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Date

Monday, July 28, 2025, at 5 p.m. ET

Call participants

  • President and Chief Executive Officer — Michael Olosky
  • Chief Financial Officer — Matt Dunn

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Risks

  • President and Chief Executive Officer Olosky stated, "There is a second round of or another round of tariffs that went in impact after we announced our price increase in April that we need to think through. And just a lot of unknowns, and we wanna make sure that we're doing everything we can to hit our guidance."
  • Chief Financial Officer Dunn said, "the cost of inventory certainly is going up on imported items a tariff standpoint. So while the dollars may be going up a bit, the pounds are flat to down."
  • Management reaffirmed guidance with a full-year 2025 operating margin midpoint of 19.5%, below the year-to-date result of 22.2% as of Q2, citing "a lot of uncertainty" in the second half of 2025, including market softness and incremental tariff headwinds.
  • Management indicated a "slightly lower overall gross margin" outlook for fiscal 2025 due to recently imposed tariffs, partially offset by price increases and facility expansions.

Takeaways

  • Consolidated net sales— $631.1 million in consolidated net sales for Q2 2025, up 5.7% year over year, with flat global volumes and price/mix gains offsetting softness in residential construction.
  • North America revenue— $492.7 million in net sales for North America in Q2 2025, up 6.4% year over year; volume was flat to slightly up, with year-to-date volume in North America down approximately 1% versus the prior year and a $9 million contribution from acquisitions.
  • Europe revenue— $133.4 million in net sales in Europe for Q2 2025, up 2.7% year over year, but decreased by $2.8 million in local currency due to volume contraction, offset by approximately $7 million in foreign currency translation.
  • Gross margin— 46.7% gross margin (GAAP) for Q2 2025, unchanged year over year, as input and labor cost increases and tariff-related pressure were offset by targeted price increases that only partially cover second-round tariff costs.
  • Operating margin— 22.2%, steady with last year, in Q2 2025 and Europe reaching an operating income margin of 11.7% in Q2 2025, its best Q2 margin in over a decade.
  • Net income— $103.5 million, or $2.47 per diluted share in Q2 2025, compared to $97.8 million, or $2.31 per share in Q2 2024 (GAAP).
  • Adjusted EBITDA— Adjusted EBITDA was $159.6 million, up 4.8%, for a 25.3% margin in Q2 2025.
  • Cash flow from operations— $124.7 million in cash flow from operations in Q2 2025, with inventory down $32.2 million from Q1 2025.
  • Capital allocation— $39.9 million deployed for capex in Q2 2025, $11.8 million for dividends in Q2 2025, $5.6 million in debt reduction in Q2 2025, and $35 million spent on 216,645 shares repurchased at a $161.55 average price in Q2 2025; $40 million in buyback authorization remains available for repurchases through year-end 2025.
  • Price action and tariffs— The June 2 North America price increase had a partial-quarter effect in Q2 2025; "mid single digits" pricing realized, with the full impact expected in the back half of 2025, and further potential pricing responses under review due to an additional 25% tariff on certain imported products.
  • Facility expansion— On-time, under-budget opening of expanded Columbus, Ohio facility (May), and the Gallatin, Tennessee facility to be fully operational by year-end 2025, increasing in-house fastener production to 50% and reducing tariff exposure.
  • Outlook and guidance— Fiscal 2025 guidance reaffirmed—operating margin range of 18.5%-20.5%, effective tax rate of 25.5%-26.5%, and reduced capex guidance of $140 million-$160 million (including $70 million-$75 million for Columbus and Gallatin facilities), expectation to return at least 35% of free cash flow to shareholders, and net sales growth in Q2 2025 driven by market share gains relative to US housing starts.
  • Operational efficiencies— Year-to-date headcount reduction achieved through attrition, with management emphasizing ongoing cost discipline to protect margins in a slow or low-growth market.
  • Product mix— Wood product sales up 5% year over year in Q2 2025, concrete product sales up 9.2% year over year in Q2 2025; wood gross margin at 47.1% in Q2 2025 and concrete gross margin at 45% in Q2 2025.
  • Business segments— OEM volumes were up double digits in Q2 2025; commercial volumes up mid-single digits year over year; component manufacturer volumes up mid-single digits year over year; national retail relatively flat; residential down slightly on sustained market headwinds.
  • Digital and software enhancements— Notable launches and improvements in digital solutions and engineering software, driving customer gains and expanded equipment offerings in the component manufacturer segment.

Summary

Simpson Manufacturing(SSD -1.04%) delivered a 5.7% net sales increase and stable gross margins in Q2 2025, citing price realization and selective acquisitions as primary growth drivers amid challenging end-market conditions and sluggish housing activity. Tariff headwinds have resulted in a lowered gross margin outlook for fiscal 2025, partially offset by price increases and supply chain adjustments, including ramping up domestic production of fastener products. Leadership signaled risk in the form of continued market volatility and sequentially softer demand for the second half, leading to a cautious reaffirmation of operating margin guidance, a focus on strict cost controls, and ongoing opportunistic capital allocation.

  • Chief Financial Officer Dunn stated, "There were only, you know, essentially three weeks and change in the quarter when the price increase was in effect in Q2 2025." Dunn pointed to pricing tailwinds that have not yet fully flowed through the income statement.
  • Management expects the sale of the original Gallatin, Tennessee facility to contribute a $12 million-$13 million margin benefit, based on a $19.1 million contracted sale price.
  • Chief Executive Officer Olosky confirmed cost control will continue -- "we've been leveraging attrition" -- with headcount down from the start of the year and an intent to maintain at least a 20% operating margin.
  • The price increase in North America averaged 8% across SKUs, which is the right way to think about the back half of the year when the price increase is fully implemented, with further pricing actions under consideration due to additional tariffs on imported steel, anchors, and related items employed in several product lines.
  • The European segment's improvement in Q2 2025 was driven by margin expansion, favorable currency, and efficiencies, but underlying local-currency sales fell, signaling continued macro weakness.

Industry glossary

  • OEM— Original Equipment Manufacturer: Simpson Manufacturing’s arm selling engineered products or components to other manufacturers for integration into their finished products.
  • Component manufacturer— Industry partner producing prefabricated structural elements using Simpson Manufacturing’s products and digital solutions, often serving residential and commercial construction.
  • Fastener— Metallic construction product such as screws, bolts, and anchors for securing components within wood, steel, or concrete building assemblies.
  • SG&A— Selling, general, and administrative expenses: including R&D, selling, administrative, and IT costs related to company operations and expansion.

Full Conference Call Transcript

Mike Olosky, Simpson's President and Chief Executive Officer.

Michael Olosky: Thanks, Kim. Good afternoon, everyone, and thank you for joining today's call. With me today is Matt Dunn, our Chief Financial Officer. Today, my remarks will provide an overview of our second quarter performance and highlights from our key end markets. Matt will then walk you through our financials and our fiscal 2025 outlook in greater detail. Now turning to our results. Our net sales of $631.1 million reflected growth over the prior year quarter in a challenging residential housing market in both the US and Europe. While our second quarter volumes were relatively flat year on year, our North volumes once again exceeded U.S. housing starts by approximately 240 basis points over the last twelve months.

In North America, net sales totaled $402.7 million, up 6.4% from $463 million last year. Our results included a contribution of roughly $9 million from our 2020 acquisitions. Additionally, we benefited from a partial month contribution from the price increases that went into effect on June 2. Collectively, these items offset our flat volumes. As a reminder, software services and equipment are not included in our volume calculations. Our North American volume results were mixed in the second quarter, though sales to all of our end markets continue to demonstrate at or above market growth on a trailing twelve-month basis. The OEM business had a strong quarter with volume up double digits over Q2 2024.

We saw significant growth in solutions for mass timber and continued momentum in off-site construction, including post frame, shed, and modular manufacturers. In the commercial business, volumes improved mid-single digits year over year, driven by the continued strong performance of our adhesive and cold form steel product lines. Our takeoff services, which generate an accurate bill of material, continue to add value and build customer loyalty, helping us win additional cold form steel projects. In the component manufacturer business, we delivered mid-single digit volume growth year over year. Our customer-centric digital solutions and expanded equipment offering contributed to the above-market performance.

In the second quarter, we expanded our customer base and launched key enhancements to our digital solutions portfolio, strengthening existing partnerships and delivering greater value to our customers. Our national retail business experienced relatively flat shipment growth, while point of sale performance improved with mid-single digit gains. This was driven by new product listings and expanded retail space secured in late 2024. Growth was primarily fueled by our strong performance in our outdoor accents product line and anchoring products, increased e-commerce activity, and pro-growth initiatives within our two largest retail partners. In the residential business, volumes declined slightly versus last year due to continued challenging market conditions.

We remain focused on driving customer conversions and expanding product lines with a particular emphasis on delivering integrated equipment and software solutions tailored for pro suppliers and builders. Additionally, we are encouraged by the recent momentum in the multifamily market. Finally, I'm proud to share that our dedication to relentless customer service resulted in several renewed partnership agreements with key builders and a supplier award announced in the second quarter from David Weekley Homes. Turning to Europe, our net sales of $133.4 million increased 2.7% compared to the prior year but decreased by $2.8 million on a local currency basis.

Although volumes were down year over year, our European business continues to outperform local markets driven by new application launches and recent customer wins. Consolidated gross margin was 46.7%, consistent with the prior year quarter despite higher input and labor costs. As a reminder, on June 2, we implemented targeted price increases in North America in direct response to rising input costs, both material and nonmaterial, as well as a portion related to recent trade policy actions. While our supply chain is primarily domestic, we do source certain components, including fasteners, from countries affected by the newly imposed tariffs.

These increases offset some, but not all, of the incremental tariff-related costs as of the date of our price increase announcement, resulting in a modest negative impact to gross margin. Looking ahead, the expansion of tariffs on steel and related products announced in early June could prompt additional pricing actions, which we are currently evaluating. However, we believe that disciplined cost management, targeted pricing strategies, and ongoing productivity initiatives position us to maintain our gross margins while continuing to make selective investments and enhance customer service. Our second quarter operating margin was relatively flat with the prior year at 22.2%. Consolidated adjusted EBITDA totaled $159.9 million, an increase of 4.8% year over year.

Next, I'd like to touch on our three financial ambitions. First, continuing above-market growth relative to US housing starts. For 2025, we are updating our assumption for US housing starts to be down in the low single digits compared to 2024. In Europe, housing starts are expected to remain broadly in line with 2024 levels. We are focusing on continuing to grow above the market. Next, maintaining an operating income margin at or above 20%. In a favorable growing market environment, we are confident in our ability to sustain at least a 20% operating margin.

And finally, as a growth-focused company with industry-leading margins, we believe we can consistently drive EPS growth ahead of net sales growth, as evidenced by our year-to-date earnings per share increasing by approximately 260 basis points ahead of our revenue growth. In summary, we delivered a solid quarter with revenue growth and stable volumes that outpaced the broader market despite continued macro housing headwinds. Our solid operating margin and disciplined cost control underscore the resilience of our team and our business model. We continue to believe in the prospects of the housing market in the mid to long term.

In the short term, we remain focused on being the partner of choice and maintaining our margins in this dynamic operating environment. With that, I'd like to turn the call over to Matt, who will discuss our financial results and outlook in greater detail.

Matt Dunn: Good afternoon, everyone. Thank you for joining us on our earnings call today. Before I begin, I'd like to mention that unless otherwise stated, all financial measures discussed in my prepared remarks refer to 2025, and all comparisons will be year-over-year comparisons versus the second quarter of 2024. Now turning to our results. Our consolidated net sales increased 5.7% year over year to $631.1 million. Within the North America segment, net sales increased 6.4% to $492.7 million. In Europe, net sales increased 2.7% to $133.4 million, primarily due to the positive effect of approximately $7 million in foreign currency translation, which was partly offset by lower sales volume.

Globally, wood construction product sales were up 5%, and concrete construction product sales were up 9.2%. Consolidated gross profit increased 5.7% to $294.5 million, resulting in a gross margin of 46.7%, in line with the second quarter of 2024. On a segment basis, our gross margin in North America was 49.7%, marginally lower than the 50% reported in the prior year, due primarily to higher warehouse costs as a percentage of net sales. Our gross margin in Europe increased to 36.2% from 35.4%, primarily due to lower material costs. From a product perspective, our second quarter gross margin was 47.1% for Wood Products, compared to 47.2%, and was 45% for concrete products, compared to 47.5%. Now, turning to expenses.

Total Q2 operating expenses were $154.4 million, an increase of 6.5%, driven by higher personnel costs primarily from our 2024 acquisitions, as well as variable compensation and computer software and hardware costs. As of June 30, our headcount was down slightly from the start of the year. As a percentage of net sales, Q2 2025 operating expenses were 24.5%, compared to 24.3% last year. We are focused on ensuring our spending results in above-market growth while targeting an operating income margin above 20%, consistent with our long-term strategic objective.

Given the current outlook for housing starts and the recent price increases, in addition to the year-to-date headcount reductions mentioned above, we anticipate the cadence of SG&A investment will continue to moderate. To further detail our second quarter SG&A, our research and development expenses increased by 4.1% to $20.8 million. Selling expenses increased by 3.6% to $56.4 million, primarily due to higher travel-related costs. On a segment basis, selling expenses in North America were up 6.5%, and in Europe, they were down 5.8%. General and administrative expenses increased by 9.4% to $77.2 million, largely as a result of higher personnel costs, including increased variable compensation and computer hardware and software costs.

As a result, our second quarter consolidated income from operations totaled $140.2 million, an increase of 6.1% from $132.2 million. Our consolidated operating income margin was 22.2%, generally consistent with last year at 22.1%. In North America, income from operations increased 2.7% to $135.7 million, driven by higher net sales. In Europe, income from operations increased 29% to $15.7 million due to reduced operating expenses on higher gross margins, including a slight favorability from foreign exchange. This resulted in our highest second quarter operating income margin in more than a decade of 11.7%, compared to 9.4% last year. Our midterm goal in Europe remains an operating income margin of 15%, predicated on improved market conditions.

Our second quarter effective tax rate was 25.8%, approximately 50 basis points below the prior year period. Accordingly, net income totaled $103.5 million, or $2.47 per fully diluted share, compared to $97.8 million, or $2.31 per fully diluted share. Adjusted EBITDA for the second quarter was $159.6 million, an increase of 4.8%, resulting in a margin of 25.3%. Now turning to our balance sheet and cash flow. Our balance sheet remained healthy with cash and cash equivalents totaling $190.4 million at June 30, 2025, up $40.1 million from our balance at March 31, 2025, due to higher net income and lower inventory levels.

Our debt balance was approximately $374.5 million, net of capitalized finance costs, and our net debt position was $184.1 million. We have $450 million remaining available for borrowing on our primary line of credit. Our inventory position as of June 30, 2025, was $586.6 million, which was down $32.2 million compared to our balance as of March 31, 2025, with lower pounds of inventory on hand. Our disciplined capital allocation strategy ensures that our investments are aligned with market dynamics and long-term value creation. We generated strong cash flow from operations of $124.7 million for the second quarter.

This enabled us to invest $39.9 million for capital expenditures, including our investments for facility upgrades and expansions, pay $11.8 million in dividends to our stockholders, and pay down $5.6 million of our term loan. In addition, we repurchased 216,645 shares of common stock at an average price of $161.55 per share for a total of $35 million. As of June 30, $40 million remained available for repurchases through year-end 2025 under our $100 million authorization. Next, I'll turn to growth investments. We held the grand opening of our expanded Columbus, Ohio facility in May. The project finished on time and under budget.

Our Gallatin, Tennessee facility is scheduled to open in 2025 and is expected to become fully operational by the end of this year. This facility will play a critical role in helping to support growth and enhance operational efficiency across our fastener product lines. As a reminder, this new greenfield expansion will enable us to manufacture approximately 50% of our fastener products in-house. This shift to primarily domestic production will reduce our tariff exposure, improve responsiveness to customer demand, and enable us to more effectively compete for larger projects with short lead times that we could not historically fulfill with imported fasteners. Additionally, we are continuing to integrate our 2024 acquisitions.

At the same time, we are evaluating potential M&A opportunities in alignment with our strategic objectives. Next, I'll turn to our 2025 financial outlook. Based on business trends and conditions as of today, July 28, we are reaffirming our guidance for the full year ending December 31, 2025, as follows. We continue to expect our operating margin to be in the range of 18.5% to 20.5%. Additional key assumptions include a revised expectation for US housing starts to be down in the low single-digit range from 2024 levels.

Additionally, we are expecting a slightly lower overall gross margin based on the recently imposed tariffs, which we anticipate will be partly offset by the price increases that went into effect on June 2, as well as the addition of new facilities as a percentage of net sales. Our margin guidance also includes a projected benefit of $12 million to $13 million from the sale of the original Gallatin, Tennessee property, based on a contracted sales price of $19.1 million.

Next, interest expense on our term loan, which had borrowings of $374.5 million as of June 30, 2025, is expected to be approximately $2 million, including the benefit from interest rate and cross-currency swaps, mitigating substantially all of the volatility from changes in interest rates. Interest on our cash and money markets is expected to offset this expense. Our effective tax rate is estimated to be in the range of 25.5% to 26.5%, including both federal and state income tax rates, based on current laws.

And finally, we are reducing our capital expenditures outlook to be in the range of $140 million to $160 million, which includes approximately $70 million to $75 million for the completion of both the Columbus facility expansion and the new Gallatin fastener facility. In closing, we performed well in the first half of 2025. We are focused on achieving our financial ambitions through the balance of the year despite ongoing macroeconomic uncertainty, and we'll continue to monitor our investments to ensure that they are aligned with market conditions. We also remain committed to returning at least 35% of our free cash flow to stockholders, reinforcing our emphasis on balancing growth with maximizing stockholder returns.

As always, we are focused on being the partner of choice by providing our customers with world-class service, support, and innovation. With that, I will now turn the call over to the operator to begin the Q&A session.

Operator: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Our first question comes from the line of Daniel Moore with CJS Securities. Please proceed.

Daniel Moore: Thank you. Good afternoon, Mike and Matt, and thanks for taking the questions. Maybe start, just make sure, I heard correctly. I think you said a $9 million contribution in the quarter from acquisitions and then the balance of revenue growth predominantly price with volumes relatively flat. Is that the right way to kind of think about the buckets in the quarter?

Matt Dunn: Yeah. Yeah, Dan. This is Matt. $9 million from acquisitions in the quarter is correct, which is acquisitions we acquired last year that we haven't quite anniversaried. There was a little bit of exchange rate help in the quarter as well from Europe. I think about $7 million. And then pricing was really the balance of it. Volume, you know, largely flat.

Daniel Moore: Perfect. Thank you. And then margins, obviously, solid quarter generated op margins of 22 little over 22%. Bringing, you know, the h one margin to nearly 21%. Yet, we're kind of maintaining the full year outlook with 19.5 at the midpoint. I realize there's seasonality. You know, q '4 is usually lighter, but it implies a bit of a step down just you know, are you expecting you talked about maybe the gross margin headwind from tariffs, but is there anything else And is there maybe a little bit of conservatism built in and know, kind of an uncertain macro environment?

Michael Olosky: Actually, Dan, you said it perfectly well in that last statement, a lot of uncertainty. I mean, when you look at the market, the forecast that we get from Zonda and the message we hear from our customers, second half is going to be a little bit tougher. There is a second round of or another round of tariffs that went in impact after we announced our price increase in April that we need to think through. And just a lot of unknowns, and we wanna make sure that we're doing everything we can to hit our guidance.

Daniel Moore: Helpful. I appreciate it. And then this is more of a housekeeping question, but maybe just what drove the reclassification of expenses And does it have is there any implication for the overall level of spend or investment going forward?

Matt Dunn: No. There was a change that we made as we brought on primarily, as we brought on a new CTO you know, mid last year. And wanted to align kinda where the work was happening and where the leadership was. So we moved move some dollars from one bucket within SG and A to another, but, you know, essentially a left pocket, right pocket and no real change in the work being done or the spend. Just more of a kind of a housekeeping thing, like you said.

Daniel Moore: Okay. And then maybe one or two quick ones on cash flow and capital allocation. You got a little bit of an inventory benefit in the quarter. How should we think about kind of working capital more generally for the balance of the year? And then you continue to buy back stock with the stock having pulled back a bit. I think you said 40,000,000 left on the authorization is the foresee the potentially replenishing that, or is that sort of, you know, 100,000,000 as we think about that as what you have left to work with for the balance of the year. Thanks again for taking all the questions.

Matt Dunn: Yeah. I'll take the last part there on the on the stock repurchase. You know, we're sitting at 60,000,000 through the front half of the year against our 100,000,000 authorization from the board. I think and then, like, in our outlook, there's a lot of uncertainty but we remain focused on returning free cash flow to shareholders and being opportunistic when we have that opportunity. So I think the you know, the authorization for the year is you know, is clear, and, you know, we're always looking to, you know, do what we can there from the standpoint of being opportunistic. So no nothing specific there yet, but more to come. Helpful.

And just kinda working capital as we think about Yeah. Sorry. Working capital, I think, you know, seasonally, know, the higher volume quarters for us are Q2 and Q3, where we tend to work down inventory a bit. There's a lot of wildcards out there about steel pricing and inventory levels. So as you know, we tend to try to hedge steel prices through inventory more so than, you know, a specific hedging program. So we remain you know, kind of vigilant and opportunistic in the market based on what we see from a steel standpoint and also knowing that the volume forecast is a bit variable.

So think not a whole lot different than where we've been from that standpoint. The cost of inventory certainly is going up on imported items a tariff standpoint. So while the dollars may be going up a bit, the pounds are flat to down.

Daniel Moore: Got it. Okay. I'll I'll circle back if there's any follow ups. Thank you.

Matt Dunn: Thanks. Thanks, Dan. Thanks, Dan.

Daniel Moore: Thank you.

Operator: Our next question comes from the line of Tim Wojs with Baird. Please proceed.

Timothy Wojs: Hey, guys. Good afternoon. Nice job. Good afternoon. Maybe just maybe just first, just a clarification. On the North America business, were volumes up Were volumes up in Q2? Or is that organic number predominantly price?

Matt Dunn: The volumes are pretty much flat. On the quarter. Tim. The revenue numbers driven by price, the carryover of the acquisitions, which generally don't have volume if you think about equipment and software, which was two of the big acquisitions from last year. They don't factor in the volume calculation. And then the last piece is a little bit of exchange rate help coming from Europe.

Timothy Wojs: Okay. But I guess in North America, I mean, I guess what I'm trying to get at is you only had a couple weeks of price, I think, in the quarter. So I'm just trying to square the 5%, you know, with only a couple weeks of price relative to your price increase and kinda flattish volumes. What it seems like there's something there that I'm missing.

Matt Dunn: No. Tim, if you look at year to date volumes, North America we are down roughly 1% versus prior year.

Timothy Wojs: Okay. Year to date basis. Okay. Year to date.

Matt Dunn: Year to date. Down 1% versus prior year. North American volumes.

Timothy Wojs: Okay. So the price contribution was, like, mid single digits in the quarter?

Matt Dunn: Yeah. I think that's right. I mean, the volume on quarter, I think it's up slightly in North America because we were down a little bit the first quarter. So maybe we're getting a point of volume in North America getting a point from the acquisitions, and then you know, the balance is pretty much pricing in the quarter.

Timothy Wojs: Okay. Okay. And the reason I'm clarifying is because I think the price realization actually accelerates or fully anniversaries into the back half of the year. Right? So if we would assume kind of flattish volumes, you should actually get more pricing realization in the third and fourth quarter relative to Q2?

Matt Dunn: Yeah. There was only, you know, essentially three weeks and change of the quarters where the price increase was in effect in Q2.

Timothy Wojs: Okay. Okay. Gotcha. And then, I guess, when you're thinking about just kind of a more difficult housing kind of market, has your ability to take share changed at all? Either positively or negatively, or is it pretty similar to, like, one in the market which growing two or three years ago? Do you guys have to do anything differently?

Michael Olosky: Yeah. It's a position doesn't change, Tim. I think when the market's growing like crazy, it's all about service and making sure that the job site's up and running. When the market slows down and there's an big emphasis on affordability, it's doing everything we can to help our customers be successful. It's value engineering. It's looking at lower installed cost. It's looking at things like our Estafram saw that helps develop cut packages. It's better software that can develop a more accurate bill of material and reduce waste. So, you know, the overall business model, I don't think changes much.

But what we emphasize in a fast growing market versus a market where maybe you've got more time to there's more emphasis on affordability. There is a different emphasis within the business model.

Timothy Wojs: Okay. And then just on the headcount that you mentioned, was that is it lower because of normal attrition, or did you guys do something maybe more structural with the organization?

Michael Olosky: Yeah. Tim, we've been leveraging attrition. To help us get to that point where we're below prior year.

Timothy Wojs: Okay. Okay. Sounds like that'll continue.

Michael Olosky: Yes. I mean, we are committed to the guide, and we're committed to getting to 20% with a little bit of help from the market. And until things pick up, we need to be very cost disciplined and that's one of the ways we're being cost disciplined.

Timothy Wojs: Okay. Sounds good. Thank you guys for the answers.

Matt Dunn: Alright. Thanks, Tim. Thanks, Tim.

Timothy Wojs: Thank you.

Operator: Our next question comes from the line of Kurt Yinger with D. A. Davidson. Please proceed.

Kurt Yinger: Great. Thanks, and good afternoon. Just wanted to guess, stick with pricing to start. Maybe you could just confirm, is the 8% kinda weighted average increase in North America still the right way to think about kind of the back half as that's fully implemented for a quarter? And then secondly, you kind of referenced some of the incremental tariff headwinds relative to when you announced the price increases. Guess going forward, how do you kind of balance competitive dynamics know, you alluded to affordability. Just a minute ago. You know, versus that end goal of making sure the business is positioned to maintain a 20% operating margin?

Matt Dunn: Yep. Yep. Kurt, you're right. The weighted average age for percent is the right way to think about it. That was our the net of the kind of the published list price increases that went out in early April and were implemented in June. In terms of how we think about going forward, I'll I'll let Mike jump in here.

Michael Olosky: Yeah. Yeah. When we look at it, mean, we're focused on helping our customers win. We're focused on making sure that we're delivering great service and innovative solutions. And our products are adding a lot of value associated with that. So we believe that's worth a modest premium At the same time, we're doing everything we can to make sure that we can control costs. So in a slow to low growth market, we can get close to that 20% operating income.

Kurt Yinger: Got it. And when you think about I guess, that modest premium, right, and ensuring you're not out of whack with that kind of traditional spread. I guess, from a competitive standpoint, like, does it does it feel like or are you seeing increases out there that would allow you to make another move of, you know, a smaller magnitude or something like that.

Matt Dunn: I mean, Kurt, I would say, know, just stepping back, our connector business is largely sourced with US deal, like, tariffs don't have a direct impact, although they impact steel prices. I think where we see bigger tariff impacts is on imported items. In fact, and anchors, and we compete against a number of different competitors in those space, some of which are similar footprint to us, and that some is domestically sourced and some is imported, others are exclusively imported. So we're we're watching what's happening with various competitors in the space, you know, where we're positioned in the market, you know, and trying to trying to strike that balance.

So, obviously, we're getting additional tariff costs from the tariffs that were announced June 4, the additional 25% on imports We have not announced any pricing related to that, obviously, because our price increase was announced in April. So something we're watching very closely. I think you know, ultimately, just kinda depends where that all nets out and where we see competition and you know, making sure that we're delivering what we need to deliver, but at the same time, you know, focused on affordability challenges in the market. And making sure that we continue to deliver good customer service.

Kurt Yinger: Okay. That's great. And then could you maybe just talk about kinda order progression through the quarter? Anything visible to you guys in terms of you know, maybe a little bit of prebuying ahead of the price increase? We saw, you know, May and June starts, sequentially weaker. Or have you kinda seen that same type of progression on a year over year basis in your business? Can you just talk maybe a little bit more about that from a monthly perspective?

Michael Olosky: Yeah. Yeah. So, Kurt, we did not see any substantial prebuying. And, you know, when we look at the market forecast for the second half of the year and how our second half is starting, it's very much in line with the market forecast. Things are definitely softer.

Kurt Yinger: Perfect. And then just lastly, I think you mentioned customer expansion in the component manufacturer space. Maybe just provide a little bit more color there? And then I you'd also reference maybe some improvements on the software side. So detail there's would be great.

Michael Olosky: Yeah. So we continue, we believe, to make really good progress on the software perspective. You know, we've got a couple areas we're working on to improve the engineering part of our trust solutions. We are also working on tools that can help our customers manage their overall project list. We've got, that we're working on to help them improve the, basically, the supply chain and the manufacturing of the trusses, And we're making good progress in that space. We look at the solutions that we have today, it's a really good fit for a lot of customers. And as a result, we continue to pick up share and deliver the value proposition that we've been delivering everybody else.

Kurt Yinger: Perfect. Appreciate the color. Thank you.

Michael Olosky: Thanks, Kurt. Thank you.

Operator: There are no further questions at this time. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.