Simpson Manufacturing (NYSE:SSD) reported second-quarter 2026 net sales of $671.1 million, up 6.3% from the prior-year period, as pricing actions, favorable mix and foreign exchange more than offset modestly lower sales volumes.
President and Chief Executive Officer Michael Olosky said the company’s 2025 pricing actions contributed approximately 5% to sales growth during the quarter, while sales mix and foreign currency each added about 1%. Those gains were partially offset by an approximately 1% decline in volume amid softer construction markets.
Margins improve, aided by pricing and settlement gain
Consolidated gross profit increased 8.6% to $318.2 million, with gross margin rising 100 basis points to 47.4%. Olosky said the improvement reflected last year’s price increases, which contributed about $34 million in quarterly net sales, partly offset by higher factory and overhead costs as a percentage of sales.
The company’s Gallatin facility, which opened late last year, created about $1.5 million, or 20 basis points, of startup-cost pressure on gross margin during the quarter. Chief Financial Officer Matt Dunn said the impact improved from the first quarter and is expected to continue moderating through the year.
Operating income increased 20.6% to $169.1 million, and operating margin expanded to 25.2% from 22.2% a year earlier. The margin included a 100-basis-point benefit from a $5.5 million eminent domain settlement. The company also incurred about $500,000 in one-time costs associated with strategic cost-savings initiatives.
Dunn said the 300-basis-point operating-margin expansion was driven by three roughly equal factors: the Texas settlement gain, improved gross-margin absorption and efficiency, and operating-expense leverage as expenses remained essentially flat while revenue grew.
Operating expenses increased 1% to $154.4 million but declined as a percentage of sales to 23% from 24.2%. SG&A headcount was down approximately 8% year over year. Higher expenses from the company’s non-qualified deferred compensation program and incentive-based compensation partly offset lower personnel, travel, advertising and certain professional costs.
North America pricing offsets softer volumes; Europe posts record margin
North American net sales increased 6% to $522.3 million, including an approximate $30 million benefit from pricing actions. North American gross margin reached 50.2%, up from 49.5% a year earlier, while operating income rose 15.8% to $158 million. The segment’s operating margin increased to 30.2% from 27.7%.
Globally, wood construction product sales rose 6.1%, while concrete construction product sales increased 7.4%. Concrete product gross margin improved to 48.3% from 45%, reflecting lower material costs as a percentage of sales and pricing, according to Dunn.
In Europe, net sales rose 7.6% to $143.5 million, including approximately $3.7 million of favorable foreign currency translation. On a local-currency basis, sales grew 4.9%. Olosky said European volume increased about 3%, supported by healthy customer engagement and several project wins, including mass timber projects.
European operating income increased 25.7% to $19.7 million, and operating margin reached a record 13.7%, compared with 11.7% a year earlier. Dunn attributed the improvement to higher gross profit and continued cost control, while Olosky said the company remains focused on a midterm goal of reaching a 15% European operating margin.
Growth areas include component manufacturing and OEM
Olosky said the component manufacturer business delivered mid-single-digit volume growth during the quarter, driven by new customer wins and a greater share of connector spending from existing customers. Customers continued to focus on labor efficiency, throughput and operational visibility, he said.
The company plans to launch its Cornerstone program, a cloud-based truss software platform covering production, design and project management software, at the BCMC show in the fall. Dunn said the launch could broaden Simpson’s access to customers and support growth over a multiyear period, though he does not expect an immediate step change in quarterly results.
OEM volumes increased by high single digits, supported by material handling, anchoring solutions, engineered applications and customer expansion. Simpson also continued building its mass timber pipeline through project specifications, wins and investments in engineering, testing and field support.
Residential volumes declined modestly amid housing affordability pressures, though Olosky cited relative strength in multifamily construction, fire rebuild activity, selected regions and new product adoption. Commercial volumes also declined modestly as construction activity remained mixed. The national retail business posted a slight year-over-year volume increase, supported by merchandising initiatives, Outdoor Accents expansion and a fastener merchandising pilot expected to expand later this year.
Outlook reflects steel, mix and housing pressures
Simpson narrowed its full-year 2026 consolidated operating-margin outlook to a range of 19.7% to 20.5%. The company continues to expect U.S. housing starts to decline by low single digits in 2026 and expects flat to modest market growth in Europe.
Dunn said Simpson still expects full-year gross margin to be slightly lower than in 2025. While second-quarter gross margin exceeded the first quarter’s level, rising steel prices, tariffs, depreciation costs and reduced pricing benefits in the second half are expected to pressure results.
“We do not anticipate maintaining the same rate of revenue growth through the back half of 2026 as we fully lap last year’s increases and navigate mix and steel cost headwinds,” Dunn said.
The company expects $2 million to $4 million in European footprint-optimization costs, along with a $10 million to $12 million gain from the sale of vacant land in the second half. Capital expenditures are now projected at $80 million to $90 million, up from the prior range due to timing changes for certain projects.
As of June 30, Simpson had $450.5 million in cash and cash equivalents and $336.7 million in debt, resulting in a net cash position of $113.8 million. Inventory declined by $80.7 million from year-end to $513.5 million. The company generated $250.6 million in operating cash flow during 2026 through the second quarter.
Year to date, Simpson spent $98.7 million repurchasing common stock and returned $23.9 million through dividends. Its board increased the 2026 repurchase authorization by $50 million to $200 million on July 23, leaving $76.8 million available through year-end at that date.
About Simpson Manufacturing (NYSE:SSD)
Simpson Manufacturing Co, Inc, through its Simpson Strong-Tie® brand, is a leading global supplier of structural building products. The company specializes in the design, testing, manufacture and supply of connectors, anchors, fasteners and lateral systems that enhance the safety and performance of wood, concrete and masonry structures. Its product portfolio also includes repair and strengthening systems, concrete reinforcement and high-performance adhesives used in residential, commercial and industrial construction projects.
Founded in 1956 by Barclay Simpson in Oakland, California, Simpson Manufacturing has grown from a single product business into a diversified manufacturer with worldwide operations.
