Building products manufacturer Simpson (NYSE:SSD) reported Q1 CY2025 results exceeding the market’s revenue expectations , with sales up 1.6% year on year to $538.9 million. Its non-GAAP profit of $1.86 per share was 20.5% above analysts’ consensus estimates.
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Revenue: $538.9 million vs analyst estimates of $528.5 million (1.6% year-on-year growth, 2% beat)
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Adjusted EPS: $1.86 vs analyst estimates of $1.54 (20.5% beat)
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Adjusted EBITDA: $121.8 million vs analyst estimates of $114.2 million (22.6% margin, 6.6% beat)
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Operating Margin: 19%, in line with the same quarter last year
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Market Capitalization: $6.61 billion
Simpson’s first quarter results were shaped by steady volume in North America and targeted pricing actions designed to offset rising costs. Management noted that sales outpaced U.S. housing starts, with particular strength from recent acquisitions and the digital solutions segment, while growth in the outdoor living category and OEM channels provided additional support. CEO Michael Olosky stated, “Our volume performance in North America once again exceeded U.S. housing starts by approximately 420 basis points.”
Looking ahead, the company’s forward guidance is influenced by expectations for a flat-to-slightly up housing market in the U.S. and stable conditions in Europe. Simpson is implementing an 8% average price increase across key product lines to help manage input cost inflation and tariffs, with management emphasizing a commitment to maintaining gross margins while closely monitoring housing activity and input costs. Olosky described the environment as “highly uncertain,” but stressed that Simpson is focusing on cost discipline and selective investments to support long-term execution.
Simpson’s management attributed the quarter’s performance to above-market growth in North America, successful integration of recent acquisitions, and targeted pricing strategies. The company responded to input cost pressures and tariffs with carefully timed price increases, and continued to focus on operational efficiency and digital expansion.
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North America Outperformed Market: Volumes in North America outpaced U.S. housing starts by 420 basis points, driven by the contribution of 2024 acquisitions and a growing digital solutions offering for component manufacturers.
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Outdoor Living and OEM Strength: The outdoor living product category saw double-digit growth, attributed to expanded offerings and marketing, while OEM (original equipment manufacturer) channels experienced high single-digit volume growth, particularly in mass timber and offsite construction solutions.
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Pricing Actions Announced: Simpson implemented an 8% average price increase across wood connectors, fasteners, and anchors, effective June 2, to address both general cost inflation and new tariffs. Management emphasized that not all tariff-related costs are being passed through to customers, highlighting a selective approach to price adjustments.
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Margin Management in Challenging Markets: Operating margin expanded 90 basis points, reflecting disciplined cost management and careful alignment of investments to market conditions. Gross margin improved modestly despite higher input and labor costs, aided by prior-year discount timing.
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European Market Trends: European sales declined 5.1%, but management believes local operations continued to outperform regional housing markets. New applications and customer wins helped partially offset macroeconomic headwinds.
Management’s outlook for the remainder of the year centers on navigating cost inflation, maintaining margin discipline, and leveraging new capacity to support above-market growth, despite ongoing housing market volatility.
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Impact of Price Increases: The June price increases are expected to help offset higher input costs and tariffs, but management noted that they are passing through only a portion of these increases to customers, aiming to balance competitiveness and margin preservation.
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Housing Market Sensitivity: Simpson’s performance is closely tied to U.S. housing starts, which are expected to remain flat or grow slightly for the rest of the year. Management highlighted that growth is likely to be weighted toward the second half, depending on broader economic factors such as interest rates.
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Capacity and Supply Chain Investments: The opening of new manufacturing and warehouse facilities in Ohio and Tennessee is intended to improve product availability, reduce tariff exposure, and support faster lead times, which could enhance Simpson’s ability to capture market share as demand recovers.
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Daniel Moore (CJS Securities): Asked how recent tariffs and consumer confidence shifts are impacting Simpson’s outlook for U.S. housing starts; management reiterated guidance for flat-to-low single-digit growth and highlighted the flexibility provided by upcoming price increases.
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Daniel Moore (CJS Securities): Inquired about customer feedback on price increases, particularly from large retailers; management said they are explaining their value proposition and not passing through the full tariff impact to remain competitive.
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Daniel Moore (CJS Securities): Asked about capital allocation priorities given recent share repurchases and M&A; CFO Matt Dunn confirmed continued focus on balanced shareholder returns, with no change in capital allocation strategy.
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Tim Wojs (Baird): Sought details on the portion of tariff costs being absorbed versus passed on through price increases; management clarified that only a portion is being passed through, as tariffs affect a relatively small percentage of goods.
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Kurt Yinger (D.A. Davidson): Asked about seasonal demand patterns and gross margin trajectory for the back half of the year; management expects traditional seasonality and aims to keep gross margin flat year-over-year despite input cost pressures.
Looking ahead, the StockStory team will be monitoring (1) the impact of June price increases on both demand and margin trends, (2) the ramp-up and operational effectiveness of new facilities in Ohio and Tennessee, and (3) any shifts in U.S. housing starts and broader construction activity, especially as interest rate expectations evolve. Additionally, we will track progress on digital solutions adoption and OEM channel expansion as indicators of above-market growth potential.
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