OEM relationships, distributors, and contractors. The Company maintains levels of inventory intended to operate with minimum backlog and fill most customer orders within 24-48 hours. The Company's business model is supported by its engineering and design services, which provide customers with engineering support for products, and an ever-growing suite of advanced technology tools including software to improve operational efficiencies in the building industry.

The Company produces and markets over 16,000 ² standard and custom products for wood construction applications, which include connectors, fasteners, and lateral-force resisting systems. Wood construction products represented approximately 84.4% ³ of total net sales in the year ended December 31, 2025. Connectors are prefabricated metal products designed to join wood, concrete, masonry or steel together and include connectors, holddowns, and truss connector plates. The fastening line includes a variety of nails and screws complemented by multiple screw fastening systems used in applications such as building envelope, decking, subfloors, drywall, and roofing. Lateral-force resisting systems are assemblies used to resist earthquake or wind forces and include pre-fabricated steel and wood shearwalls, continuous rod tiedown systems, and wall bracing solutions.

The Company produces and markets over 3,000 ⁴ standard and custom products for concrete construction applications, which include anchor products and repair, protection, and strengthening products. Concrete construction products represented approximately 15.5% ⁵ of total net sales in the year ended December 31, 2025. Anchor products primarily include adhesives and mechanical anchors used for numerous applications of anchoring or attaching elements onto concrete, brick, masonry, and steel. Repair, protection, and strengthening products include coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems, and asphalt products. The Company also provides engineering and design services, and its customer-facing software and other technology solutions are anticipated to expand over time to become a larger portion of the Company's overall value-added offerings.

During the fiscal year ended December 31, 2025, the Company developed over 50 ⁶ new products through its research and development efforts, expanding its product offerings by adding new connectors and lateral products for wood framing applications, new connectors and fasteners for mass timber and offsite constructions, new fastener products and tools for wood construction, and new mechanical and adhesive anchors for concrete and masonry construction. The Company completed construction of its Columbus, Ohio facility in the second quarter of 2025 and the construction of its new Gallatin, Tennessee facility in the fourth quarter of 2025, with the cost of both projects at or below budget. In July 2025, the Company sold its existing facility in Gallatin, Tennessee for approximately $19.0 million ⁷ in net proceeds after closing costs and sale price adjustments, which resulted in a gain on disposal of fixed assets of $12.9 million ⁸. On December 16, 2025, the Company entered into the Second Amended and Restated Credit Agreement, which provides for a 5-year $600.0 million ⁹ revolving credit facility and a 5-year term loan facility of $300.0 million ¹⁰. During the year, the Company repurchased approximately 0.7 million ¹¹ shares of its common stock for a total of $120.0 million ¹² and paid a total of $47.6 million ¹³ in cash dividends.

Net sales increased approximately 4.5% ¹⁴ to $2.3 billion ¹⁵ from the prior year, primarily due to increases in pricing, higher incremental sales related to the Company's 2024 acquisitions, and the positive effect of $17.7 million ¹⁶ in foreign currency translation, partly offset by lower volumes. Gross profit increased approximately 4.5% ¹⁷ to $1.1 billion ¹⁸ from the prior year, primarily due to higher net sales, with gross margin consistent with fiscal year 2024 at 45.9% ¹⁹. Income from operations increased 6.5% ²⁰ to $458.1 million ²¹ from $430.0 million ²², primarily due to the increase in net sales, a $12.9 million ²³ gain on disposal of assets from the sale of the existing Gallatin, Tennessee facility, and a decrease of $4.7 million ²⁴ in integration expenses. Net income was $345.1 million ²⁵ compared to $322.2 million ²⁶, and diluted net income per share of common stock was $8.24 ²⁷ compared to $7.60 ²⁸.

For the full fiscal year ending December 31, 2026, the Company's consolidated operating margin is estimated to be in the range of 19.5% to 20.5% ²⁹, which includes a projected gain of $10.0 million to $12.0 million ³⁰ on the sale of vacant land. The effective tax rate is estimated to be in the range of 25.0% to 26.0% ³¹, including both federal and state income tax rates as well as international income tax rates, and assuming no tax law changes are enacted. Capital expenditures are estimated to be in the range of $75.0 million to $85.0 million ³².

The Company's organic growth opportunities are focused on expanding product lines with current customers while also identifying new market share gain opportunities within core product and market competencies. The Company intends to leverage its engineering expertise, deep-rooted relationships with top builders, engineers, contractors, code officials, and distributors, and its ongoing commitment to testing, research, and innovation. The Company believes it can continue to achieve above market growth in North America relative to U.S. housing starts in fiscal 2025 and beyond, driven by high service levels, an increasingly diverse portfolio of products and software, and a commitment to innovation and delivering complete solutions. For 2026, the Company expects U.S. housing starts to be at 2025 levels, and with the investments made, the Company believes it will be able to continue to grow net sales above the US housing starts market. The Company anticipates product price increases implemented during 2025 will also benefit 2026 net sales by an estimated $40.0 million ³³, mostly in the first half of fiscal year 2026.

In Europe, the Company believes in the long-term potential given Europe's on-going housing shortage with an increasing use of wood construction and new environmental regulations for which the Company has products and solutions. The Company currently anticipates Europe results for 2026 to be improved partly due to product price increases and controlling expenses. The Company's international operations are predominantly located in Europe, and the Company markets both wood construction products including connectors, fasteners, shear-wall systems, and mass timber solutions, and concrete construction products such as anchors, fiber-reinforced products used in the protection and strengthening of structures, and other fixing and fastening solutions designed for commercial building-envelope applications.

The Company anticipates that product price increases implemented during 2025 will partially offset increased costs related to tariffs affecting a portion of fastener and anchor sales, but do not offset tariffs announced after December 31, 2025. Tariffs and increased depreciation expense will have a negative impact on North America's gross and operating margins. A portion of the product price increases were to partly offset the negative impact of tariffs for product imported into the United States. The Company expects that increased selling prices will be offset by higher non-material costs including labor, energy, transportation, and equipment incurred over the prior three years and potentially by future cost increases.

The Company completed construction of its Columbus, Ohio facility in the second quarter of 2025 and the construction of its new Gallatin, Tennessee facility in the fourth quarter of 2025, with the cost of both projects at or below budget. These facilities are expected to improve overall service, production efficiencies, and safety in the workplace, as well as reduce reliance on certain outsourced finished goods and component products. The Company's investment in its new Gallatin Tennessee facility enables onshoring of additional fastener and anchor production, and the operation will in-source key manufacturing processes such as heat treating and coating of fasteners. Additional warehouse capabilities will also enhance next day delivery for North American customers. Incremental investments in the current business will be limited until the U.S. housing market shows long-term improvement.

Capital expenditures are estimated to be in the range of $75.0 million to $85.0 million ³⁴ for 2026. On October 23, 2025, the Board authorized the Company to repurchase up to $150.0 million ³⁵ of shares of the Company's common stock, effective January 1, 2026 through December 31, 2026. On January 28, 2026, the Board declared a quarterly cash dividend of $0.29 ³⁶ per share of common stock to be paid on April 23, 2026 to stockholders of record as of April 2, 2026, estimated to be $12.0 million ³⁷ in total. For the fiscal year ended December 31, 2025, the Company returned $167.6 million ³⁸ to the Company's stockholders, which represents 56.3% ³⁹ of free cash flow from operations during the same period.

The Company is closely monitoring the recent tariff and trade policy actions taken by the U.S. and foreign governments, and as the situation continues to remain fluid due to the rapidly changing global trade environment, the Company is still evaluating the potential implications of these actions on its business. The extent and duration of tariffs and the resulting impact on macroeconomic conditions and on the Company's business are uncertain and may depend on various factors beyond the Company's control. Economic pressures on customers, including the potential for higher inflation, fluctuations in foreign currencies, and consumer confidence driven by economic concerns or price increases, could reduce demand for products and services, negatively affecting net sales and profitability in the future.

The Company faces significant competition in the markets it serves, and many competitors are dedicating increasing resources to competing, especially as products and services become more affected by technological advances and software innovations. Many competitors are also leveraging AI to improve product capabilities and operational efficiency, which could further intensify competition. The Company's ability to compete effectively in North America depends, to a significant extent, on the specification or approval of its products by architects, engineers, building inspectors, building code officials, and customers and their acceptance of the premium brand. The Company's growth may depend on its ability to develop new products and services and penetrate new markets, which could involve considerable costs and may not generate sufficient revenue to be profitable.

The Company's business depends significantly on the stability of the housing and residential construction and home improvement markets, which are affected by conditions beyond its control including interest rates, unemployment, and consumer confidence. Steel is the principal raw material, and its price has historically fluctuated on a cyclical basis; in 2025, changes to tariffs on certain imported fastener and anchor products negatively impacted the cost structure, contributing to a decline in gross margin in the North America segment. The Company has a few large customers that accounted for a significant portion of net sales for the years ended December 31, 2025, 2024, and 2023, and a reduction in or elimination of sales to any of these customers would cause a material reduction in net sales, income from operations, and net income. The Company faces significant competition, and many competitors are dedicating increasing resources to competing, especially as products and services become more affected by technological advances and software innovations, with many competitors leveraging AI to improve product capabilities and operational efficiency. The Company's international operations subject it to risks including currency exchange rate fluctuations, with sales outside of the U.S. of $619.0 million ⁴⁰ representing approximately 26.5% ⁴¹ of consolidated sales in 2025, and changes in tariffs or other import or export restrictions could materially harm costs of doing business, revenue, and results of operations.

Management's message emphasizes the Company's relentless focus on providing customers with best-in-class field support, technical expertise, digital tools, and training, and highlights that since announced in 2021, the Company has made great progress on key growth initiatives, adding approximately $1.0 billion in revenue, with sales growing $100.7 million or 4.5% from fiscal year 2024 compared to fiscal year 2025, and $200.0 million in operating profit. Earnings per share grew $0.64 per share to $8.24 per share or 8.4% from fiscal year 2024 compared to fiscal year 2025, exceeding sales growth over the same fiscal periods. Management's strategic priorities for the period ahead include strengthening the values-based culture, being the business partner of choice, striving to be an innovative leader in the markets served, driving above market volume growth relative to U.S. housing starts, maintaining an operating income margin at or above 20% ⁴², and delivering earnings per share growth ahead of net revenue growth. For the full fiscal year ending December 31, 2026, management provided guidance that consolidated operating margin is estimated to be in the range of 19.5% to 20.5% ⁴³, including a projected gain of $10.0 million to $12.0 million ⁴⁴ on the sale of vacant land, the effective tax rate is estimated to be in the range of 25.0% to 26.0% ⁴⁵, and capital expenditures are estimated to be in the range of $75.0 million to $85.0 million ⁴⁶.