Operating Margin Target
Q: Is 20% operating margin the new floor? How will you achieve it?
A: Management stated that 20% operating margin is their floor, aiming to return to that level next year . They will be more selective with investments in SG&A and cost of goods, focusing on controlling costs while still providing strong customer support. Anything below 20% is unacceptable, and they will work to improve profitability .

Housing Starts Outlook
Q: What are your expectations for housing starts in 2025?
A: They anticipate 3–4% growth in U.S. housing starts next year, based on customer input and forecasters. In Europe, they expect 1–2% growth, with modest recovery due to lower interest rates . However, they acknowledge uncertainty and note that the second half of the year may be better than the first.

Gross Margin Expectations
Q: How do you expect gross margins to trend in Q4 and next year?
A: They expect gross margins in Q4 to be flattish to slightly up from last year's 43.9% . Factors include slightly higher factory and tooling costs as a percent of revenue, potential benefits on freight costs, and a good position on material costs. They are comfortable with steel costs and haven't seen significant pricing pressure from competitors .

Acquisitions Impact
Q: What can you tell us about the recent acquisitions?
A: The acquisitions of Monet DeSauw and QuickFrames add new tools to serve component manufacturers and commercial customers. The combined revenue from these acquisitions is expected to be less than $10 million in Q4. They see these additions as strategic fits that enhance their product offerings.

Cost Control Measures
Q: How will you manage costs to support margins?
A: Management plans to dial in SG&A investments, being more selective on where they add both in SG&A and cost of goods. They aim to control costs while ensuring they provide great support to customers, which is key to their business model.

Exposure to True Value Bankruptcy
Q: Are there any risks from the True Value bankruptcy filing?
A: They have sold to True Value in the past but the revenue is not material for Simpson. They are evaluating the situation and the potential buyer, with whom they have a good relationship, and will assess credit decisions accordingly.

Impact of Hurricanes on Q4
Q: How will the hurricanes affect Q4 sales and operating income?
A: Hurricanes have caused slowdowns in the Southeast, with some customers significantly impacted . They haven't specified the exact impact on guidance, but forecasted Q4 sales in affected areas are definitely lower than expected.

European Margin Improvement
Q: Do you expect margin improvement in Europe next year?
A: They are working on defensive synergies and rightsizing their footprint in Europe. Some costs incurred this year will not repeat, which should help improve gross margins going forward.

Facility Expansions
Q: What are the costs associated with facility expansions?
A: They plan to provide more details in their 2025 guidance. The Ohio expansion adds to the existing footprint with no significant OpEx expected. Gallatin will involve moving costs but further granularity will be provided later.