Simpson Manufacturing Plans More Price Increases As Steel Climbs Over 50% To A Four-Year High
The CEO said productivity cannot offset steel costs, and the CFO put fourth-quarter operating margin near 14% against 22.1% in the third.
Simpson Manufacturing will announce further price increases within weeks because steel costs have jumped, CEO Michael Olosky said on the company's third-quarter earnings call on Monday. Steel is up over 50% from a year ago and at its highest level in more than four years, he said.
Steel costs outrun productivity
Simpson Manufacturing, which makes structural connectors, anchors and fasteners for wood and concrete construction, sold mainly under the Simpson Strong-Tie brand, faces what Olosky called "some big headwinds" from steel. Other inflation adds to the pressure, and the company is "just not able to offset all that with productivity efforts," he said.
Olosky said the details of the new pricing would come in the next few weeks. CFO Matt Dunn said that if the increase follows the usual pattern, it would take effect in early January, and that the company typically tries to price to hold its gross margin percentage.
Prior increases still help a little: Dunn said pricing should add less than 1% to fourth-quarter sales, before any new increases. Third-quarter net sales rose 2.3% to $638.1 million, with pricing contributing 2.5 points of growth and global volumes roughly flat.
A lower fourth-quarter margin
Management cut its full-year operating margin outlook to 20.0% to 20.5%. Asked by an analyst at Baird whether that implied a big sequential step-down, Dunn replied, "You're doing the math right."
He put fourth-quarter operating income at roughly 14% of sales, possibly the upper 13% range, even with an expected gain of about $11 million on a vacant land sale that closed in early October. The third-quarter operating margin was 22.1%. Dunn said the drop is not much different from the normal seasonal pattern, since fourth-quarter volume is typically lower, and he cited steel costs and employee investments tied to the company's 70th anniversary.
Olosky expects volume to be down slightly for the rest of the year, and said early indications for the 2027 market are flattish.
Buybacks and a thinner steel stockpile
The board approved a new $1 billion share repurchase authorization with no expiration date, replacing a $200 million plan. The company bought $66.3 million of stock in the quarter. Dunn said no acquisitions are active, and the company could step up buybacks if none appear.
Net income was $109.1 million, or $2.68 a share, against $107.4 million, or $2.58, a year earlier. Inventory fell $82.3 million from December 31, 2025, and North American steel pounds on hand are down 31.5% as Simpson buys steel in smaller, just-in-time lots instead of big purchases. Dunn expects raw steel inventory and cost per pound to rise.
The board also declared a quarterly dividend of $0.30 a share, payable on January 28, 2027, to holders of record on January 7, 2027.
Sources
- Simpson Manufacturing: Q3 Earnings Snapshot | 9news.com — Associated Press
- North American Morning Briefing: Stock Futures Point Toward Gains as Fed Decision Nears -2- | Morningstar — morningstar.com
- Simpson Manufacturing announces new $1B share repurchase plan (SSD:NYSE) — seekingalpha.com
- Simpson (SSD) Q3 earnings: what to expect — Yahoo Finance
- Simpson Manufacturing Co., Inc. Declares Quarterly Dividend – Company Announcement - FT.com — Financial Times
