Management's Discussion and Analysis of Financial Condition and Results of Operations.
Each of the terms the "Company," "we," "our," "us" and similar terms used herein refer collectively to Simpson Manufacturing Co., Inc., a Delaware corporation, and its wholly-owned subsidiaries, including Simpson Strong-Tie Company Inc., unless otherwise stated. The Company regularly uses its website to post information regarding its business and governance. The Company encourages investors to use http://www.simpsonmfg.com as a source of information about the Company. The information on our website is not incorporated by reference into this report or other material we file with or furnish to the Securities and Exchange Commission (the "SEC"), except as explicitly noted or as required by law.
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company's consolidated financial condition and results of operations. This discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and notes thereto included in this report.
"Strong-Tie" and our other trademarks appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies' trade names or trademarks to imply endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements generally can be identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "target," "continue," "predict," "project," "change," "result," "future," "will," "could," "can," "may," "likely," "potentially," or similar expressions. Forward-looking statements are all statements other than those of historical fact and include, but are not limited to, statements about future financial and operating results, our plans, objectives, business outlook, priorities, expectations and intentions, expectations for sales and market growth, comparable sales, earnings and performance, stockholder value, effective tax rates, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, our strategic initiatives, including the impact of these initiatives on our strategic and operational plans and financial results, and any statement of an assumption underlying any of the foregoing.
Forward-looking statements are subject to inherent uncertainties, risks and other factors that are difficult to predict and could cause our actual results to vary in material respects from what we have expressed or implied by these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those expressed in or implied by our forward-looking statements include, the effect of military conflicts, tariffs and international trade policies on our business operations, the effects of inflation and labor and supply shortages on our operations, and the operations of our customers, suppliers and business partners, volatile supply and demand conditions affecting prices and volumes in the markets for both our products and raw materials we purchase; and those factors discussed under Item 1A. Risk Factors and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Additional risks include: the cyclicality and impact of general economic conditions; changing conditions in global markets including the impact of military conflicts, sanctions and tariffs, quotas and other trade actions and import restrictions; the impact of pandemics, epidemics or other public health emergencies; the impact of foreign currency fluctuations; potential limitations on our ability to access capital resources and borrowings under our existing credit agreement; restrictions on our business and financial covenants under our credit agreement; reliance on employees subject to collective bargaining agreements; and our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any.
We caution that you should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise of the risks and factors that may affect our business, results of operations, and financial condition.
Overview
We design, manufacture, and sell building construction products that are of high quality and performance, easy to use, and cost-effective for customers. We operate in three business segments determined by geographic region: North America, Europe, and
Asia/Pacific. Within the North America segment, our sales efforts are dedicated to serving customers across the following end-use markets:
•Residential;
•Commercial;
•Original Equipment Manufacturers ("OEM");
•National Retail; and
•Component Manufacturers
Our organic growth opportunities are focused on expanding product lines with our current customers while also identifying new market share gain opportunities within our core product and market competencies.
To grow in these markets, we aspire to be among the leaders in engineered load-rated construction building products and systems as well as digital product offerings. We intend to leverage our engineering expertise, deep-rooted relationships with top builders, engineers, contractors, code officials and distributors, along with our ongoing commitment to testing, research and innovation. Importantly, we have existing products, testing results, distribution and manufacturing capabilities to support our ambitions. Achieving this growth will depend on expanding our sales and marketing efforts to promote our products across end users and distribution channels, broadening our customer base, and introducing new products over time.
Our commitment to continuous improvement has fostered our core Company ambitions, which we will pursue including:
•Strengthen our values-based culture;
•Be the business partner of choice;
•Strive to be an innovative leader in the markets we operate;
•Drive above market volume growth relative to U.S. housing starts;
•Maintain an operating income margin at or above 20%; and
•Deliver earnings per share growth ahead of net revenue growth.
Since announced in 2021, we have made great progress on our key growth initiatives. Examples include:
•Added 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 of 8.4% from fiscal 2024 compared to fiscal year 2025 exceeding sales growth over the sale fiscal periods.
•Realigned our sales team by end market, significantly reduced two-step distribution, and made significant investments in our field sales and engineering teams.
•Made significant footprint investments in both production and warehouses. Our investment in our new Gallatin, Tennessee facility enables us to onshore 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 our North American customers.
•Invested significantly in digital solutions, combined with the other initiatives strengthened our business model, which drove hardware sales, created value for our customers and made us a partner of choice.
•Expanded our equipment product line which helped drive increase sales in the component manufacturing market space.
•Streamlined internal processes and focused development efforts on high-impact new products.
•Promoted high-potential talent and external experts to senior leadership.
As a result, we have further strengthened our market position in connectors with significant gains in both fasteners and anchors. In addition, driven by our high service levels, increasingly diverse portfolio of products and software and commitment to innovation and delivering complete solutions to the markets we serve, we believe we can continue to achieve above market growth in the North America relative to U.S. housing starts in fiscal 2026 and beyond. These actions reflect our Founder, Barclay Simpson's, nine principles of doing business, particularly our relentless focus and commitment to customers and users.
Tariff and trade policy actions have impacted our results of operations and are expected to continue to do so. We also experienced increased foreign currency exchange rate volatility, which we attribute, in part, to the rapidly changing global trade environment.
We increased prices in the U.S. effective June 2, 2025 on certain wood connectors, fasteners and mechanical anchors, and again effective October 15, 2025 on certain fasteners and mechanical anchors, in response to tariffs. We believe North America net sales could increase in future periods even if demand does not increase. However, increased selling prices are expected to be offset by higher non-material costs including labor, energy, transportation, and building and equipment depreciation (from recent footprint investments, as noted above) incurred over the three years and potentially by future costs increases. In addition, the price increases are expected to partially offset increased costs related to the tariffs affecting a portion of our fastener and anchors sales, but do not offset tariffs announced after December 31, 2025.
Due to a declining housing starts market, we undertook proactive strategic cost savings initiatives during fiscal year 2025 to align our operations with evolving market demand to position the Company for long-term success. These actions included workforce reduction and portfolio management. As a result, we expect these initiatives will generate at least $30.0 million in annualized cost savings with approximately $20.0 million in reduced operating expense.
Non-GAAP Financial Measures
In addition to financial information prepared in accordance with GAAP, we use Adjusted EBITDA, a non-GAAP financial measure in evaluating our ongoing operating performance. We define Adjusted EBITDA as net income (loss) before income taxes, adjusted to exclude depreciation and amortization, integration, acquisition and restructuring costs, non-qualified deferred compensation adjustments, goodwill impairment, gain on bargain purchase, lease termination costs, severance costs related to cost saving initiatives, net loss or gain on disposal of assets, interest income or expense, and foreign exchange and other expense (income). This provides additional insight into the Company's operating performance in light of the significant levels of growth investment we have made in our operations, the effect depreciation and acquisition as well as integration costs will have on our operating results. We believe this will also provide a better approximation of our cash flows compared to operating income.
Factors Affecting Our Results of Operations
Our business, financial condition, and results of operations depend in large part on the level of U.S. housing starts and residential construction activity. Overall U.S. housing starts have been decreasing year over year since 2021. Lower housing starts in the U.S. could result in lower demand, which would affect our sales and possibly operating profit.
Unlike lumber or other products that have a more direct correlation to U.S. housing starts, our products are used to a greater extent in areas that are subject to natural forces, such as seismic or wind events. Our products are generally used in a sequential progression that follows the construction process. Residential and commercial construction begins with the foundation, followed by the wall and the roof systems, and then the installation of our products, which flow into a project or a house according to these schedules.
We are closely monitoring the recent tariff and trade policy actions taken by the U.S. and foreign governments as well as the recent Middle East conflict. As the situation continues to remain fluid due to the rapidly changing global trade environment, we are still evaluating the potential implications of these events on our business. While we are largely domestically sourced, we continue to monitor macroeconomic trends from these events such as the impact of interest rates, disruptions to trade or transportation routes, cyberattack, changing foreign exchange rates, inflation, the effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs in markets where we and our supplier operate. Additionally, economic pressures on our customers, including the potential of higher inflation, fluctuations in foreign currencies and consumer confidence, driven by economic concerns or price increases as a result of these events, such as those we previously announced, could reduce demand for our products and services negatively affecting our net sales and profitability in the future.
As a result of the tariffs announced by the U.S. presidential administration during 2025 and potential tariff modifications or the imposition of tariffs or export controls by other countries there is significant economic uncertainty. The extent and duration of tariffs and the resulting impact on macroeconomic conditions and on our business are uncertain and may depend on various factors beyond our control. We are closely monitoring the potential for the imposition of new or additional U.S. tariffs on imports, as well as potential retaliatory tariffs or other measures other countries may impose on U.S. imports, that may adversely affect the global economy. We are currently uncertain as to the ultimate impact these measures may have given the rapidly changing environment surrounding tariffs and other related political topics; however, if enacted as currently proposed, we expect that the proposed tariffs would primarily impact our North America segment as we procure fasteners and a small number of other products from countries that will be subjected to the these tariffs.
In prior years, our sales were heavily seasonal with operating results varying from quarter to quarter depending on weather conditions that could delay construction starts. Our sales and income have historically been lower in the first and fourth quarters than in the second and third quarters of a fiscal year. Increased tariffs (as noted above), Middle East conflicts, political uncertainty, fluctuating foreign currency rates, mortgage interest rates, and rising costs can also have an effect on our gross and operating profits as well. Due to efforts in diversifying our geographic footprint, product offerings, and changing our path to market in the U.S., sales from our product lines, customer base, and customer purchases are becoming less seasonal. Changes in raw material cost could impact the amount of inventory on-hand, and negatively affect our gross profit and operating margins depending on the timing of raw material purchases or how much sales prices can be increased to offset any increases in raw material costs. Changes in labor, freight and warehousing costs, could also negatively impact gross profit depending on timing and amount of sales price can be increased to offset the higher costs.
Business Segment Information
Historically, our North America segment has generated more revenues from wood construction products compared to concrete construction products. North America net sales increased for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 due to price increases that took effect in June 2025 and October 2025, a slight increase in sales volumes and the positive effect of approximately $1.2 million in foreign currency translation. Our wood construction product net sales increased 8.6% for the three months ended March 31, 2026 compared to March 31, 2025. Our concrete construction product net sales increased 18.6% over the same periods.
Operating income increased 12.8% to $118.3 million. The increase was primarily due to higher net sales and lower operating expenses, partially offset by increased cost of goods sold reflecting primarily the impact from tariffs and higher material costs, labor and factory and overhead costs, as a percentage of nets sales. The operating expenses decrease was primarily driven by lower personnel costs, professional fees and variable incentive compensation. Additional incremental investments in the business will be limited until the U.S. housing market shows long-term improvement.
We completed the expansion of our Columbus, Ohio facility in the second quarter of 2025 and the construction of our new Gallatin, Tennessee facility in the fourth quarter of 2025. The cost of both projects was at or below budget. These facilities are expected to improve our overall service, production efficiencies and safety in the workplace, as well as reduce our reliance on certain outsourced finished goods and component products. These facilities will help ensure we have ample capacity to meet our customer needs. These investments reinforce our core business model differentiators to remain the partner of choice as we continue to produce products locally and ensure superior levels of customer service.
Europe net sales increased 6.3% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, due to the positive effect of approximately $13.2 million in foreign currency translations as well as price increases. partly offset by lower sales volumes as a result of unfavorable weather conditions. Wood construction product net sales increased 6.7% for the three months ended March 31, 2026 compared to March 31, 2025 and concrete construction product net sales, which are mostly project based, increased 4.7% over the same periods. Gross profit increased $3.9 million primarily due to higher net sales as well as gross margins increasing to 36.3% from 35.2% due to a decrease in material costs, partly offset by higher factory and overhead costs, as a percentage of net sales. Operating income decreased $2.2 million while operating margin decreased to 5.9% from 8.2%, partly due to increased operating expenses. Operating expenses were negatively affected by approximately $3.8 million in foreign currency transactions as well as $1.5 million in one-time cost savings initiative costs. In local currency, operating expenses increased by 5% due to one-time cost savings initiative costs. We currently anticipate Europe results for 2026 to benefit from recent price increases and recent cost savings initiatives, including the closing of the fastener manufacturing business in Sweden. We believe in Europe's long term potential given on-going housing shortage (with an increasing use of wood construction) and new environmental regulations for which we have products and solutions.
Our Asia/Pacific segment has generated revenues from both wood and concrete construction products. We believe that the Asia/Pacific segment is not significant to our overall performance.
Business Outlook
Based on business trends and conditions, the Company's outlook for the full fiscal year ending December 31, 2026 is as follows:
•Consolidated operating margin is estimated to be in the range of 19.5% to 20.5%. The operating margin range includes a projected gain of $10.0 million to $12.0 million on the sale of vacant land.
•The effective tax rate is estimated to be in the range of 25.0% to 26.0%, 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.
Results of Operations for the Three Months Ended March 31, 2026, Compared with the Three Months Ended March 31, 2025
Unless otherwise stated, the below results, when providing comparisons (which are generally indicated by words such as "increased," "decreased," "unchanged" or "compared to"), compare the results of operations for the three months ended March 31, 2026, against the results of operations for the three months ended March 31, 2025. Unless otherwise stated, the results announced below, when referencing "both quarters," refer to the three months ended March 31, 2025 and the three months ended March 31, 2026. In the first quarter of 2026, the Company reclassified certain software amortization costs related to the Company's component manufacturing efforts from general and administrative expense to cost of sales. Additionally, for the year ended December 31, 2025, the Company reclassified certain quality assurance costs from general and administrative expense to cost of sales. The financial results for the three months ended March 31, 2025 have been recast for comparison purposes and to conform to the current period classification, with $1.5 million of costs being reclassified from general and administrative expense to cost of sales. The reclassification did not have any impact on the total income from operations.
First Quarter 2026 Consolidated Financial Highlights
The following table shows the change in the Company's results of operations from the three months ended March 31, 2025 to the three months ended March 31, 2026, and the increases or decreases for each category by segment:
| Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||
| Increase (Decrease) in Operating Segment | |||||||||||||||||||||||||||||||||||
| (in thousands) | March 31, 2025 |
North America | Europe |
Asia/ Pacific |
Admin & All Other | March 31, 2026 | |||||||||||||||||||||||||||||
| Net sales | $ | 538,895 | $ | 41,226 | $ | 7,187 | $ | 656 | $ | - | $ | 587,964 | |||||||||||||||||||||||
| Cost of sales | 288,329 | 29,921 | 3,263 | 585 | (25) | 322,073 | |||||||||||||||||||||||||||||
| Gross profit | 250,566 | 11,305 | 3,924 | 71 | 25 | 265,891 | |||||||||||||||||||||||||||||
| Research and development and other engineering expense | 19,839 | (1,597) | 421 | (32) | - | 18,631 | |||||||||||||||||||||||||||||
| Selling expense | 54,164 | (1,335) | 1,466 | 168 | - | 54,463 | |||||||||||||||||||||||||||||
| General and administrative expense | 74,192 | 771 | 3,664 | 96 | (1,161) | 77,562 | |||||||||||||||||||||||||||||
| Total operating expenses | 148,195 | (2,161) | 5,551 | 232 | (1,161) | 150,656 | |||||||||||||||||||||||||||||
| Acquisition and integration related costs | 127 | - | 421 | - | 17 | 565 | |||||||||||||||||||||||||||||
| Net gain on disposal of assets | (75) | 4 | 169 | (45) | - | 53 | |||||||||||||||||||||||||||||
| Income from operations | 102,319 | 13,462 | (2,217) | (116) | 1,169 | 114,617 | |||||||||||||||||||||||||||||
| Interest income, net and other | 1,103 | (197) | (112) | 1 | 3,638 | 4,433 | |||||||||||||||||||||||||||||
| Other & foreign exchange gain (loss), net | 1,058 | (609) | (1,212) | (436) | (1,553) | (2,752) | |||||||||||||||||||||||||||||
| Income before income taxes | 104,480 | 12,656 | (3,541) | (551) | 3,254 | 116,298 | |||||||||||||||||||||||||||||
| Provision for income taxes | 26,596 | 2,372 | (1,186) | (109) | 409 | 28,082 | |||||||||||||||||||||||||||||
| Net income | $ | 77,884 | $ | 10,284 | $ | (2,355) | $ | (442) | $ | 2,845 | $ | 88,216 | |||||||||||||||||||||||
Net sales increased 9.1% to $588.0 million from $538.9 million. Wood construction product sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 84.6% and 85.3% of the Company's total sales in the first quarters of 2026 and 2025, respectively. Concrete construction product sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15.2% and 14.4% of the Company's total sales in the first quarters of 2026 and 2025, respectively.
Gross profit increased 6.1% to $265.9 million from $250.6 million primarily due to higher net sales while gross margins decreased to 45.2% from 46.5%. From a product perspective, gross margin slightly decreased to 46.1% from 46.2% for wood construction products and decreased to 40.2% from 49.5% for concrete construction products, respectively.
Selling expense increased 0.6% to $54.5 million from $54.2 million, primarily due to increases of $0.5 million in variable compensation, and $0.5 million in advertising and trade shows costs, which is offset by decreases of $0.5 million in personnel costs and $0.2 million in software related costs, net of amount capitalized.
General and administrative expense increased 4.5% to $77.6 million from $74.2 million, primarily due to increases of $0.4 million in variable compensation, $0.1 million in severance costs, $2.9 million in software related costs, net of amount
capitalized, and $1.5 million in depreciation and amortization costs, which is offset by decrease of $1.2 million in personnel costs, and $1.0 million in professional service costs.
Income from operations increased 12.0% to $114.6 million from $102.3 million mostly due to higher gross profits.
Our effective income tax rate decreased to 24.1% from 25.5%.
Consolidated net income was $88.2 million compared to $77.9 million. Diluted earnings per share was $2.13 compared to $1.85.
Adjusted EBITDA 1 of $139.4 million increased 14.1% compared to $122.2 million, primarily due to higher gross profits.
Net sales
The following table shows net sales by segment for the three months ended March 31, 2026 and 2025, respectively:
| (in thousands) |
North America | Europe |
Asia/ Pacific | Total | |||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| March 31, 2025 | $ | 420,699 | $ | 113,860 | $ | 4,336 | $ | 538,895 | |||||||||||||||
| March 31, 2026 | 461,925 | 121,047 | 4,992 | 587,964 | |||||||||||||||||||
| Increase | $ | 41,226 | $ | 7,187 | $ | 656 | $ | 49,069 | |||||||||||||||
| Percentage increase | 9.8 | % | 6.3 | % | 15.1 | % | 9.1 | % | |||||||||||||||
The following table shows segment net sales as percentages of total net sales for the three months ended March 31, 2026 and 2025, respectively:
| North America | Europe |
Asia/ Pacific | Total | ||||||||||||||||||||
| Percentage of total 2025 net sales | 78.1 | % | 21.1 | % | 0.8 | % | 100.0 | % | |||||||||||||||
| Percentage of total 2026 net sales | 78.6 | % | 20.6 | % | 0.8 | % | 100.0 | % | |||||||||||||||
Gross profit
The following table shows gross profit (loss) by segment for the three months ended March 31, 2026 and 2025, respectively:
| (in thousands) |
North America | Europe |
Asia/ Pacific |
Admin & All Other | Total | ||||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||||||||
| March 31, 2025 | $209,428 | $40,022 | $1,725 | $(609) | $250,566 | ||||||||||||||||||||||||
| March 31, 2026 | 220,733 | 43,946 | 1,796 | (584) | 265,891 | ||||||||||||||||||||||||
| Increase (decrease) | $11,305 | $3,924 | $71 | $25 | $15,325 | ||||||||||||||||||||||||
| Percentage Increase | 5.4 | % | 9.8 | % | * | * | 6.1 | % | |||||||||||||||||||||
* The statistic is not meaningful or material.
The following table shows gross margin by segment for the three months ended March 31, 2026 and 2025, respectively:
| North America | Europe |
Asia/ Pacific |
Admin & All Other | Total | |||||||||||||||||||||||||
| 2025 gross margin percentage | 49.8 | % | 35.2 | % | 39.8 | % | * | 46.5 | % | ||||||||||||||||||||
| 2026 gross margin percentage | 47.8 | % | 36.3 | % | 36.0 | % | * | 45.2 | % | ||||||||||||||||||||
* The statistic is not meaningful or material.
1 Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to U.S. generally accepted accounting principles ("GAAP") net income see the schedule titled "Reconciliation of Non-GAAP Financial Measures."
North America
•Net sales increased 9.8%, primarily due to price increases that took effect in June 2025 and October 2025 and an increase in sales volumes, as well as the positive effect of approximately $1.2 million in foreign currency translation.
•Gross margin decreased to 47.8% from 49.8%, reflecting primarily the impact from tariffs and higher material, labor and factory and overhead costs, as a percentage of net sales.
•Selling expense decreased 3.3%, primarily due to decreases of $0.8 million in personnel costs, $0.4 million in variable compensation, $0.2 million in software related costs, net of amount capitalized, and $0.2 million in severance costs, partially offset by increases of $0.4 million in advertising and trade show costs.
•General and administrative expense increased 1.7%, primarily due to increases of $2.0 million in software related costs, net of amount capitalized, $0.6 million in patents costs, $0.5 million in depreciation and amortization costs, $0.5 million in leasing costs, and $0.2 million in severance costs, which is offset by decreases of $1.8 in personnel costs, $1.2 million in professional service costs, and $0.3 million in variable compensation.
•Income from operations increased by $13.5 million, primarily due to the increases in net sales as well as lower operating expense including lower personnel costs, professional fees and variable incentive compensation.
Europe
•Net sales increased 6.3% due to the positive effect of approximately $13.2 million in foreign currency translation as well as price increases, partly offset by decreased sales volumes.
•Gross margin increased to 36.3% from 35.2%, primarily driven by higher pricing and lower material costs, partly offset by higher factory and tooling costs, as a percentage of net sales.
•Income from operations decreased by $2.2 million to $7.1 million from $9.3 million primarily due to lower sales volumes. Operating expenses were negatively affected by approximately $3.8 million in foreign currency translation.
Asia/Pacific
•For information about the Company's Asia/Pacific segment, please refer to the tables above setting forth changes in our operating results for the three months ended March 31, 2026 and 2025.
Administrative and All Other
•Loss from operations decreased to $11.0 million from $12.2 million due to higher gross profits.
Effect of New Accounting Standards
See "Note 1 Basis of Presentation - Accounting Standard Adopted" and "Note 1 Basis of Presentation - Accounting Standards Not Yet Adopted" to the accompanying unaudited interim Condensed Consolidated Financial Statements.
Liquidity and Capital Resources
We have historically met our capital needs through a combination of cash flows from operating activities and, when necessary, borrowings under our credit facilities. Our principal uses of capital include the costs and expenses associated with our operations, including financing working capital requirements and continuing our capital allocation strategy, which includes supporting capital expenditures, paying cash dividends, repurchasing the Company's common stock, and financing other investment opportunities from time to time.
On December 16, 2025, the Company entered into the Second Amended and Restated Credit Agreement (the "Second Amended and Restated Credit Agreement"), which amended and restated in its entirety the Amended and Restated Credit Agreement, dated as of March 30, 2022. The Second Amended and Restated Credit Agreement provides for a 5-year revolving credit facility of $600 million (the "revolving credit facility"), which includes a letter of credit sub-facility of up to $50 million, and for a 5-year term loan facility of $300 million (the "term loan facility"). The Company has the ability to increase the
principal amount of the Credit Facilities by an additional amount equal to the greater of $525 million and 100% of consolidated EBITDA for the most recently ended fiscal quarter, by obtaining additional commitments from existing lenders or new lenders and satisfying certain other customary conditions. As of March 31, 2026, the Company had borrowings of $74.2 million under the revolving credit facility and $296.3 million under the term loan facility, and has $525.8 million available to borrow under the revolving credit facility.
As of March 31, 2026, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions, including $130.2 million that is held in the local currencies of our foreign operations and could be subject to additional taxation if repatriated to the U.S. The Company is maintaining a permanent reinvestment assertion on its foreign earnings relative to remaining cash held outside the United States.
We believe the Company's balances of cash and cash equivalents, cash flows from operating activities, and access to borrowings under our credit facilities are sufficient to satisfy its liquidity requirements and capital needs over the next 12 months and beyond.
The following table shows selected financial information as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively:
| As of March 31, | As of December 31, | As of March 31, | ||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2025 | |||||||||||||||||
| Cash and cash equivalents | $ | 341,005 | $ | 384,138 | $ | 150,290 | ||||||||||||||
| Property, plant and equipment, net | 621,137 | 627,854 | 568,503 | |||||||||||||||||
| Equity & other investments, goodwill and intangible assets | 933,040 | 956,665 | 924,809 | |||||||||||||||||
| Non-cash net working capital | 615,954 | 586,570 | 673,925 | |||||||||||||||||
The following table presents the significant categories of cash flows used or provided during the three-month periods ended March 31, 2026 and 2025, respectively:
| Three Months Ended March 31, | ||||||||||||||
| (in thousands) | 2026 | 2025 | ||||||||||||
| Net cash provided by (used in): | ||||||||||||||
| Operating activities | $ | 35,547 | $ | 7,563 | ||||||||||
| Investing activities | (19,049) | (50,102) | ||||||||||||
| Financing activities | (68,952) | (42,832) | ||||||||||||
Cash flow from operating activities result primarily from our earnings before non-cash items such as depreciation, amortization, and stock-based compensation, and are also affected by changes in operating assets and liabilities which consist primarily of working capital balances. Our revenues are derived from manufacturing and sales of building construction materials. Our operating cash flows are impacted by prevailing macro-economic conditions and subject to seasonality, which is cyclically associated with the volume and timing of construction project starts. For example, as a result of seasonality our trade accounts receivable are generally lowest at the end of the fourth quarter and increases during the first, second, and third quarters as construction activity ramps in markets we serve.
During the three months ended March 31, 2026, operating activities provided $35.5 million in cash, as a result of $88.2 million from net income plus $35.5 million of non-cash expenses such as depreciation and amortization, deferred compensation, stock-based compensation, and leases. This amount was partly offset by $88.2 million used for the net change in operating assets and liabilities. The net change in operating assets and liabilities included an increase of $98.8 million in trade accounts receivable and a decrease of $37.5 million in accrued liabilities and other current liabilities, which was partly offset by a decrease of $40.0 million in inventory.
Cash flow used in investing activities of $19.0 million during the three months ended March 31, 2026 consisted primarily of $17.6 million used for machinery and equipment purchases. Due to updated forecasts on the timing of the spend and subject to future events and circumstances, capital expenditures are estimated to be in the range of $75.0 million and $85.0 million. Capital expenditures will be primarily focused on purchases of new equipment to support increased productivity and
efficiencies, enhancements to our existing facilities to expand our manufacturing footprint in-line with increasing customer needs.
Cash flow used in financing activities of $69.0 million during the three months ended March 31, 2026 consisted primarily of $50.0 million in stock repurchases and $12.0 million used to pay dividends to our stockholders.
On May 6, 2026, the Board declared a quarterly cash dividend of $0.30 per share of the Company's common stock, payable on July 23, 2026 to stockholders of record on July 2, 2026, and estimated to be $12.3 million in total.
Since the beginning of 2023 through the period ended March 31, 2026, we have returned $471.3 million to stockholders, which represents 58.1% of our free cash flow from operations during the same period, and over the same period the Company has repurchased $1.9 million shares of the Company's common stock, which represents approximately 4.4% of the outstanding shares of the Company's common stock at the start of 2022.
Reconciliation of Non-GAAP Financial Measures
(In thousands) (Unaudited)
A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, is set forth below.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net Income | $ | 88,216 | $ | 77,884 | |||||||
| Provision for income taxes | 28,082 | 26,596 | |||||||||
| Interest (income) expense, net and other financing costs | (4,433) | (1,103) | |||||||||
| Depreciation and amortization | 25,511 | 19,522 | |||||||||
| Other* | 1,985 | (725) | |||||||||
| Adjusted EBITDA | $ | 139,361 | $ | 122,174 | |||||||
*Other: Includes acquisition integration and restructuring related expenses, non-qualified deferred compensation plan adjustments, other & foreign exchange loss net, and net loss or gain on disposal of assets.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of March 31, 2026.
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Disclaimer
Simpson Manufacturing Co. Inc. published this content on May 07, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 07, 2026 at 22:51 UTC.
