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SM

Simpson Manufacturing Co., Inc. (SSD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered resilient growth and margin execution amid soft housing: net sales $0.624B (+6.2% YoY), diluted EPS $2.58 (+16.7% YoY), and operating margin 22.6% (+130 bps YoY), aided by a $12.9M gain on the Gallatin facility sale and price increases offsetting tariffs .
  • Revenue and EPS exceeded S&P Global consensus: revenue $623.5M vs $604.9M* and EPS $2.58 vs $2.34*, with pricing (~$30M Q3 benefit) and FX (+~1 pt) driving the beat despite modest volume declines and tariff headwinds . Values retrieved from S&P Global*.
  • FY2025 guidance updated: operating margin narrowed to 19.0%–20.0% (from 18.5%–20.5%), tax rate maintained at 25.5%–26.5%, and capex raised to $150M–$160M; Board expanded 2025 repurchase authorization and approved $150M for 2026, supporting capital return momentum .
  • Catalyst: management announced strategic cost savings initiatives (annualized ≥$30M; $9–$12M one-time in 2025), reaffirmed ≥20% operating margin ambition, and highlighted pricing actions (June and Oct 15) expected to contribute ~$100M annualized sales, framing EPS durability into 2026 .

What Went Well and What Went Wrong

What Went Well

  • Pricing actions and FX drove Q3 net sales growth (+6.2% YoY) and operating margin expansion to 22.6%, with adjusted EBITDA up 4.5% YoY to $155.3M .
  • Europe outperformed: net sales $134.4M (+10.9% YoY), gross margin 37.9% (+130 bps), and operating margin 12.0% (+160 bps), with ~$8.1M FX tailwind and stronger volumes .
  • CEO: “Our proven ability to outperform the market, maintain strong margins, and consistently grow EPS ahead of net sales, gives us confidence in delivering sustained shareholder value, even in a challenging environment.” .

What Went Wrong

  • Gross margin compressed modestly to 46.4% (−40 bps YoY) as tariffs and labor costs flowed through inventory; concrete product margin was more impacted given anchor exposure to tariffs .
  • North America volume softness and regional mix pressure (South/West down mid-single digits in census data through August) weighed on volumes despite price and acquisitions, with NA operating margin down to 25.9% (−80 bps YoY) .
  • SG&A up 9% (severance ~$3M in Q3; higher comp, software, FX, healthcare), lifting opex to 26.0% of sales; management expects further tariff-driven gross margin deceleration near term .

Financial Results

Consolidated Quarterly Performance

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$538.9 $631.1 $623.5
Diluted EPS ($)$1.85 $2.47 $2.58
Gross Margin (%)46.8% 46.7% 46.4%
Operating Margin (%)19.0% 22.2% 22.6%
Adjusted EBITDA ($USD Millions)$121.8 $159.9 $155.3

Q3 2025 vs Prior Year and vs Estimates

MetricQ3 2024Q3 2025 (Actual)Q3 2025 Consensus*
Net Sales ($USD Millions)$587.2 $623.5 $604.9*
Diluted EPS ($)$2.21 $2.58 $2.34*
Gross Margin (%)46.8% 46.4% N/A
Operating Margin (%)21.3% 22.6% N/A

Values retrieved from S&P Global*.

Segment Breakdown (Q3 2025 vs Q3 2024)

SegmentNet Sales Q3 2024 ($M)Net Sales Q3 2025 ($M)Operating Margin Q3 2024 (%)Operating Margin Q3 2025 (%)
North America$461.4 $483.6 26.7 25.9
Europe$121.2 $134.4 10.4 12.0
Asia/Pacific$4.6 $5.5 N/M N/M

KPIs and Balance Sheet

KPIQ1 2025Q2 2025Q3 2025
Cash & Equivalents ($M)$150.3 $190.4 $297.3
Total Debt Outstanding ($M)$382.5 $376.9 $371.3
Cash from Operations ($M)$7.6 $124.7 $169.5
Share Repurchases ($M)$25.0 $35.0 $30.0
Dividend per Share ($)$0.28 $0.29 $0.29
Adjusted EBITDA ($M)$121.8 $159.9 $155.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating MarginFY202518.5%–20.5% 19.0%–20.0% Narrowed range; raised low end
Effective Tax RateFY202525.5%–26.5% 25.5%–26.5% Maintained
Capital ExpendituresFY2025$140M–$160M $150M–$160M Raised low end
Interest Expense (Term Loan)FY2025N/A≈$5M; largely offset by swaps/interest income New detail
One-time Charges (Severance)FY2025N/A~$9M–$12M New detail
Asset Sale GainFY2025$12.0M–$13.0M expected $12.9M realized Clarified actual
Share Repurchase Authorization2025$100M authorization; $40M remaining at Q2 +$20M added; $30M remaining for 2025 Increased
Share Repurchase Authorization2026N/AUp to $150M New authorization

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Pricing & TariffsAnnounced June 2 price increases to offset rising costs and tariffs; partial Q2 benefit; volumes outperformed housing starts June and Oct 15 price increases; ~$100M annualized sales; ~5 pts of Q3 growth from pricing; expect near-term gross margin deceleration as tariffs roll through Intensifying pricing actions; tariffs pressuring margins
Cost Savings ProgramNot highlightedStrategic initiatives ≥$30M annualized savings; $3M severance in Q3, $9–$12M in FY25; ~90%+ SG&A New structural efficiency focus
Housing Starts & MacroTTM starts down 4.5% in Q1; reaffirmed cautious FY outlook Government shutdown limited Q3 census data; management expects US starts down mid-single digits in 2025; flattish 2026 Macro softness persists
Europe ExecutionQ2: margin expansion to 11.7%, FX tailwind Q3: net sales +10.9%, OM 12.0%; local currency volume growth Improving profitability, above-market growth
Digital & SoftwareEmphasis on digital cost reclassification and ongoing investments Launch of CSProducer (cloud-based truss production management software); positive BCMS feedback Advancing product/software roadmap

Management Commentary

  • CEO: “Our pricing actions, particularly in response to tariff pressures and a positive impact from foreign exchange, drove net sales growth of over 6%… We expect [cost savings] to generate at least $30 million in annualized cost savings.” .
  • CFO: “Gross margin… down 40 basis points… concrete products more impacted due to increased tariffs… operating expenses up 9% with ~$3M severance costs; adjusted EBITDA $155.3M, margin 24.9%.” .
  • Strategy: Focus on maintaining ≥20% operating margin, driving EPS growth ahead of net sales, and returning ≥35% of free cash flow to shareholders; 2026 repurchase authorization of $150M reflects confidence and capex normalization .

Q&A Highlights

  • Cost savings cadence: ~$3M severance in Q3; total $9–$12M in FY25; majority realized in SG&A with ≥$30M annualized savings in 2026; model 6–9 in Q4 for severance .
  • Tariffs and margins: ~80% tariff impact rolled into Q3; further erosion expected in Q4 and modest in Q1; concrete anchors most affected; Gallatin ramp not immediately margin-accretive .
  • Volume trajectory: NA volume down ~2.7% QoQ; YTD down ~1.4%; regional mix headwind (South/West weakness) offsets Northeast/Midwest strength .
  • Pricing carryover: ~$25M incremental pricing in Q4; ~$30–$35M carryover into 2026; ~$100M annualized from Oct tariff-related actions; ~$50M annualized on U.S.-made products .
  • Capital return: 2026 repurchase target $150M, contingent on M&A; capex expected to normalize post Columbus/Gallatin projects .

Estimates Context

  • S&P Global consensus (quarterly):
    • Q3 2025: revenue $604.9M*, EPS $2.34* vs actual $623.5M and $2.58 (beat).
    • Q2 2025: revenue $599.4M*, EPS $2.26* vs actual $631.1M and $2.47 (beat).
    • Q1 2025: revenue $528.5M*, EPS $1.54* vs actual $538.9M and $1.85 (beat).
    • Q4 2025: revenue $530.7M*, EPS $1.26* (guidance-dependent quarter). Values retrieved from S&P Global*.
MetricQ1 2025 (Est*)Q1 2025 ActualQ2 2025 (Est*)Q2 2025 ActualQ3 2025 (Est*)Q3 2025 ActualQ4 2025 (Est*)
Revenue ($M)528.5*538.9 599.4*631.1 604.9*623.5 530.7*
EPS ($)1.54*1.85 2.26*2.47 2.34*2.58 1.26*
# of Estimates (Rev)3*—3*—3*—4*
# of Estimates (EPS)1*—3*—3*—2*

Values retrieved from S&P Global*.

Implication: Repeated beats on both revenue and EPS across the last three quarters increase the probability of upward estimate revisions, though management flags near-term gross margin deceleration from tariffs and seasonal Q4 volume variability .

Key Takeaways for Investors

  • Pricing power and disciplined execution are offsetting tariff headwinds, producing consistent top- and bottom-line beats; expect estimates to creep higher, but model near-term gross margin headwinds through Q1 2026 as tariffs fully roll through .
  • Operating margin guidance narrowed to 19%–20% with structural cost actions, reinforcing the ≥20% long-term ambition even in flattish housing scenarios; treat FY25 margin range as credible given realized asset sale gains and cost savings .
  • Europe’s improving profitability and local currency growth provide diversification against North America softness; maintain overweight to SSD on international margin momentum .
  • Capital returns offer support: 2025 authorization expanded and 2026 $150M repurchases set; capex normalization post major projects should increase FCF available for buybacks/dividends in 2026 .
  • Watch Q4 volume risk: management flagged variability as the key swing factor; price carryover (~$25M in Q4, ~$30–$35M into 2026) mitigates pressure, but mix/regional dynamics remain a headwind .
  • Tactical: near-term softness from tariff-driven gross margin pressure and Q4 seasonality may create entry points; medium-term thesis centers on pricing durability, SG&A restructuring, digital/software growth, and Europe margin improvement .
  • Monitor execution on the ≥$30M SG&A savings and progress at Gallatin/Columbus; any acceleration in housing starts or tariff relief would be upside to margins and EPS .
Notes:
- All company data and quotes sourced from the Q3 2025 press release and 8-K (including exhibits) and Q3 2025 earnings call transcript **[920371_0001628280-25-046437_q32025ex991pressrelease.htm:0]**–**[920371_0001628280-25-046437_ssd-20251027.htm:2]** **[920371_20251027SF07831:0]**–**[920371_20251027SF07831:10]** **[0000920371_2205731_0]**–**[0000920371_2205731_11]**.
- Values retrieved from S&P Global* for consensus estimates; lack citations by design per tool policy.