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What changed in Simpson Manufacturing Co., Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Simpson Manufacturing Co., Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+262 added−256 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-28)

Top changes in Simpson Manufacturing Co., Inc.'s 2024 10-K

262 paragraphs added · 256 removed · 213 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

64 edited+5 added−6 removed31 unchanged
Biggest changeThe Company has an ever-growing suite of advanced technology tools, including software, to improve operational efficiencies in the building industry. The Company’s early software solutions started by supporting engineers and designers with product selection and specification applications as well as estimating solutions for builders and retailers.
Biggest changeThe growth of the Company’s business as well as many of its current growth initiatives have been and are currently facilitated by its current technology and software solutions, as well as its ongoing digital development initiatives. The Company has an ever-growing suite of advanced technology tools, including software, to improve operational efficiencies in the building industry.
Our products for concrete construction products are used in concrete, masonry and steel building applications and include adhesives, chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber reinforced materials, and other repair products used for protecting and strengthening structures.
Our products for concrete construction are used in concrete, masonry and steel building applications and include adhesives, chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber reinforced materials, and other repair products used for protecting and strengthening structures.
The Company produces and markets over 15,000 standard and custom products for wood construction applications. These products are used primarily to strengthen, support and connect wood applications in residential and commercial construction and do-it-yourself (“DIY”) projects. The Company’s wood construction products contribute to structural integrity and resistance to seismic, wind and gravitational forces.
Structural Products for Wood Construction. The Company produces and markets over 15,000 standard and custom products for wood construction applications. These products are used primarily to strengthen, support and connect wood applications in residential and commercial construction and do-it-yourself (“DIY”) projects. The Company’s wood construction products contribute to structural integrity and resistance to seismic, wind and gravitational forces.
The Company also intends to expand opportunities with the other OEMs where its products complement their offerings. • Distributors. The Company regularly evaluates its distribution coverage and the service level provided by its distributors, and from time to time implement changes.
The Company also intends to expand opportunities with other OEMs where its products complement their offerings. • Distributors. The Company regularly evaluates its distribution coverage and the service level provided by its distributors, and from time to time implement changes.
The Company continues to develop new potentially patentable products, product enhancements and product designs as well as acquire patented product. The Company also seeks continuation patents for all pending patents and it is dedicated to securing patents for any new developments.
The Company continues to develop new potentially patentable products, product enhancements and product designs as well as acquire patented products. The Company also seeks continuation patents for all pending patents, and it is dedicated to securing patents for any new developments.
The Company is relentlessly focused on providing customers the best in-class field support, technical expertise, digital tools, and training. Our research, rigorous testing, and focus on innovation enable us to design cost-effective, high-performing, and easy-to-install solutions for a multitude of applications in wood, steel, and concrete structures.
The Company is relentlessly focused on providing customers with best in-class field support, technical expertise, digital tools, and training. Our research, rigorous testing, and focus on innovation enable us to design cost-effective, high-performing, and easy-to-install solutions for a multitude of applications in wood, steel, and concrete structures.
Although the Company does not have plans to apply for additional foreign patents covering existing products, the Company is committed to pursuing intellectual property protection for patentable enhancements as appropriate. The Company has developed an international patent program to protect any innovative new products that it may develop, ensuring its competitive advantage is safeguarded.
Although the Company does not have plans to apply for additional foreign patents covering existing products, the Company is committed to pursuing intellectual property protection for patentable enhancements as appropriate. The Company has developed an international patent program to protect any innovative new product that it may develop, ensuring its competitive advantage is safeguarded.
The Company’s customer-facing software and other technology solutions are anticipated to expand over time to address the growing needs of its end-markets to become a larger portion of the Company’s overall value-added offerings. Distribution Channels and Markets The Company seeks to expand existing and identify new distributions channels in the markets it serves and expand into new markets.
The Company’s customer-facing software and other technology solutions are anticipated to expand over time to address the growing needs of its end-markets to become a larger portion of the Company’s overall value-added offerings. Distribution Channels and Markets The Company seeks to expand existing and identify new distributions channels in the markets it serves and expand into new adjacent markets.
See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Human Capital Resources Successful execution of our strategy is largely dependent on attracting, developing and retaining key employees and leaders. The skills, experience, industry knowledge, and contributions of our employees significantly benefit our operations and performance.
See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Human Capital Resources Successful execution of the Company's strategy is largely dependent on attracting, developing and retaining key employees and leaders. The skills, experience, industry knowledge, and contributions of our employees significantly benefit our operations and performance.
We intend to disclose on our website any amendment to, or waiver of, any provisions of our Code of Business Conduct and Ethics that apply to any of our directors, executive officers or senior financial officers that would otherwise be required to be disclosed under the rules of the SEC or the New York Stock Exchange (the "NYSE").
We intend to disclose on our website any amendment to, or waiver of, any provisions of our Code of Business Conduct and Ethics that apply to any of our directors, executive officers or senior financial officers that would otherwise be required to be disclosed under the rules of the SEC or the 11 New York Stock Exchange (the "NYSE").
The Company intends to increase penetration of the residential market by expanding its markets in which it sells products directly to lumber dealers and cooperatives. The Company's sales force maintains ongoing contact with these customers and supports the inventory levels, resets, and displays. • Home Centers.
The Company intends to increase penetration of the residential market by expanding to markets in which it sells products directly to lumber dealers and cooperatives. The Company's sales force maintains ongoing contact with these customers and supports the inventory levels, resets, and displays. • Home Centers.
In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, where you may obtain a copy of all information we file publicly with the SEC. The SEC website address is www.sec.gov. 11
In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, where you may obtain a copy of all information we file publicly with the SEC. The SEC website address is www.sec.gov.
As noted above, the same efforts to mitigate the Company's reliance on housing starts have also softened the effects of seasons and adverse weather on the Company's quarterly results.
As noted above, the same efforts to mitigate the Company's reliance on housing starts have also softened 9 the effects of seasons and adverse weather on the Company's quarterly results.
The Company works closely with manufacturers of engineered wood, composite laminated timber and original equipment manufacturers ("OEMs") for off-site construction to develop and expand the application and sales of its engineered wood connector, fastener, anchor, and truss products. The Company has relationships with many of the leaders in these industries.
The Company works closely with manufacturers of engineered wood, composite laminated timber and OEMs for off-site construction to develop and expand the application and sales of its engineered wood connector, fastener, anchor, and truss products. The Company has relationships with many of the leaders in these industries.
Included in this category are connectors, holddowns, and truss connector plates. • Fasteners - The fastening line includes various nails, screws and staples, which are complemented by the Company's multiple screw fastening systems, which are used in numerous applications such as building envelope applications, decking, subfloors, drywall and roofing; and • Lateral-Force Resisting Systems - Lateral-force resisting systems are assemblies used to resist earthquake or wind forces and include pre-fabricated steel and wood shearwalls, Anchor Tiedown Systems (ATS), and yield-link connections for steel moment and braced frames.
Included in this category are connectors, holddowns, and truss connector plates. • Fasteners - The fastening line includes variety of nails, screws and staples, which are complemented by the Company's multiple screw fastening systems, which are used exclusively in numerous applications such as building envelope applications, decking, subfloors, drywall and roofing; and • Lateral-Force Resisting Systems - Lateral-force resisting systems are assemblies used to resist earthquake or wind forces and include pre-fabricated steel and wood shearwalls, Anchor Tiedown Systems (ATS), and Yield-Link connections for steel moment and braced frames.
We’ve successfully increased our market share over the years through: • designing and marketing end-to-end construction product systems; • product availability with delivery in typically 24 hours to 48 hours; • strong customer support and education for engineers, builders, contractors and building officials; • extensive product testing capabilities at our state-of-the-art test lab; • strong relationships with engineers that get our products specified on the blueprint and pulled through to the job site; and • active involvement with code officials to improve building codes and construction practices.
The Company has successfully increased its market share over the years through: • designing and marketing end-to-end construction product systems; • product availability with delivery in typically 24 hours to 48 hours; • strong customer support and education for engineers, builders, contractors and building officials; • extensive product testing capabilities at our state-of-the-art test lab; • strong relationships with engineers that get our products specified on the blueprint and pulled through to the job site; and • active involvement with code officials to improve building codes and construction practices.
The steel market continues to be dynamic, with a high degree of uncertainty about future pricing trends. Numerous factors may cause steel prices to increase in the future. In addition to increases in steel prices, steel mills may add surcharges for zinc, energy and freight in response to increases in their costs.
The steel market continues to be dynamic, with a high degree of uncertainty about future pricing trends. Numerous factors may cause steel prices to increase in the future. In addition to increases in steel prices, steel mills may impose surcharges for zinc, energy and freight in response to their rising costs.
In 2023, through our research and development efforts, the Company developed over 50 new products expanding its product offerings by adding: • new connectors and lateral products for wood framing applications; • new connectors and fasteners for mass timber and offsite constructions; • connections for structural steel construction; • new connectors for cold formed steel applications; • new fastener products and tools for wood construction; • new mechanical and adhesive anchors for concrete and masonry construction; and • new repair and strengthening systems for concrete and masonry applications.
In 2024, through our research and development efforts, the Company developed over 65 new products expanding its product offerings by adding: • new connectors and lateral products for wood framing applications; • new connectors and fasteners for mass timber and offsite constructions; • connections for structural steel construction; • new connectors for cold formed steel applications; • new fastener products and tools for wood construction; • new mechanical and adhesive anchors for concrete and masonry construction; and • new repair and strengthening systems for concrete and masonry applications.
This test and load information is used by architects, engineers, contractors, building officials, and homeowners in selecting our products and comparing them to those of competitors, and is useful across all applications of the Company’s products, ranging from the deck constructed by a homeowner to a multi-story structure designed by an architect or engineer. Structural Products for Wood Construction.
This test and load information is used by architects, engineers, contractors, building officials, and homeowners in selecting our products and comparing them to those of competitors, and is useful across all applications of the Company’s products, ranging from the wood deck constructed by a homeowner to a multi-story steel structure designed by an architect or engineer.
The Company’s sales to home centers increased year-over-year in 2023, 2022 and 2021. • Wood Component Manufacturers. The company works directly with wood component manufacturer customers.
The Company’s sales to home centers increased year-over-year in 2024, 2023 and 2022. • Wood Component Manufacturers. The Company works directly with wood component manufacturer customers.
As a result, the Company is less dependent on U.S. housing starts, though they are still a leading indicator for a portion of our business. Resources Raw Materials The principal raw material used by the Company is steel, including stainless steel.
As a result, the Company is less dependent on U.S. housing starts, though they are still a leading indicator for a significant portion of the business. 8 Resources Raw Materials The principal raw material used by the Company is steel, including stainless steel.
New Products In order to innovate, advance and diversify our product offerings, the Company commits substantial resources to new product development. The majority of SST’s products have been developed through its internal research and development program.
New Products In order to innovate, advance and diversify our product offerings, the Company commits substantial resources to new product development. The majority of our products have been developed through its internal research and development team.
The Company’s strategy is to develop new products on a proprietary basis, to seek patents when appropriate and to rely on trade secret protection for others or depending on availability and circumstances, the Company will acquire products or solutions meeting our strategic initiatives. Since at least 2006, the Company generally develops 15 to 35 new products each year.
The Company’s strategy is to develop new products on a proprietary basis, to seek patents when appropriate, and to rely on trade secret protection for others. Depending on availability and circumstances, the Company will acquire products or solutions meeting our strategic initiatives. 7 Since at least 2006, the Company generally develops 45 to 70 new products each year.
The Company evaluates distributor product mix and conducts promotion to encourage distributors to add the Company's products that complement the mix of their product offerings in their markets. • Contractors. In some markets, the Company sells to a wide range of end customers mainly through direct sales.
The Company evaluates distributors' product mix and conducts promotion to encourage them to add the Company's products that complement the mix of their product offerings in their markets. • Contractors. In some markets, the Company sells to a wide range of end customers (contractors) mainly through direct sales.
Our continuous focus on workplace safety has enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe. Labor Relations As of December 31, 2023, approximately 9% of the Company’s employees are represented by labor unions and are covered by collective bargaining agreements.
Our continuous focus on workplace safety has enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe. Labor Relations As of December 31, 2024, approximately 18.4% of the Company’s employees are represented by labor unions and are covered by collective bargaining agreements.
Engineering and Design Services. The Company’s engineers not only design and test products, but also provide engineering support for customers in connection with a number of products that the Company manufactures and sells. This support might range from the discussion of a load value in a catalog to testing the suitability of an existing product in a unique application.
Engineering and Design Services. The Company’s engineers not only design and test products, but also provide customers with engineering support for a number of products manufactured and sold by the Company. This support might range from the discussion of a load value in a catalog to testing the suitability of an existing product in a unique application.
As described below, the Company’s wood construction products include: • Connectors - Connectors are prefabricated metal products that attach wood, concrete, masonry or steel together and are essential for tying wood construction elements together and create safer and stronger buildings.
As described below, the Company’s wood construction products include: • Connectors - Connectors are prefabricated metal products designed to join wood, concrete, masonry or steel together and are essential for tying wood construction elements together and create safer and stronger buildings.
Seasonality and Cyclicality Although the Company’s sales have been seasonal and cyclical, with operating results varying from quarter to quarter, as a result of the acquisition of ETANCO overall sales are becoming less seasonal.
Seasonality and Cyclicality Although the Company’s sales have been seasonal and cyclical, with operating results varying from quarter to quarter, as a result of our European operations, primarily ETANCO, overall sales are becoming less seasonal.
The Company intends to continue efforts to increase market share in its geographic markets of North America, Europe, and Asia/Pacific as well as across its broad product range through: • An increasingly diverse portfolio of products and software, and a commitment to developing complete solutions for the markets we serve; • Our long-standing reputation, relationships and engagement with engineers, building officials, and contractors to design safer, stronger structures and improve construction standards and practices; • A dedication to innovation and extensive product engineering along with rigorous research and testing in our nine state-of-the-art labs; • Striving for best-in-class field support, technical expertise, digital tools, and training to make it easy to select, specify, install and purchase our products; • Industry-leading product availability and delivery standards on our vast product offering across multiple distribution channels, with typical delivery within 24-48 hours and high fill rates; • A deep commitment to trades education and partnering with organizations that provide training and career opportunities to attract more people to the construction industry and alleviate labor shortages; and • Building out or introducing additional solutions and offerings to our end-market customers in the residential, OEM, commercial, national retail, and component manufacturer areas. 5 Products and Services Historically, the Company’s product lines have encompassed connectors, anchors, fasteners, lateral-force resisting systems, and truss plates, as well as repair and strengthening product lines for the industrial and transportation markets.
The Company intends to continue efforts to increase market share in its geographic markets of North America, Europe, and Asia/Pacific as well as across its broad product range through: • An increasingly diverse portfolio of products and software, and a commitment to developing complete solutions for the markets we serve; • Our long-standing reputation, relationships and engagement with engineers, building officials, and contractors to design safer, stronger structures and improve construction standards and practices; • A dedication to innovation and extensive product engineering along with rigorous research and testing in our nine state-of-the-art labs; • Striving for best-in-class field support, technical expertise, digital tools, and training to make it easy to select, specify, install and purchase our products; • Industry-leading product availability and delivery standards on our vast product offering across multiple distribution channels, with typical delivery within 24-48 hours and high fill rates; • A deep commitment to trades education and partnering with organizations that provide training and career opportunities to attract more people to the construction industry and alleviate labor shortages; and • Expanding our solutions and offerings to our end-market customers in the residential, commercial, OEM, component manufacturer, and national retail areas.
We purchase steel at market prices, which fluctuate as a result of supply and demand driven by prevailing economic conditions in the marketplace.
The Company purchases steel at market prices, which fluctuate as a result of supply and demand driven by prevailing economic conditions in the marketplace.
In an effort to help mitigate our exposure to the cyclicality of the U.S. housing market, as well as to respond to the needs of our customers, we’ve made investments over the years in adjacent products such as anchors, fasteners and software solutions and 8 expanded operations into Europe through acquisitions.
In an effort to help mitigate exposure to the cyclicality of the U.S. housing market as well as to respond to the needs of our customers, the Company has made investments over the years in adjacent products such as anchors, fasteners, and software solutions and expanded operations internationally into Europe.
We continue to develop our software solutions, equipment offerings, and provide better technology solutions increasing our truss connector plate sales as well as other Simpson Strong-Tie core products sales within the component industry. • OEM Relationships.
The Company continues to develop its software solutions, equipment offerings, and provide better technology solutions increasing its truss connector plate sales as well as other Simpson Strong-Tie core products sales within the component industry. • OEM Relationships.
We believe these value-added services are competitive differentiators for us and provide us with a competitive advantage, helping us to achieve industry-leading margins, strong brand recognition and a trusted reputation. We also provide engineering services in support of some of our products and increasingly offer design and other software that facilitates the specification, selection and use of our products.
The Company believes these value-added services are competitive differentiators and provides the Company with a competitive advantage, helping it to achieve industry-leading margins, strong brand recognition and a trusted reputation. The Company also provides engineering services in support of some of our products and increasingly offer design and other software that facilitates the specification, selection and use of our products.
We strive to have a diverse culture of employees representing different genders, ages, ethnicities and abilities by implementing thoughtful, customized solutions and programs.
We strive to have employees representing different genders, ages, ethnicities and abilities by implementing thoughtful, customized solutions and programs.
The Company also has ongoing development of truss software for the design, modeling and truss plate selection for its integrated component manufacturing customers. Competition Simpson is a category creator in the building products space. Our mission is to provide solutions that help people design and build safer, stronger structures.
The Company also continues to focus on the development of truss software for the design, modeling, and truss plate selection for its integrated component manufacturing customers. Competition Simpson is a category creator in the building products space. Its mission is to deliver innovative solutions that help people design and build safer, stronger structures.
We also provide engineering services to support and enhance products and specifications of products while growing our offering of digital tools and design, planning and estimating software to facilitate the specification, selection and use of our products.
Simpson also provides engineering services to support and enhance products and their specification while growing its offering of digital tools and design, planning and estimating software to facilitate the specification, selection and use of our products.
Employees Individual Contributors Middle Management Senior Leadership American Indian or Alaska Native 1% 1% —% —% Asian 11% 11% 8% 14% Black or African American 9% 11% 3% 3% Hispanic or Latino 19% 20% 9% —% Native Hawaiian or Other Pacific Islander 1% 1% —% —% Two or More Races 2% 2% 2% —% White 52% 49% 75% 83% Not disclosed 5% 6% 3% —% Talent Development Our focus on talent development is fundamental to executing our strategy and advancing the development, manufacture, and marketing of innovative products and services.
Employees Individual Contributors Middle Management Senior Leadership American Indian or Alaska Native 1.0% 1.0% —% —% Asian 10.0% 10.0% 8.0% 14.0% Black or African American 9.0% 10.0% 4.0% 3.0% Hispanic or Latino 19.0% 21.0% 9.0% —% Native Hawaiian or Other Pacific Islander 1.0% 1.0% —% —% Two or More Races 2.0% 2.0% 2.0% —% White 52.0% 48.0% 73.0% 77.0% Not disclosed 6.0% 7.0% 4.0% 6.0% 10 Talent Development The Company's commitment to talent development is fundamental to executing our strategy and advancing the development, manufacture, and marketing of innovative products and services.
The Company has also introduced software applications for the DIY and repair and remodel markets. Whether focusing on residential, commercial, or outdoor structures, the Company’s technology solutions are designed to solve challenges, simplify tasks and provide cost-effective product and design recommendations that ultimately enhance customer efficiency and business success.
Whether focusing on residential, commercial, or outdoor structures, the Company’s technology and digital solutions are designed to solve challenges, simplify tasks and provide cost-effective product and design recommendations that ultimately enhance customer efficiency and business success.
These segments are similar in several ways, including similarities in the products manufactured and distributed, the types of materials used, the production processes, the distribution channels and the product applications. The Company sells its products through multiple channels, including the following: • Dealers.
The Asia/Pacific segment includes operations primarily in Australia, New Zealand, China, Taiwan, and Vietnam. These segments are similar in several ways, including similarities in the products manufactured and distributed, the types of materials used, the production processes, the distribution channels and the product applications. The Company sells its products through multiple channels, including the following: • Dealers.
For over 67 years, through Simpson Strong-Tie® brand, we have led the industry in the wood connectors products space and a growing presence in both the concrete and fastener markets in the U.S. and Europe.
Since 1956, through the Simpson Strong-Tie® brand, the Company has led the industry in the wood connectors products space and a growing presence in both the concrete and fastener markets in the U.S. and Europe.
We are also investing in software technology, such as 3D visualization software tools, truss design and specification software and BIM software, in order to drive increased specification and use of our building material products with homeowners, truss component manufacturers, builders and distributors as well as to support our customers with additional solutions and services.
The Company is also investing in software technology, such as 3D visualization software tools, truss design and specification software, Artificial Intelligence ("AI"), and construction-related software, in order to drive increased specification and use of our building material products with engineers, truss component manufacturers, builders, lumber dealers, and homeowners as well as to support our customers with additional solutions and services.
As of December 31, 2023, our employees, including those employed by consolidated subsidiaries, by region were approximately: Asia Pacific 668 Europe 1,555 North America 3,274 5,497 Inclusion and Diversity Our commitment to diversity and inclusion starts at the top with a highly skilled and diverse board.
As of December 31, 2024, our employees, including those employed by consolidated subsidiaries, by region were approximately: Asia Pacific 797 Europe 1,536 Americas 3,539 5,872 Inclusion and Belonging Our commitment to inclusion and belonging starts at the top with a highly skilled and diverse board.
The Company’s engineering, sales, product management, and marketing teams work together with architects, engineers, building inspectors, code officials, builders and customers in the new product development process. 7 The Company’s product research and development is based largely on products or solutions that are identified within the Company, feedback or requests from customers for new or specialty products and in connection with the Company’s strategic initiatives to expand into new markets and/or develop new product lines.
The Company’s product research and development is based largely on products or solutions that are identified within the Company, feedback or requests from customers for new or specialty products or in connection with the Company’s strategic initiatives to expand into new markets and/or develop new product lines.
We have two facility locations with collective bargaining agreements covering tool and die craftsmen, maintenance workers, and sheet-metal workers. In Stockton, California, two union contracts will expire in June 2027 and September 2028, respectively. Also, we have two union contracts in San Bernardino County, California that will expire in February 2025 and in June 2026.
We have two facility locations with collective bargaining agreements covering tool and die craftsmen, maintenance workers, and sheet-metal workers. In Stockton, California, two union contracts will expire in June 2027 and September 2028, respectively. In Riverside, California, two union contracts will expire on February 28, 2025, which is in the process of being renegotiated and in June 2026, respectively.
Presently, the Company primarily serves in three geographic markets, which are also its operating segments, consisting of the North America, Europe and Asia/Pacific segments. The North America segment includes operations primarily in the U.S. and Canada.
Presently, the Company primarily serves in three geographic markets, which are also its operating segments, consisting of the North America, Europe and Asia/Pacific segments. The North America segment includes operations primarily in the U.S. and Canada. The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, The Netherlands, Belgium, Spain, Sweden, Norway, and Italy.
While we do not believe that any single company competes with us across all of our product lines and distribution channels, certain companies compete in one or more product categories and/or distribution channels.
The Company's competitors include many regional or specialized companies, as well as large U.S. and non-U.S. companies or divisions of large companies. While we do not believe that any single company competes with us across all of our product lines and distribution channels, certain companies compete in one or more product categories and/or distribution channels.
As of December 31, 2023, we had the following global gender demographics: Women Men Not Disclosed All employees 22% 69% 9% Individual Contributors 22% 68% 10% Middle Management 19% 74% 7% Senior Leadership 19% 81% —% As of December 31, 2023, our U.S. employees had the following race and ethnicity demographics: All U.S.
As of December 31, 2024, we had the following global gender demographics: Women Men Not Disclosed All employees 22.0% 70.0% 8.0% Individual Contributors 23.0% 68.0% 9.0% Middle Management 20.0% 75.0% 5.0% Senior Leadership 16.0% 84.0% —% As of December 31, 2024, our U.S. employees had the following race and ethnicity demographics: All U.S.
We market our products to the residential construction, commercial construction, original equipment manufacturer ("OEM"), component manufacturers and national retail markets domestically in North America, primarily in the United States, and internationally, primarily in Europe.
The Company markets its products to the residential construction, light industrial, commercial construction, original equipment manufacturer ("OEM"), component manufacturers and national retail markets domestically in North America, primarily in the United States, and internationally, predominantly in Europe. Our European operations includes our subsidiary FIXCO, Invest S.A.S.
Generally, in connection with any engineering services the Company provides, the Company’s engineers serve as a point of reference and support for the customer’s engineers and other service professionals, who ultimately determine and are responsible for the engineering approach and design loads for any project. 6 The growth of the Company’s business, as well as many of its current growth initiatives, have been and are currently facilitated by its current technology and software solutions, as well as its ongoing software development initiatives.
Generally, in connection with any engineering services the Company provides, the Company’s engineers serve as a point of reference and support for the customer’s engineers and other design and construction professionals, who ultimately determine and are responsible for the engineering approach and design loads for any project.
The opportunity to grow and develop skills and abilities, regardless of job role, division, or geographical location is critical to the success of the Company as a global organization.
The opportunity to grow and develop skills and abilities, regardless of job role, division, or geographical location is critical to the success of the Company as a global organization. By investing in the Company's employees’ continuous development, we create a culture where every employee can thrive and grow.
(together with its subsidiaries, "ETANCO"). ETANCO is a leading designer, manufacturer and distributor of fixing and fastening solutions for the European building and construction market.
(together with its subsidiaries, “ETANCO”), which we acquired in 2022 to expand our product portfolio to include commercial building envelope solutions. ETANCO is a leading designer, manufacturer and distributor of fixing and fastening solutions for the European building and construction market.
Additionally, with the acquisition of ETANCO, the Company expanded its product portfolio to include commercial building envelope solutions and significantly increased its market presence across Europe. Many of the Company’s products are code-listed and approved by building code evaluation agencies. To achieve these approvals, the Company conducts extensive product testing, which is witnessed and certified by independent testing laboratories.
The Company also distributes connector, anchor, and adhesive products in Canada, Mexico, Chile, Australia, and New Zealand. Additionally, with the acquisition of ETANCO, the Company expanded its product portfolio to include commercial building envelope solutions and significantly increased its market presence across Europe. Many of the Company’s products are code-listed and approved by building code evaluation agencies.
See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note 19 — Segment Information” to the Company’s consolidated financial statements for financial information regarding revenues by product category.
See “Item 7 — 5 Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note 19 — Segment Information” to the Company’s consolidated financial statements for financial information regarding revenues by product category. The Company has established a presence in Europe through acquisition of companies with existing customer bases and through servicing U.S.-based customers operating in Europe.
The Company believes it is the only U.S. manufacturer with the capability to internally test multi-story wall systems, thus enabling full scale testing rather than analysis alone to prove system performance.
The Company believes it is the only U.S. manufacturer with the capability to internally test multi-story wall systems, thus enabling full scale testing rather than analysis alone to prove system performance. The Company’s engineering, sales, product management, and marketing teams work together with architects, engineers, building inspectors, code officials, builders and customers in the new product development process.
Operating results vary from quarter to quarter and with economic cycles. 9 Although the Company’s sales are also dependent, to a degree, on the North American residential home construction industry, our North America Segment accounted for approximately 78% of our net sales for the fiscal year ended December 31, 2023.
Although the Company’s sales are also dependent, to a degree, on the U.S. residential home c onstruction industry, the North America Segment accounted for approximately 77.8% of our net sales for the fiscal year ended December 31, 2024.
Our Board of Directors, through its Compensation and Leadership Development Committee, monitors the relationship between the pay received by our executive officers, and Human Resources monitors the relationship of pay received by all other employees. We believe our compensation philosophy and strategy are strongly aligned with our corporate strategic priorities and our vision for stockholder value creation.
The Board of Directors, through its Compensation and Leadership Development Committee, monitors the relationship between the pay received by our executive officers, and Human Resources evaluates the compensation program for executive officers. The Company's Human Resources department, along with senior management, evaluates the compensation received by all other employees.
In addition to financial compensation, we offer a health and wellness package to our employees which is designed to provide a range of options that can be personalized to suit their individual and/or family needs.
The Company's compensation philosophy and strategy are strongly aligned with its strategic priorities and its vision for shareholder value creation. In addition to financial compensation, the Company offers a comprehensive health and wellness package to its employees which is designed to provide a range of options that can be personalized to suit their individual and/or family needs.
The Company strategically expanded its software offerings to enhance collaboration with building industry partners in an effort to streamline workflows, reduce labor time and costs, improve accuracy, support scalability, and increase its profitability. The Company has grown its software solutions to support the growth of many customer groups, such as component manufacturers, builders and lumber yards.
The Company’s early software solutions started by supporting engineers and designers with product selection and specification applications as well as estimating solutions for builders and retailers. The Company strategically expanded its software offerings to enhance collaboration with building industry partners in an effort to streamline workflows, reduce labor 6 time and costs, improve accuracy, support scalability, and increase its profitability.
Additionally, weather conditions, such as extended cold or wet weather, which affected and sometimes delayed installation of some of our products, would negatively affect our results of operations.
Additionally, weather conditions, such as extended cold or wet weather, affecting and sometimes delaying installation of some of its products, would negatively affect the Company's results of operations. Operating results vary from quarter to quarter and with economic cycles.
Our products improve the performance and integrity of the structures they are installed in, helping to make those structures more sustainable, and often helping to save lives in times of natural disasters and catastrophe. Currently, 26 of the top 30 U.S. builders (based on number of housing starts per year) are engaged in our builder program.
The Company’s products improve the performance and integrity of the structures they are installed in, helping to make those structures more resilient and sustainable, and often helping to save lives in times of natural disasters and catastrophes.
As part of our ongoing commitment to attract, retain, and inspire our workforce in the United States, we provide remote and flexible work options for positions that support remote work. We regularly engage our partners and benefits consultants to ensure our health and wellness package evolves to meet the needs of our diverse workforce both now and in the future.
As part of an ongoing commitment to attract, retain, and inspire our workforce in the United States, the Company provides remote and flexible work options for positions that support this approach.
Workplace Safety and Health A vital part of our business is providing our workforce with a safe, healthy and sustainable working environment.
The Company regularly engages with its partners and benefits consultants to ensure its health and wellness package evolves to meet the needs of our diverse workforce both now and in the future. Workplace Safety and Health A vital part of our business is providing our workforce with a safe, healthy and sustainable working environment.
These tests also provide the basis of load ratings for the Company’s structural products.
To achieve these approvals, the Company conducts extensive product testing, which is witnessed and certified by independent testing laboratories. These tests also provide the basis of load ratings for the Company’s structural products.
For more information, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Sales The Company attracts and retains customers by designing, manufacturing and selling high quality, high-performing products that are cost-effective and easy for our customers to install.
The Company has continuously manufactured structural connectors since 1956 and believes that it benefits from the strong name recognition of the Simpson Strong-Tie® brand in residential, light industrial, and commercial markets. Sales The Company attracts and retains customers by designing, manufacturing and selling high quality, high-performing products that are cost effective and easy for our customers to install.
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The Company has continuously manufactured structural connectors since 1956 and believes that the Simpson Strong-Tie® brand benefits from strong brand name recognition in residential, light industrial and commercial applications. Acquisition of ETANCO As previously disclosed, on April 1, 2022, the Company successfully completed the acquisition of 100% of the outstanding equity interest of FIXCO Invest S.A.S.
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Products and Services Historically, the Company’s product lines have encompassed connectors, anchors, fasteners, lateral-force resisting systems, and truss plates, as well as repair and strengthening product lines for the industrial and transportation markets.
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We continue to believe that the acquisition of ETANCO will support continued growth in our European business, including expansion into new geographies, sales channels and commercial building offerings.
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The Company has grown its software solutions to support the growth of many customer groups, such as component manufacturers, builders and lumber yards. The Company has also introduced software applications for the DIY and repair and remodel markets.
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The Company has established a presence in Europe through acquisition of companies with existing customer bases, such as the acquisition of ETANCO, and through servicing U.S.-based customers operating in Europe. The Company also distributes connector, anchor, and epoxy products in Canada, Mexico, Chile, Australia, and New Zealand.
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Currently, in the U.S. 26 of the top 30 builders (based on number of housing starts per year) are engaged in our builder program. The Company encounters a variety of competitors that vary by product line, end market, and geographic area.
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The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, The Netherlands, Belgium, Spain, Sweden, Norway, Italy and Romania. The Asia/Pacific segment includes operations primarily in Australia, New Zealand, China, Taiwan, and Vietnam.
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We provide the tools, resources, and opportunities that empower our team to expand their skills, embrace new challenges, and drive our organization’s success. We offer comprehensive global leadership development programs that provide leaders with the training, tools, and experiences necessary to develop their full leadership potential.
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We encounter a variety of competitors that vary by product line, end market and geographic area. The Company's competitors include many regional or specialized companies, as well as large U.S. and non-U.S. companies or divisions of large companies.
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The Company also has two collective bargaining agreements in France, one under the Convention collective nationale de la métallurgie and the other under Plasturgie.
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We continually invest in 10 our employees’ career growth and provide employees access to a wide variety of learning and development resources, including a suite of online courses for developing both soft and technical skills. Our extraordinary leadership development programs provide employees with training, tools and experiences that are targeted to develop their full leadership potential.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, our business is subject to risks and uncertainties associated with international operations, including: • difficulties and costs associated with complying with a wide variety of complex and changing laws, including securities laws, tax laws, employment and pension-related laws, competition laws, U.S. and foreign export and trading laws, and laws governing improper business practices, treaties and regulations; • limitations on our ability to enforce legal rights and remedies; • adverse domestic or international economic and political conditions, business interruption, war and civil disturbance; • changes to tax, currency, or other laws or policies that may adversely impact our ability to repatriate cash from non-U.S. subsidiaries, make cross-border investments, or engage in other intercompany transactions; • future regulatory guidance and interpretations of the tax legislation commonly known as the U.S.
Biggest changeAs a result, our business is subject to risks and uncertainties associated with international operations, including: • difficulties and costs associated with complying with a wide variety of complex and changing laws, including securities laws, tax laws, employment and pension-related laws, competition laws, U.S. and foreign export and trading laws, and laws governing improper business practices, treaties and regulations; • limitations on our ability to enforce legal rights and remedies; • adverse domestic or international economic and political conditions, business interruption, war and civil disturbance; • changes to tax, currency, or other laws or policies that may adversely impact our ability to repatriate cash from non-U.S. subsidiaries, make cross-border investments, or engage in other intercompany transactions; • potential future or existing regulatory guidance and interpretations of the tax legislation, as well as any associated assumptions that the Company makes related to the change; • changes to tariffs or other import or export restrictions, penalties or sanctions, including modification or elimination of international agreements covering trade or investment; 16 • costs and availability of shipping and transportation; • nationalization or forced relocation of properties by foreign governments; • currency exchange rate fluctuations between the U.S. dollar and foreign currencies; and • uncertainty with respect to any potential changes to laws, regulations and policies that could exacerbate the risks described above.
These factors could adversely affect demand for our products and services, and our costs of doing business, and our business, financial condition and results of operations may be harmed. Further, many of our customers in the construction industry are small and medium-sized businesses that are more likely to be adversely affected by economic downturns than larger, more established businesses.
These factors could adversely affect demand for our products and services, and our costs of doing business, our business, financial condition, and results of operations may be harmed. Further, many of our customers in the construction industry are small and medium-sized businesses that are more likely to be adversely affected by economic downturns than larger, more established businesses.
There are many factors that may materially and adversely affect the schedule, cost, and execution of the implementation process, including, without limitation, problems during the design and testing phases of new systems; system delays and malfunctions; the deviation by suppliers and contractors from the required performance under their contracts with us; the diversion of management attention from our daily operations to the implementation project; reworks 16 due to unanticipated changes in business processes; difficulty in training employees in the operation of new systems and maintaining internal control while converting from legacy systems to new systems; and integration with our existing systems.
There are many factors that may materially and adversely affect the schedule, cost, and execution of the implementation process, including, without limitation, problems during the design and testing phases of new systems; system delays and malfunctions; the deviation by suppliers and contractors from the required performance under their contracts with us; the diversion of management attention from our daily operations to the implementation project; reworks due to unanticipated changes in business processes; difficulty in training employees in the operation of new systems and maintaining internal control while converting from legacy systems to new systems; and integration with our existing systems.
If we fail to extend or renegotiate our collective bargaining agreements, if disputes with our unions arise, or if the workers covered by one or more of the collective bargaining agreements engage in a strike, lockout, or other work stoppage, we could have a material adverse effect on production at one or more of our facilities, incur higher labor costs, and, depending upon the length of such dispute or work stoppage, on our business, results of operations, financial position and liquidity.
If we fail to extend or renegotiate our collective bargaining agreements, if disputes with our unions arise, or if the workers covered by one or more of the collective bargaining agreements engage in a strike, lockout, or other work stoppage, we could have a material adverse effect on production at one or more of our facilities, incur higher labor costs, and, depending upon the length of such dispute or work stoppage, on our business, results of operations, financial position a nd liquidity.
Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder and which may discourage, delay or 23 prevent a change in control of our company.
Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder and which may discourage, delay or prevent a change in control of our company.
Claims of intellectual property 15 infringement also might require us to redesign affected products, pay costly damage awards, or face injunctions prohibiting us from manufacturing, importing, marketing or selling certain of our products. Even if we have agreements to indemnify us, indemnifying parties may be unable or unwilling to do so.
Claims of intellectual property infringement also might require us to redesign affected products, pay costly damage awards, or face injunctions prohibiting us from manufacturing, importing, marketing or selling certain of our products. Even if we have agreements to indemnify us, indemnifying parties may be unable or unwilling to do so.
Our ability to raise money by issuing and selling shares of our common or preferred stock depends on general market conditions and the demand for our stock. If we sell stock, our existing stockholders could experience substantial dilution. Our inability to secure additional financing could prevent the expansion of our business, internally and through acquisitions.
Our ability to raise money by issuing and selling shares of our common or preferred stock depends on general market conditions and the demand 22 for our stock. If we sell stock, our existing stockholders could experience substantial dilution. Our inability to secure additional financing could prevent the expansion of our business, internally and through acquisitions.
We depend on our information technology infrastructure for electronic communications among our locations 14 around the world and between our personnel and our subsidiaries, customers and suppliers. We collect and retain large volumes of internal and customer, vendor and supplier data, including some personally identifiable information, for business purposes. We also maintain personally identifiable information about our employees.
We depend on our information technology infrastructure for electronic communications among our locations around the world and between our personnel and our subsidiaries, customers and suppliers. We collect and retain large volumes of internal and customer, vendor and supplier data, including some personally identifiable information, for business purposes. We also maintain personally identifiable information about our employees.
In addition, weather conditions, such as unseasonably warm, cold or wet weather, which affect, and sometimes delay or accelerate installation of some of our products, may significantly affect our results of operations. Sales that we anticipate in one quarter may occur in another quarter, affecting both quarters’ results and potentially our stock price.
In addition, weather conditions, such as unseasonably warm, cold or wet weather, which affect, and sometimes delay or accelerate installation of some of our products, may significantly affect our results of 19 operations. Sales that we anticipate in one quarter may occur in another quarter, affecting both quarters’ results and potentially our stock price.
If a significant portion of those communities were to decide that the design, materials, 13 manufacturing, testing or quality control of our products is inferior to that of any of our competitors or the cost differences between our products and any competitors are not justifiable, our sales and profits could be materially reduced.
If a significant portion of those communities were to decide that the design, materials, manufacturing, testing or quality control of our products is inferior to that of any of our competitors or the cost differences between our products and any competitors are not justifiable, our sales and profits could be materially reduced.
Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, damage to our reputation and credibility, and could have a material adverse effect on our business and results of operations.
Misuse of or failure to secure personal information could also result in violation of data privacy laws and 15 regulations, proceedings against us by governmental entities or others, damage to our reputation and credibility, and could have a material adverse effect on our business and results of operations.
Foreign governments where we have operations also implement 17 export, import and sanction laws and regulations, some of which may be inconsistent or conflict with ITAR and EAR. Where we face such inconsistencies, it may be impossible for us to comply with all applicable regulations.
Foreign governments where we have operations also implement export, import and sanction laws and regulations, some of which may be inconsistent or conflict with ITAR and EAR. Where we face such inconsistencies, it may be impossible for us to comply with all applicable regulations.
Our growth may depend on our ability to develop new products and services and penetrate new markets, which could reduce our profitability. Our continued growth depends upon our ability to develop additional products, services and technologies that meet our customers’ expectations of our brand and quality and that allow us to enter into new markets.
Our growth may depend on our ability to develop new products and services and penetrate new markets, which could reduce our profitability. 12 Our continued growth depends upon our ability to develop additional products, services, and technologies that meet our customers’ expectations of our brand and quality and that allow us to enter into new markets.
Many of our products are integral to the structural soundness or safety of the structures in which they are used and we have on occasion found flaws and deficiencies in the design, manufacturing, assembling, labeling, product formulations, chemical mixes 19 or testing of our products.
Many of our products are integral to the structural soundness or safety of the structures in which they are used and we have on occasion found flaws and deficiencies in the design, manufacturing, assembling, labeling, product formulations, chemical mixes or testing of our products.
For example, numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development model (OECD) rules that propose a partial global profit reallocation and a global minimum tax rate of 15%.
For example, numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development model (OECD) rules that propose a partial global profit reallocation and a global minimum tax rate of 15.0%.
As a result, fluctuations in foreign currency exchange rates affect the results of our operations and the value of our foreign assets and liabilities, which in turn may adversely affect results of operations and cash flows and the comparability of period-to-period results of operations.
As a result, fluctuations in foreign currency exchange rates affect the results of our operations and the value of our foreign assets and 18 liabilities, which in turn may adversely affect results of operations and cash flows and the comparability of period-to-period results of operations.
We have a few large customers, the loss of any one of which could negatively affect our sales and profits. Our largest customers accounted for a significant portion of net sales for the years ended December 31, 2023, 2022, and 2021.
We have a few large customers, the loss of any one of which could negatively affect our sales and profits. Our largest customers accounted for a significant portion of net sales for the years ended December 31, 2024, 2023, and 2022.
Changes in government and industry regulatory standards pertaining to health and safety could have a material adverse effect on our business, financial condition or results of operations.
Changes in government and industry regulatory standards pertaining to health and safety and various political factors could have a material adverse effect on our business, financial condition or results of operations.
The cost of producing our products is also sensitive to the price of energy. The selling prices of our products have not always increased in response to raw material, energy or other cost increases, and we are unable to determine to what extent, if any, we will be able to pass future cost increases through to our customers.
The selling prices of our products have not always increased in response to raw material, energy or other cost increases, and we are unable to determine to what extent, if any, we will be able to pass future cost increases through to our customers.
Risks Related to Our International Operations International operations and our financial results in those markets may be affected by legal, regulatory, political, currency exchange and other economic risks. During 2023, revenue from sales outside of the U.S. was $583.4 million, representing approximately 26.4% of consolidated sales.
Risks Related to Our International Operations International operations and our financial results in those markets may be affected by legal, regulatory, political, currency exchange and other economic risks. During 2024, revenue from sales outside of the U.S. was $591.5 million, representing approximately 26.5% of consolidated sales.
Our foreign operations subject us to certain commercial, political and financial risks. Our business in these foreign markets is subject to general political conditions, including any political instability (such as those resulting from war, terrorism and insurrections) and general economic conditions in these markets, such as inflation, deflation, interest rate volatility and credit availability.
Our business in these foreign markets is subject to general political conditions, including any political instability (such as those resulting from war, terrorism and insurrections) and general economic conditions in these markets, such as inflation, deflation, interest rate volatility and credit availability.
Increases in income tax rates, changes in income tax laws or disagreements with tax authorities could adversely affect our financial performance. 18 Increases in income tax rates or other changes in tax laws, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial performance.
Increases in income tax rates or other changes in tax laws, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial performance.
In addition, a significant amount of our manufacturing and production operations are located outside the U.S.
In addition, a portion of our manufacturing and production operations are located outside the U.S.
Regulatory Risks Failure to comply with industry regulations could result in reduced sales and increased costs. We are subject to environmental laws and regulations governing emissions into the air, discharges into water, and generation, handling, storage, transportation, treatment and disposal of waste materials.
Regulatory Risks Failure to comply with industry regulations could result in reduced sales and increased costs. We are subject to environmental laws and regulations governing emissions into the air, discharges into water, and generation, handling, storage, transportation, treatment and disposal of waste materials. We are also subject to other federal and state laws and regulations regarding health and safety matters.
Item 1A. Risk Factors. Investing in our common stock involves a high degree of risk.
Item 1A. Risk Factors. Investing in the Company's common stock involves a high degree of risk.
To determine whether an impairment has occurred, we compare fair value of each of our reporting units with its carrying value. In the past, these tests have led us to incur significant impairment charges.
To determine whether an impairment has occurred, we may utilize "Step Zero" qualitative test or compare fair value of each of our reporting units with its carrying value. In the past, these tests have led us to incur significant impairment charges.
We are also subject to other federal and state laws and regulations regarding health and safety matters. 22 Our manufacturing operations involve the use of solvents, chemicals, oils and other materials that are regarded as hazardous or toxic. We also use complex and heavy machinery and equipment that can pose severe safety hazards, especially if not properly and carefully used.
Our manufacturing operations involve the use of solvents, chemicals, oils and other materials that are regarded as hazardous or toxic. We also use complex and heavy machinery and equipment that can pose severe safety hazards, especially if not properly and carefully used.
General global economic downturns and macroeconomic trends, including heightened inflation, capital market volatility, interest rate and currency rate fluctuations, and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our products due to customers decreasing their inventories in the near-term or long-term, reduction in sales due to raw material shortages, reduction in research and development efforts, our inability to sufficiently hedge our currency and raw material costs, insolvency of suppliers and customers and exacerbate some of the other risks that affect our business, financial condition and results of operations.
Overall economic conditions in the U.S. and globally, including in Europe, including adverse factors such as heightened inflation, capital market volatility, rising or sustained high interest rates, currency rate fluctuations, and economic slowdown or recession, may result in unfavorable conditions that could negatively affect demand for our products due to customers decreasing their inventories in the near-term or long-term, reduction in sales due to raw material shortages, reduction in research and development efforts, our inability to sufficiently hedge our currency and raw material costs, insolvency of suppliers and customers and exacerbate some of the other risks that affect our business, financial condition and results of operations.
If we were found to be liable for violations of anti-corruption laws, we could be liable for criminal or civil penalties or other sanctions, which could have a material adverse impact on our business, financial condition and results of operations. Failure to comply with export, import, and sanctions laws and regulations could materially and adversely affect us.
If we were found to be liable for violations of anti-corruption laws, we could be liable for criminal or civil penalties or other sanctions, which could have a material adverse impact on our business, financial condition and results of operations.
Risks Related to Our Business and Our Industry Business cycles and uncertainty regarding the housing market, economic conditions, political climate and other factors beyond our control could adversely affect demand for our products and services, and our costs of doing business, any of which may harm our business, financial condition and results of operations. 12 The primary drivers of our North America segment are residential remodeling, replacement activities and housing starts.
Risks Related to Our Business and Our Industry Business cycles and uncertainty regarding the housing market, economic conditions, political climate and other factors beyond our control could adversely affect demand for our products and services, and our costs of doing business, any of which may harm our business, financial condition and results of operations.
We are subject to a number of export, import and economic sanction regulations, including the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”) and U.S. sanction regulations administered by the U.S. Department of Treasury, Office of Foreign Assets (“OFAC”).
Failure to comply with export, import, and sanctions laws and regulations could materially and adversely affect us. We are subject to a number of export, import and economic sanction regulations, including the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”) and U.S. sanction regulations administered by the U.S. Department of Treasury, Office of Foreign Assets (“OFAC”).
In addition, when we experience periods with little or no profits, a decrease in compensation based on our profits may make it difficult to attract and retain highly qualified personnel. We may not be able to attract and retain key personnel or may incur significant costs to do so.
In addition, when we experience periods with little or no profits, a decrease in compensation based on our profits may make it difficult to attract and retain highly qualified personnel.
We are a global company with significant revenues and earnings generated internationally, which exposes us to the impact of foreign currency fluctuations, as well as political and economic risks. A significant portion of our net sales and earnings are generated internationally.
We are a global company with significant revenues and earnings generated internationally, which exposes us to the impact of foreign currency fluctuations, as well as political and economic risks. Sales outside of the U.S. accounted for 26.5% of our consolidated net sales and a portion of our earnings in 2024.
Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.
Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made. Increases in income tax rates, changes in income tax laws or disagreements with tax authorities could adversely affect our financial performance.
Accordingly, our business, financial condition and results of operations depend significantly on the stability of the housing and residential construction and home improvement markets, which are affected by conditions and other factors that are beyond our control.
The primary drivers of our North America segment are U.S. housing starts, residential remodeling, and replacement activities. Accordingly, our business, financial condition, and results of operations depend significantly on the stability of the housing and residential construction and home improvement markets, which are affected by conditions and other factors that are beyond our control.
In addition to claims concerning individual products, as a manufacturer, we can be subject to costs, potential negative publicity and lawsuits related to product recalls, which could adversely impact our results of operations and damage our reputation.
In addition to claims concerning individual products, as a manufacturer, we can be subject to costs, potential negative publicity and lawsuits related to product recalls, which could adversely impact our results of operations and damage our reputation. 20 Design defects, labeling defects, product formula defects, inaccurate chemical mixes, product recalls and/or product liability claims could harm our business, reputation, financial condition and results of operations.
While we see having a software interface with the construction industry as a potential growth area, we also face competition from other companies that are focused solely or primarily on the development of software and applications.
We may not be able to adapt quickly enough to keep up with changing demands, and our software may become obsolete. While we see having a software interface with the construction industry as a potential growth area, we also face competition from other companies that are focused solely or primarily on the development of software and applications.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.
Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm and other adverse effects on the Company’s business. 13 Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.
Damage or disruption to our supply chain, including transportation and distribution capabilities, could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of disruptions, or to effectively manage such events if they occur could adversely affect our business or financial results.
Failure to take adequate steps to mitigate the likelihood or potential impact of disruptions, or to effectively manage such events if they occur could adversely affect our business or financial results.
Sales outside of the U.S. accounted for 26.4% of our consolidated net sales in 2023 and we anticipate that sales from international operations will continue to represent a significant portion of our net sales in the future. In addition, many of our manufacturing facilities and suppliers are located outside of the U.S.
We anticipate that sales and earnings from international operations will continue to represent a portion of our net sales and earnings in the future. In addition, many of our manufacturing facilities and suppliers are located outside of the U.S. Our foreign operations subject us to certain commercial, political and financial risks.
Risks Related to Seasonality and Weather Conditions Seasonality and weather-related conditions may have a significant impact on our financial condition from period to period. The demand for our products and services is heavily correlated to both seasonal changes, with operating results varying from quarter to quarter, and unpredictable weather patterns.
The demand for our products and services is heavily correlated to both seasonal changes, with operating results varying from quarter to quarter, and unpredictable weather patterns.
Increases in prices of raw materials and energy, our inability or unwillingness to pass increased costs through to our customers could materially and adversely affect our financial condition or results of operations. We depend on third parties for transportation services and the lack of availability of transportation and/or increases in cost could materially and adversely affect our business and operations.
We depend on third parties for transportation services and the lack of availability of transportation and/or increases in cost could materially and adversely affect our business and operations. Our business depends on the transportation of both our products to our customers and distributors and the transportation of raw materials to us.
We may be unable to recoup part or all of the investments we make in attempting to develop new products and technologies and penetrate new markets. Any of these events could reduce our profitability. We face significant competition in the markets we serve and we may not be able to compete successfully.
We may be unable to recoup part or all of the investments we make in attempting to develop new products and technologies and penetrate new markets. Any of these events could reduce our profitability. Increases in prices of raw materials and energy could negatively affect our sales and profits.
Any such issuance could be used to impede an acquisition of our business that our Board of Directors does not approve, further dilute the equity investments of holders of our common stock and reduce funds available for the payment of dividends to holders of our common stock.
Any such issuance could be used to impede an acquisition of our business that our Board of Directors does not approve, further dilute the equity investments of holders of our common stock and reduce funds available for the payment of dividends to holders of our common stock. 23 Provisions in our amended and restated certificate of incorporation and bylaws or Delaware law might discourage, delay or prevent a change in control of our company or changes in our management.
Our business depends on the transportation of both our products to our customers and distributors and the transportation of raw materials to us. We rely on third parties for transportation services of these items, which services are occasionally in high demand (especially at the end of calendar quarters) and/or subject to price fluctuations.
We rely on third parties for transportation services of these items, which services are occasionally in high demand (especially at the end of calendar quarters) and/or subject to price fluctuations. Damage or disruption to our supply chain, including transportation and distribution capabilities, could impair our ability to manufacture or sell our products.
Our insurance may not be adequate to cover all of our resulting costs, business interruption and lost profits when a major natural disaster or catastrophe occurs.
Our insurance may not be adequate to cover all of our resulting costs, business interruption and lost profits when a major natural disaster or catastrophe occurs. A natural disaster rendering one or more of our manufacturing facilities totally or partially inoperable, whether or not covered by insurance, would materially and adversely affect our business and financial condition.
Interest rate increases or other government actions taken to reduce inflation could also result in recessionary pressures in many parts of the world. The impact of public health crises, could have a significant effect on supply and/or demand for our products and services and have a negative impact on our business, financial condition and results of operations.
The impact of public health crises, could have a significant effect on supply and/or demand for our products and services and have a negative impact on our business, financial condition and results of operations.
Although we believe that our relations with our employees are generally good, no assurance can be 20 given that we will be able to successfully extend or renegotiate our collective bargaining agreements as they expire.
After termination, the union may authorize a strike similar to the strike which was initiated at our Stockton facility in the third quarter of 2019. Although we believe that our relations with our employees are generally good, no assurance can be given that we will be able to successfully extend or renegotiate our collective bargaining agreements as they expire.
One of our responses has been to develop and market sophisticated software and applications to facilitate the specification, selection and use of our product systems. We have continued to commit substantial resources to our software development endeavors in recent years and expect that trend to continue.
One of our responses has been to develop and market sophisticated software and applications to facilitate the specification, selection and use of our product systems.
The price of steel has historically fluctuated on a cyclical basis and has often depended on a variety of factors over which we have no control including geopolitical and macroeconomic conditions and currency exchange rates. Import tariffs and/or other mandates also could significantly increase the prices on raw materials that are critical to our business, such as steel.
Steel is the principal raw material used in the manufacture of many of our products. The price of steel has historically fluctuated on a cyclical basis and has often depended on a variety of factors over which we have no control including geopolitical and macroeconomic conditions and currency exchange rates.
Certain countries, including European Union member states, have enacted or are expected to enact legislation incorporating the global minimum tax with effect as early as 2024 and widespread implementation of a global minimum tax is expected by 2025.
Numerous countries, including European Union member states, have already enacted legislation incorporating the global minimum tax with effect and widespread implementation of a global minimum tax is expected by 2025. While we are subject to Pillar II, the enacted legislative changes to date did not have a material impact to our overall operations.
These arrangements require us to make judgments with which tax authorities may disagree. Tax authorities may impose additional tariffs, duties, taxes, penalties and interest on us.
Our income tax liabilities in the different countries where we operate depend in part on internal settlement prices and administrative charges among us and our subsidiaries. These arrangements require us to make judgments with which tax authorities may disagree. Tax authorities may impose additional tariffs, duties, taxes, penalties and interest on us.
In such event, we may need to seek alternative sources of supply for products for our customers, which may increase the costs to manufacture and deliver our products.
In such event, we may need to seek alternative sources of supply for products for our customers, which may increase the costs to manufacture and deliver our products. 17 We are subject to U.S. and international tax laws that could affect our financial results. We generally conduct international operations through our wholly-owned subsidiaries.
We may not be able to create and further develop commercially successful software and applications. Even if we are able to create and develop initially successful ideas, the technology industry is subject to rapid changes. We may not be able to adapt quickly enough to keep up with changing demands, and our software may become obsolete.
We have continued to commit substantial resources to our software development endeavors in recent years and expect that trend to continue. 14 We may not be able to create and further develop commercially successful software and applications. Even if we are able to create and develop initially successful ideas, the technology industry is subject to rapid changes.
As the legislation becomes effective in countries in which we do business, our taxes could increase and negatively impact our provision for income taxes. This increasingly complex global tax environment could increase tax uncertainty, which could in turn result in higher compliance costs and adverse effects on our financial performance.
As the legislation becomes effective in other countries in which we do business, our taxes could increase and negatively impact our provision for income taxes. As the legislation continues to become effective in countries in which we do business, our taxes could increase and negatively impact our provision for income taxes.
Our work force could become increasingly unionized in the future and our unionized or union-free work force could strike, which could adversely affect the stability of our production and reduce our profitability. A significant number of our employees are represented by labor unions and covered by collective bargaining agreements that will expire between 2025 and 2028.
A significant number of our employees are represented by labor unions and covered by collective bargaining agreements that will expire between 2025 and 2028. Generally, collective bargaining agreements that expire may be terminated after notice by the union.
In furtherance of our business strategy, we routinely evaluate opportunities and may enter into agreements for possible acquisitions, divestitures, or other strategic transactions. A significant portion of our growth has been generated by acquisitions, such as the acquisition of ETANCO and we may continue to acquire businesses in the future as part of our growth strategy.
A significant portion of our growth has been generated by acquisitions, such as the acquisition of ETANCO and we may continue to acquire businesses in the future as part of our growth strategy. Furthermore, there is no assurance that any such transaction will result in synergistic benefits.
We are also subject to regular reviews, examinations and audits by numerous taxing authorities with respect to income and non-income based taxes.
This increasingly complex global tax environment could increase tax uncertainty, which could in turn result in higher compliance costs and adverse effects on our financial performance. We are also subject to regular reviews, examinations and audits by numerous taxing authorities with respect to income and non-income based taxes.
A natural disaster rendering one or more of our manufacturing facilities totally or partially inoperable, whether or not covered by insurance, would materially and adversely affect our business and financial condition. 21 Capital Expenditures, Expansions, Acquisitions and Divestitures Risks Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations.
Capital Expenditures, Expansions, Acquisitions and Divestitures Risks Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations. In furtherance of our business strategy, we routinely evaluate opportunities and may enter into agreements for possible acquisitions, divestitures, or other strategic transactions.
Removed
Global and Economic Risks Global economic conditions, including inflation and supply chain disruptions, could continue to adversely affect our operations.
Added
Import tariffs and/or other mandates also could significantly increase the prices on raw materials that are critical to our business, such as steel. The cost of producing our products is also sensitive to the price of energy.
Removed
Both domestic and international markets experienced significant inflationary pressures in fiscal year 2023 and inflation rates in the U.S., as well as in other countries in which we operate, are currently expected to continue at elevated levels for the near-term. We may be adversely affected during periods of high inflation, mainly from raw material and labor costs.
Added
Increases in prices of raw materials and energy, our inability or unwillingness to pass increased costs through to our customers could materially and adversely affect our financial condition or results of operations. We face significant competition in the markets we serve and we may not be able to compete successfully.
Removed
Inflation could increase our cost of financing, raw materials and labor and could cause our financial results and profitability to decline.
Added
Global and Economic Risks Changes in the global economic environment, inflation, elevated interest rates, recessions or prolonged periods of slow economic growth, and global instability and actual and threatened geopolitical conflict, could continue to adversely affect our operations.
Removed
In addition, the Federal Reserve in the U.S. and other central banks in various countries have raised, and may again raise, interest rates in response to concerns about inflation, which, coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks.
Added
Periods of economic downturn or continued uncertainty could result in difficulty increasing or maintaining our level of sales or profitability and we may experience an adverse effect on our business, results of operations, financial condition and cash flows.
Removed
Increases in prices of raw materials and energy could negatively affect our sales and profits. Steel is the principal raw material used in the manufacture of many of our products.
Added
Political factors that could impact us include, but are not limited to, changes to tax laws and regulations resulting in increased income tax liability, changes in administration resulting in increased or newly imposed tariffs, increased regulation, limitations on exports of energy and raw materials, and trade remedies.
Removed
Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm and other adverse effects on the Company’s business.
Added
Actions taken by the U.S. government could affect our results of operations, cash flows and liquidity. Risks Related to Seasonality and Weather Conditions Seasonality and weather-related conditions may have a significant impact on our financial condition from period to period.
Removed
Tax Cuts and Jobs Act of 2017 (the "Tax Act"), as well as assumptions that the Company makes related to the Tax Act; • changes to tariffs or other import or export restrictions, penalties or sanctions, including modification or elimination of international agreements covering trade or investment; • costs and availability of shipping and transportation; • nationalization or forced relocation of properties by foreign governments; • currency exchange rate fluctuations between the U.S. dollar and foreign currencies; and • uncertainty with respect to any potential changes to laws, regulations and policies that could exacerbate the risks described above.
Added
We may not be able to attract and retain key personnel or may incur significant costs to do so. 21 Our work force could become increasingly unionized in the future and our unionized or union-free work force could strike, which could adversely affect the stability of our production and reduce our profitability.
Removed
We are subject to U.S. and international tax laws that could affect our financial results. We generally conduct international operations through our wholly-owned subsidiaries. Our income tax liabilities in the different countries where we operate depend in part on internal settlement prices and administrative charges among us and our subsidiaries.
Removed
Design defects, labeling defects, product formula defects, inaccurate chemical mixes, product recalls and/or product liability claims could harm our business, reputation, financial condition and results of operations.
Removed
Generally, collective bargaining agreements that expire may be terminated after notice by the union. After termination, the union may authorize a strike similar to the strike which was initiated at our Stockton facility in the third quarter of 2019.
Removed
Furthermore, there is no assurance that any such transaction will result in synergistic benefits.
Removed
Provisions in our amended and restated certificate of incorporation and bylaws or Delaware law might discourage, delay or prevent a change in control of our company or changes in our management.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisks from Cybersecurity Threats Despite our security measures, our information technology and infrastructure may remain vulnerable to disruptions, including as a result of attacks by increasingly sophisticated intruders or others who attempt to cause harm to, or otherwise interfere with the normal use of our systems.
Biggest changeInsurance We maintain cybersecurity insurance coverage at industry standard levels as a part of our comprehensive insurance portfolio to help mitigate risk in the event an information security event occurs. 24 Risks from Cybersecurity Threats Despite our security measures, our information technology and infrastructure may remain vulnerable to disruptions, including as a result of attacks by increasingly sophisticated intruders or others who attempt to cause harm to, or otherwise interfere with the normal use of our systems.
These reports typically include analyses of recent significant cybersecurity threats and incidents at the Company and across the industry, as well as a review of our security controls, assessments and program maturity, risk mitigation status, and a review of our third-party service providers as appropriate.
These reports typically include analyses of recent significant cybersecurity threats and incidents at the Company and across the industry, as well as a review of our security controls, assessments and program maturity, top risks, risk mitigation status, and a review of our third-party service providers as appropriate.
The Simpson Information Security Team monitors information security risks that target both technology and manufacturing environments and identifies potential risks to Simpson’s information security posture. Any identified risks are prioritized in terms of impact to Simpson’s information security posture and, if critical, addressed immediately or added to Simpson’s information security roadmap.
The Company's Information Security team monitors information security risks that target both technology and manufacturing environments and identifies potential risks to Simpson’s information security posture. Any identified risks are prioritized in terms of impact to Simpson’s information security posture and, if critical, addressed immediately or added to Simpson’s information security roadmap.
We employ a robust, global and multi-layered security strategy, known as “defense-in-depth,” to assess, identify and manage cybe rsecurity risks and protect our cyber work environment from potential threats and vulnerabilities.
We employ a robust, global and multi-layered security strategy, known as “defense-in-depth,” to assess, identify and manage cybersecurity risks and protect our cyber work environment from potential threats and vulnerabilities.
Simpson’s information security roadmap and posture are also reviewed quarterly with members of the executive leadership team and the Audit and Finance Committee. In accordance with our information security program, any information security event is assessed and reviewed by our IT Steering Committee.
Simpson’s information security roadmap and posture are also reviewed quarterly with members of the executive leadership team and the Audit and Finance Committee. In accordance with our information security program, any information security event is assessed and reviewed by our Digital Leadership team and members of the executive leadership team.
Our SVP, IT and IT Director have an average of over 35 years of prior work experience in various roles involving information technology, including security, auditing compliance, systems and programming. These individuals have relevant educational and industry experience, including holding similar positions at other large companies.
Our CTO and IT Director have an average of over 25 years of prior work experience in various roles involving information technology, including security, auditing compliance, systems and programming. These individuals have relevant educational and industry experience, including holding similar positions at other large companies.
These efforts are designed to address information security governance and risk, product security, identification and protection of critical assets, third-party risk, security awareness, cyber defense operations and related risk management matters.
These efforts are designed to address information security governance and risk, product security, identification and protection of critical assets, third-party risk, security awareness, cyber defense operations, artificial intelligence and data protection governance, and related risk management matters.
Management’s Role in Assessing and Managing Risk The Company’s information security efforts are led by our Senior Vice President, Information Technology (“SVP, IT”) and our Director of Information Security (“IT Director”), supported by our executive management team.
Management’s Role in Assessing and Managing Risk The Company’s information security efforts are led by our Executive Vice President, Chief Technology Officer (“CTO”) and our Director of Information Security (“IT Director”), supported by our executive management team.
The IT Steering Committee is responsible for assessing and reviewing our information security program and the Company’s material risks from cybersecurity threats. Additional supervision and management is provided by our IT Leadership team, comprised of our SVP, IT; VP, IT Infrastructure and Operations; VP, IT Enterprise Applications; and International IT Director.
Through the Digital QBR process, the executive leadership team is responsible for assessing and reviewing our information security program and the Company’s material risks from cybersecurity threats. Additional supervision and management is provided by our Digital Leadership team, comprised of our CTO; VP, Digital Infrastructure and Operations; VP, Digital Enterprise Applications; and International IT Director.
Our SVP, IT provides relevant cybersecurity and information technology reports to the Audit and Finance Committee, and to the executive leadership team. These reports are provided at quarterly Audit and Finance Committee meetings and at our quarterly Information Technology Steering Committee (“IT Steering Committee”) meetings.
Our CTO provides relevant cybersecurity and information technology reports to the Audit and Finance Committee, and to the executive and senior leadership teams. These reports are provided at quarterly Audit and Finance Committee meetings and at our Digital Quarterly Business Review (“Digital QBR”) meetings.
Removed
Insurance We maintain cybersecurity insurance coverage at industry standard levels as a part of our comprehensive insurance portfolio to help mitigate risk in the event an information security event occurs.
Added
When we do experience cybersecurity incidents like these and the one we disclosed in October 2023, we aim to utilize that experience to inform and strengthen our cybersecurity management efforts.
Removed
On October 11, 2023, we announced that we had experienced disruptions in our Information Technology (IT) infrastructure and applications resulting from a cybersecurity incident. We identified unauthorized activity in our IT systems and took immediate steps to stop, remediate and investigate such activity. We also notified relevant law enforcement.
Added
In response to the October 2023 incident, we increased our phishing awareness training and testing, deployed a cybersecurity tool that continuously monitors and verifies the security posture of individual devices within our network, and deployed technology that provides visibility into our sensitive data across different cloud environments, allowing the identification of potential vulnerabilities and take proactive measures to protect data from unauthorized access, misuse, or theft.
Removed
The incident, which caused disruption of our business operations for approximately three days, has been 24 resolved due to steps we took to address the incident.
Removed
As a result of our ability to restore our operations within three days, we were able to fulfill our backlog of orders caused by the operational disruption within one week, and therefore, we experienced no material financial impact to our business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of February 27, 2024, the Company’s owned and leased facilities were as follows: 25 Number Of Approximate Square Footage Properties Owned Leased Total (in thousands of square feet) North America 32 2,235 1,271 3,506 Europe 38 1,886 668 2,554 Asia/Pacific 9 175 41 216 Administrative and all other 1 89 — 89 Total 80 4,385 1,980 6,365 We believe that our properties are maintained in good operating condition.
Biggest changeAs of February 28, 2025, the Company’s owned and leased facilities were as follows: Number Of Approximate Square Footage Properties Owned Leased Total (in thousands of square feet) North America 47 2,365 1,751 4,116 Europe 37 1,793 836 2,629 Asia/Pacific 9 175 123 298 Administrative and all other 1 92 — 92 Total 94 4,425 2,710 7,135 We believe that our properties are maintained in good operating condition.
The principal manufacturing facilities located outside the U.S., the majority of which we own, are in France, Italy, Denmark, Germany, Poland, Switzerland, Sweden, Portugal and China. We also own and lease smaller manufacturing facilities, warehouses, research and development facilities and sales offices in the U.S., Canada, the United Kingdom, Europe, Asia, Australia, New Zealand, and Chile.
The principal manufacturing facilities located outside the U.S., the majority of which we own, are in France, Italy, Denmark, Germany, Poland, Switzerland, Sweden, Portugal and China. We also own and lease smaller manufacturing facilities, warehouses, research and development facilities and sales offices in the U.S., Canada, the United 25 Kingdom, Europe, Asia, Australia, New Zealand, and Chile.
Our manufacturing facilities are equipped with specialized equipment and use extensive automation. Our leased facilities typically have renewal options and have expiration dates through 2036. We believe we will be able to extend leases on our various facilities as necessary, or as they expire. Currently, our manufacturing facilities are being operated with at least one full-time shift.
Our manufacturing facilities are equipped with specialized equipment and use extensive automation. Our leased facilities typically have renewal options and have expiration dates through 2039. We believe we will be able to extend leases on our various facilities as necessary, or as they expire. Currently, our manufacturing facilities are being operated with at least one full-time shift.
Item 2. Properties. Our headquarters and principal executive offices in Pleasanton, California, and our principal U.S. manufacturing facilities in Stockton and San Bernardino County, California, McKinney, Texas, West Chicago, Illinois, Columbus, Ohio, and Gallatin, Tennessee are located in owned premises.
Item 2. Properties. Our headquarters and principal executive offices in Pleasanton, California, and our principal U.S. manufacturing facilities in Stockton and Riverside, California; McKinney, Texas; Columbus, Ohio; West Chicago, Illinois; and Gallatin, Tennessee are located in owned premises.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRefer to Note 15, “Commitments and Contingencies,” to the Company’s consolidated financial statements included in this Annual Report on Form 10-K for a discussion of recent developments related to certain of the legal proceedings in which we are involved. Item 4. Mine Safety Disclosures. Not applicable. PART II
Biggest changeRefer to Note 15 , “Commitments and Contingencies,” to the Company’s consolidated financial statements included in this Annual Report on Form 10-K for a discussion of recent developments related to certain of the legal proceedings in which we are involved.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn October 19, 2023, the Board of Directors authorized the repurchase up to $100.0 million of the Company’s common stock from January 1, 2024 through December 31, 2024.
Biggest changeOn October 23, 2024, we announced the Board of Directors authorized a new share repurchase program pursuant to which the Company my purchase up to $100.0 million of the Company’s common stock from January 1, 2025 through December 31, 2025. This authorization replaces the previous share repurchase authorizations.
Building Materials & Fixtures Index (a published industry or line-of-business index) and a Peer Group Index over the same period (assuming the investment of $100 in the Company’s common stock and in each of the indices on December 31, 2017, and reinvestment of all dividends into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year).
Building Materials & Fixtures Index (a published industry or line-of-business index) and a Peer Group Index over the same period (assuming the investment of $100 in the Company’s common stock and in each of the indices on December 31, 2019, and reinvestment of all dividends into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year).
See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 27 Stock Performance Graph The following graph compares the cumulative total stockholder return on the Company’s common stock from December 31, 2017, through December 31, 2023, with the cumulative total return on the S&P 500 Index (a broad equity market index), the Dow Jones U.S.
See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 27 Stock Performance Graph The following graph compares the cumulative total stockholder return on the Company’s common stock from December 31, 2019 through December 31, 2024, with the cumulative total return on the S&P 500 Index (a broad equity market index), the Dow Jones U.S.
To provide an additional comparison to our performance, we included an index consisting of companies in the building products or construction materials industries that are most comparable to us in terms of size and nature of operations, which group has also been referenced by us in connection with setting our executive compensation.
To provide an additional comparison to our performance, we included an index consisting of companies in the building products or construction materials industries that are most comparable to us in terms of size and nature of operations, which group has also been referenced by us in connection with setting our executive compensation. The Peer Group Index below consisted of A.O.
Market Information for Common Stock The Company’s common stock is listed on the NYSE under the symbol “SSD.” As of February 22, 2024 there were 61,712 holders of record of the Company’s common stock, although we believe that there are a significantly larger number of beneficial owners of our common stock.
Market Information for Common Stock The Company’s common stock is listed on the NYSE under the symbol “SSD.” As of February 24, 2025 there were 97,545 holders of record of the Company’s common stock, although we believe that there are a significantly larger number of beneficial owners of our common stock.
The Peer Group Index below consisted of AAON, Inc., Advance Drainage Systems, Inc.; Allegion Plc; American Woodmark Corp.; Apogee Enterprises, Inc.; Armstrong World Industries, Inc.; Atkore, Inc.; Axek Company, Inc.; Azek Company, Inc.; Eagle Materials, Inc.; Gibraltar Industries, Inc.; Masonite International Corp.; Patrick Industries, Inc.; PGT Innovations, Inc.; Quanex Building Products Corp.; Summit Materials, Inc.; and Trex Company, Inc. 28 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The table below shows the monthly repurchases of shares of the Company's common stock in the fourth quarter of 2023.
Smith Corporation; AAON, Inc.; Advance Drainage Systems, Inc.; Allegion Plc; American Woodmark Corp.; Apogee Enterprises, Inc.; Armstrong World Industries, Inc.; Atkore, Inc.; Azek Company, Inc.; Eagle Materials, Inc.; Gibraltar Industries, Inc.; James Hardie Industries plc; Lousiana-Pacific Corporation; Patrick Industries, Inc.; Quanex Building Products Corp.; Summit Materials, Inc.; and Trex Company, Inc. 28 Purchases of Equity Securities by the Issuer and Affiliated Purchasers The table below shows the monthly repurchases of shares of the Company's common stock in the fourth quarter of 2024.
See "Note 20 — Subsequent Events" to the Company's consolidated financial statements. Future dividends, if any, will be determined by the Com pany’s Board of Directors, based on the Company’s future earnings, cash flows, financial 26 condition and other factors deemed relevant by the Board of Directors.
Future dividends, if any, will be determined by the Company’s Board of Directors, based on the Company’s future earnings, cash flows, financial condition and other factors deemed relevant by the Board of Directors.
(a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid per Share 1 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)2 October 1 - October 31, 2023 128,093 $ 133.12 128,000 $82,962 November 1 - November 30, 2023 232,746 $ 141.62 232,746 $50,000 December 1 - December 31, 2023 73 $ 166.97 — $50,000 Total 360,912 Approximately 66 thousand shares of the Company's common stock were repurchased in 2023, in connection with the withholding of shares to cover payroll taxes on vesting of stock-based compensation awards vested and for retirement eligible employees who retired during 2023.
(a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid per Share 1 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)2 October 1 - October 31, 2024 165,590 $ 181.87 165,000 $20.0 November 1 - November 30, 2024 111,315 $ 180.32 110,906 $— December 1 - December 31, 2024 13 $ 188.38 — $— Total 276,918 Approximately 41 thousand shares of the Company's common stock were repurchased in 2024, in connection with the withholding of shares to cover payroll taxes on vesting of stock-based compensation awards vested and for retirement eligible employees who retired during 2024.
Approximately 361 thousand shares of the Company's common stock were repurchased in 2023 for a total amount of $50.0 million pursuant to the Board’s $100.0 million repurchase authorization that was publicly announced on December 15, 2022, which authorization expired on December 31, 2023.
Approximately 559 thousand shares of the Company's common stock were repurchased in 2024 for a total amount of $100.0 million which authorization expired on December 31, 2024.
Dividends During 2023, the Company paid a total of $45.2 million in cash dividends. O n January 19, 2024, the Company declared a quarterly cash dividend of $0.27 per share of common stock to be paid on April 25, 2024 to stockholders of record as of April 4, 2024.
Dividends During 2024, the Company paid a total of $46.5 million in cash dividends. On January 31, 2025, the Company declared a quarterly cash dividend of $0.28 per share of common stock to be paid on April 23, 2025 to stockholders of record as of April 3, 2025. See "Note 20 — Subsequent Events" to the Company's consolidated financial statements.
Added
From February 1, 2025 to February 27, 2025, the Company repurchased 146,640 shares of the Company’s common stock in the open market at an average price of $170.48 per share for a total of approximately $25.0 million.
Added
As a result, as of February 28, 2025, approximately $75.0 million remained available for share repurchase through December 31, 2025 under the Company’s previously announced $100.0 million share repurchase authorization. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

57 edited+32 added−21 removed34 unchanged
Biggest changeConsolidated income from operations, income before tax and net income for all periods presented below are not affected by the change in presentation 33 The following table shows the change in the Company’s operations from 2022 to 2023, and the increases or decreases from the prior year, for each category by segment: Increase (Decrease) in Operating Segment North America Asia/ Pacific Admin & All Other (in thousands) 2022 Europe 2023 Net sales $ 2,116,087 $ 15,381 $ 80,453 $ 1,882 $ — $ 2,213,803 Cost of sales 1,174,794 (36,446) 29,021 1,113 1,566 1,170,048 Gross profit 941,293 51,827 51,432 769 (1,566) 1,043,755 Operating expenses: Research and development and other engineering expense 68,354 21,905 2,057 (149) — 92,167 Selling expense 169,378 23,634 10,681 302 (15) 203,980 General and administrative expense 228,468 18,892 15,621 767 4,355 268,103 Operating expenses 466,200 64,431 28,359 920 4,340 564,250 Net gain (loss) on disposal of assets (1,317) 66 908 39 28 (276) Acquisition and integration related costs 17,343 — (12,711) — — 4,632 Income from operations 459,067 (12,670) 34,876 (190) (5,934) 475,149 Interest income (expense), net and other financing costs (7,594) (639) (3,354) 239 14,739 3,391 Other & foreign exchange gain (loss), net (3,408) 4,729 2,306 (98) (5,522) (1,993) Income before taxes 448,065 (8,580) 33,828 (49) 3,283 476,547 Provision for income taxes 114,070 (2,815) 10,243 222 840 122,560 Net income $ 333,995 $ (5,765) $ 23,585 $ (271) $ 2,443 $ 353,987 Net Sales increased 4.6% to $2,213.8 million from $2,116.1 million primarily due to the acquisition and integration of ETANCO as well as the positive effect of $12.7 million in foreign currency translation related mostly to Europe's currencies weakening against the United States dollar.
Biggest changeThe following table sets forth, for the years indicated, the Company’s operating results as a percentage of net sales for the years ended December 31, 2024, 2023 and 2022, respectively: Years Ended December 31, 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 54.0 % 52.9 % 55.5 % Gross profit 46.0 % 47.1 % 44.5 % Research and development and other engineering expenses 4.2 % 4.2 % 3.2 % Selling expense 9.8 % 9.2 % 8.0 % General and administrative expense 12.4 % 12.1 % 10.8 % Total operating expense 26.4 % 25.5 % 22.0 % Acquisition and integration related costs 0.3 % 0.2 % 0.8 % Net gain on disposal of assets — % — % (0.1) % Income from operations 19.3 % 21.4 % 21.8 % Interest income and other finance costs, net 0.2 % 0.2 % (0.4) % Other and foreign exchange loss, net (0.1) % (0.1) % (0.2) % Income before taxes 19.4 % 21.5 % 21.2 % Provision for income taxes 5.0 % 5.5 % 5.4 % Net income 14.4 % 16.0 % 15.8 % Comparison of the Years Ended December 31, 2024 and 2023 Unless otherwise stated, the results announced below, when providing comparisons (which are generally indicated by words such as “increased,” “decreased,” “unchanged” or “compared to”), compare the results of operations for the year ended December 31, 2024, against the results of operations for the year ended December 31, 2023. 32 The following table shows the change in the Company’s operations from 2023 to 2024, and the increases or decreases from the prior year, for each category by segment: Increase (Decrease) in Operating Segment North America Asia/ Pacific Admin & All Other (in thousands) 2023 Europe 2024 Net sales $ 2,213,803 $ 19,457 $ (1,701) $ 580 — $ 2,232,139 Cost of sales 1,170,048 31,511 6,365 461 (2,097) 1,206,288 Gross profit 1,043,755 (12,054) (8,066) 119 2,097 1,025,851 Operating expenses: Research and development and other engineering expense 92,167 (292) 991 710 — 93,576 Selling expense 203,980 14,330 453 639 — 219,402 General and administrative expense 268,103 7,717 3,603 (378) (1,513) 277,532 Operating expenses 564,250 21,755 5,047 971 (1,513) 590,510 Net gain on disposal of assets (276) (145) 26 (24) (28) (447) Acquisition and integration related costs 4,632 — (947) — 2,128 5,813 Income from operations 475,149 (33,664) (12,192) (828) 1,510 429,975 Interest income and other financing costs, net 3,391 597 763 (578) 1,104 5,277 Other and foreign exchange loss, net (1,993) (3,844) (3,397) 1,485 6,540 (1,209) Income before taxes 476,547 (36,911) (14,826) 79 9,154 434,043 Provision for income taxes 122,560 (10,762) (2,103) (42) 2,166 111,819 Net income $ 353,987 $ (26,149) $ (12,723) $ 121 $ 6,988 $ 322,224 Net Sales increased approximately 0.8% to $2.2 billion from prior year, primarily due to higher sales volumes, incremental sales from the Company's 2024 acquisitions, and the positive effect of $3.7 million in foreign currency translation related mostly to Europe's currencies weakening against the United States dollar.
Importantly, we currently have existing products, testing results, distribution and manufacturing capabilities to support our growth ambitions. This will ultimately be a function of expanding our sales and/or marketing functions to promote our products to different end users and distribution channels, expanding our customer base, and potentially introducing new products in the future.
Importantly, we currently have existing products, testing results, distribution and manufacturing capabilities to support our ambitions. This will ultimately be a function of expanding our sales and/or marketing functions to promote our products to different end users and distribution channels, expanding our customer base, and introducing new products in the future.
Discussions of 2021 results and year-to-year comparison between 2022 and 2021 results are not included in this Annual Report on Form 10-K and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 results and year-to-year comparison between 2023 and 2022 results are not included in this Annual Report on Form 10-K and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Refer to "Note 12 - Leases", "Note 14 - Debt" and "Note 15 - Commitment and Contingencies" in Part II, Item 8 for details related to the Company's obligations and debt annual facility fees. The Company did not have any significant off-balance sheet commitments as of December 31, 2023.
Refer to "Note 12 - Leases", "Note 14 - Debt" and "Note 15 - Commitment and Contingencies" in Part II, Item 8 for details related to the Company's obligations and debt annual facility fees. The Company did not have any significant off-balance sheet commitments as of December 31, 2024.
In order to grow in these markets, we aspire to be among the leaders in engineered load-rated construction building products and systems and digital product offerings while leveraging 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.
In order to grow in these markets, we aspire to be among the leaders in engineered load-rated construction building products and systems and digital product offerings. We also aspire 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.
As of December 31, 2023, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions, and includes $106.4 million held in the local currencies of our foreign operations and could be subject to additional taxation if repatriated to the U.S.
As of December 31, 2024, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions, and includes $111.6 million held in the local currencies of our foreign operations and could be subject to additional taxation if repatriated to the U.S.
Accordingly, the Company has not recorded any liability for costs related to these indemnities through December 31, 2023.
Accordingly, the Company has not recorded any liability for costs related to these indemnities through December 31, 2024 . 40
Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85% and 87% of the Company’s total net sales for the years ended December 31, 2023 and 2022, respectively.
Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85.1% and 85.4% of the Company’s total net sales for the years ended December 31, 2024 and 2023, respectively.
Inflation and Raw Materials Inflation rates increased during fiscal year 2023, which have negatively affected labor costs and other costs of doing business, and as such may adversely affect our operating profits if we cannot recover the higher costs through price increases.
Inflation and Raw Materials Inflation rates continued to increase during fiscal year 2024, which negatively affected labor costs and other costs of doing business, and as such may adversely affect our operating profits if we cannot recover the higher costs through price increases.
We expect the expansion and replacement facility will 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 and continue to ensure we have ample capacity to meet our customer needs.
The expanded and new facilities will 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 and continue to ensure we have ample capacity to meet our customer needs.
The following table shows gross margins by segment for the years ended December 31, 2022 and 2023, respectively: North America Europe Asia/ Pacific Admin & All Other Total 2022 gross margin 47.7 % 31.4 % 33.3 % * 44.5 % 2023 gross margin 50.3 % 36.8 % 34.2 % * 47.1 % * The statistic is not meaningful or material.
The following table shows gross margins by segment for the years ended December 31, 2024 and 2023, respectively: North America Europe Asia/ Pacific Admin & All Other Total 2023 gross margin 50.3 % 36.8 % 34.2 % * 47.1 % 2024 gross margin 49.0 % 35.3 % 33.7 % * 46.0 % * The statistic is not meaningful or material.
Based on the qualitative assessment performed, the Company concluded that there was no evidence of events or circumstances that would indicate a material change from the Company’s prior year quantitative assessment by reporting unit and therefore, it was more likely than not that the estimated fair value of reporting units exceeded their respective carrying values The 2023 and 2022 annual testing of goodwill for impairment did not result in impairment charges.
Based on the qualitative assessment performed, the Company concluded that there was no evidence of events or circumstances that would indicate a material change from the Company’s prior year quantitative assessment by reporting unit and therefore, it was more likely than not that the estimated fair value of reporting units exceeded their respective carrying values.
Gross margins, including some inter-segment expenses, which were eliminated upon consolidation, and excluding certain expenses that are allocated according to product group, increased from 44.4% to 47.2% for wood construction products and increased from 43.9% to 46.0% for concrete construction products.
Gross margins, including some inter-segment expenses, which were eliminated upon consolidation, and excluding certain expenses that are allocated according to product group, decreased from 47.2% to 45.6% for wood construction products and increased from 46.0% to 47.5% for concrete construction products.
Cost includes all costs incurred in bringing each product to its present location and condition, as follows: • Raw materials and purchased finished goods — principally valued at cost determined on a weighted average basis; and • In-process products and finished goods — cost of direct materials and labor plus attributable overhead based on a normal level of activity. 36 The Company applies net realizable value and makes estimates for obsolescence to the gross value of inventory.
Cost includes all costs incurred in bringing each product to its present location and condition, as follows: • Raw materials and purchased finished goods — principally valued at a cost determined on a weighted average basis; and • In-process products and finished goods — the cost of direct materials and labor plus attributable overhead based on a normal level of activity.
As of December 31, 2023, the Company had borrowings of $75.0 million under the revolving credit facility and $410.6 million under the term loan facility, and has $375.0 million available to borrow under the revolving credit facility. The Company has certain contractual obligations, primarily debt interest, operating leases and purchase obligations, which include annual facility fees.
As of December 31, 2024, the Company had no borrowings under the revolving credit facility and $388.1 million under the term loan facility, and has $450.0 million available to borrow under the revolving credit facility. The Company has certain contractual obligations, primarily debt interest, operating leases, and purchase obligations, which include annual facility fees.
Unexpected changes in market demand, building codes or buyer preferences could reduce the rate of inventory turnover and require the Company to recognize more obsolete inventory. Business Combinations. Accounting for business combinations requires us to make significant estimates and assumptions.
When impairments are established, a new cost basis of the inventory is created. Unexpected changes in market demand, building codes or buyer preferences could reduce the rate of inventory turnover and require the Company to recognize more obsolete inventory. 36 Business Combinations. Accounting for business combinations requires us to make significant estimates and assumptions.
Our wood construction product sales decreased 0.9% for the year ended December 31, 2023 compared to December 31, 2022, primarily due to product price decreases implemented during the first quarter of 2023, partly offset by increased sales volumes.
Our wood construction product net sales increased 0.5% for the year ended December 31, 2024 compared to December 31, 2023, primarily due to increased sales volumes, partly offset by product price decreases implemented during the first quarter of 2023. Our concrete construction product sales increased 5.0% over the same periods.
Revenue from Contracts with Customers The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer at a point in time. The Company's general shipping terms are Incoterm C.P.T.
The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer at a point in time. The Company's shipping terms provide the primary indicator of the transfer of control. The general shipping terms are Incoterm C.P.T.
Periodically, we evaluate the status of each matter and assess our potential financial exposure. The Company records a liability when we believe that it is both probable that a loss has been incurred, and the amount is reasonably estimable. Significant judgment is required to determine both probability of a loss and the estimated amount.
The Company records a liability when we believe that it is both probable that a loss has been incurred, and the amount is reasonably estimable. Significant judgment is required to determine both probability of a loss and the estimated amount.
In 2023, operating activities provided $427.0 million in cash and cash equivalents as a result of $354.0 million from net income and adding back $101.8 million for non-cash adjustments from net income which includes depreciation and amortization, stock-based compensation and non-cash lease expense, partially offset by a decrease of $28.8 million for the net change in operating assets and liabilities.
In 2024, cash provided by operating activities of $338.2 million in cash and cash equivalents as a result of $322.2 million from net income and adding back $113.4 million for non-cash adjustments from net income which includes depreciation and amortization, stock-based compensation and non-cash lease expense, partially offset by a decrease of $97.5 million for the net change in operating assets and liabilities.
Further, on January 19, 2024, the Board declared a quarterly cash dividend of $0.27 per share payable on April 25, 2024 to stockholders of record on April 4, 2024, and estimated to be $11.5 million in total.
Further, on January 31, 2025, the Board declared a quarterly cash dividend of $0.28 per share payable on April 23, 2025 to stockholders of record on April 3, 2025, and estimated to be $11.8 million in total.
Cash used in financing activities of $199.0 million during the year ended December 31, 2023, consisted primarily of $98.7 million in loan principal payments, $50.0 million for the repurchase of the Company’s common stock and $45.2 million used to pay cash dividends.
Cash used in financing activities of $261.5 million during the year ended December 31, 2024, consisted primarily of $100.8 million in loan principal payments, $100.0 million for the repurchase of the Company’s common stock and $46.5 million used to pay cash dividends.
Due to efforts in diversifying our global footprint with the acquisition of ETANCO and changing our path to market in the United States, sales from our product line, customer base and customer purchases are becoming less seasonal.
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.
Administrative and All Other • General and administrative expense increased $4.4 million, primarily due to increases of $1.2 million in variable compensation, $1.0 million in personnel costs, and $1.0 million professional and legal fees.
Administrative and All Other • General and administrative expense decreased $1.5 million, primarily due to a decrease of $6.1 million in variable compensation costs, partially offset by increases of $2.3 million in professional and legal fees and $1.9 million in personnel costs.
The Company is maintaining a permanent reinvestment assertion on its foreign earnings relative to remaining cash held outside the United States. 38 The following table presents selected financial information as of December 31, 2023, 2022 and 2021, respectively: As of December 31, (in thousands) 2023 2022 2021 Cash and cash equivalents $ 429,822 $ 300,742 $ 301,155 Property, plant and equipment, net 418,612 361,555 259,869 Equity investment, goodwill and intangible assets 883,079 872,699 170,309 Net working capital 521,362 529,945 453,078 The following table presents the significant categories of cash flows for the twelve months ended December 31, 2023, 2022 and 2021, respectively: Years Ended December 31, (in thousands) 2023 2022 2021 Net cash provided by (used in): Operating activities $ 427,022 $ 399,821 $ 151,295 Investing activities (103,251) (870,244) (58,805) Financing activities (199,034) 465,526 (71,616) Cash flows from operating activities result primarily from our earnings, and are also affected by changes in operating assets and liabilities which consist primarily of working capital balances.
The following table presents selected financial information as of December 31, 2024, 2023 and 2022, respectively: As of December 31, (in thousands) 2024 2023 2022 Cash and cash equivalents $ 239,371 $ 429,822 $ 300,742 Property, plant and equipment, net 531,655 418,612 361,555 Equity investment, goodwill and intangible assets 903,498 883,079 872,699 Non-cash net working capital 570,602 521,362 529,945 The following table presents the significant categories of cash flows for the twelve months ended December 31, 2024, 2023 and 2022, respectively: 38 Years Ended December 31, (in thousands) 2024 2023 2022 Net cash provided by (used in): Operating activities $ 338,160 $ 427,022 $ 399,821 Investing activities (259,259) (103,251) (870,244) Financing activities (261,464) (199,034) 465,526 Cash flows from operating activities result primarily from our earnings before non-cash items such as depreciation, amortization, and stock based compensation, and are affected by changes in operating assets and liabilities which consist primarily of working capital balances.
Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15% and 13% of the Company’s total net sales for the years ended December 31, 2023 and 2022, respectively. Gross profit increased to $1,043.8 million from $941.3 million, primarily due to the acquisition and integration of ETANCO.
Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 14.8% and 14.5% of the Company’s total net sales for the years ended December 31, 2024 and 2023, respectively. Gross profit decreased approximately 1.7% to $1.0 billion from prior year, primarily due to lower gross margins.
We have made progress towards our key growth initiatives since they were first announced in 2021.
Since announced in 2021, we made great progress on our key growth initiatives.
General and administrative expense increased 17.3% to $268.1 million from $228.5 million, primarily due to increases of $12.5 million in personnel costs, $7.6 million in depreciation and amortization, $6.0 million in variable compensation, and $1.6 million in travel costs. Our effective income tax rate increased to 25.7% from 25.5%. 34 Net income was $354.0 million compared to $334.0 million.
General and administrative expense increased 3.5% to $277.5 million from $268.1 million, primarily due to increases of $12.8 million in personnel costs, $7.1 million in professional fees, and $1.6 million in depreciation and amortization, partially offset by a decrease of $13.2 million in variable compensation costs. Our effective income tax rate increased to 25.8% from 25.7%.
Our operations also expose us to risks associated with pandemics, epidemics or other public health crises. Business Segment Information Historically, our North America segment has generated more revenues from wood construction products compared to concrete construction products. North America sales increased 0.9% for the year ended December 31, 2023 compared to December 31, 2022.
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 1.1% for the year ended December 31, 2024 compared to December 31, 2023.
The Company revalues obsolete inventory to its net realizable value and has consistently applied this methodology. The Company believes that this approach is suitable for impairments of slow-moving and obsolete inventory. When impairments are established, a new cost basis of the inventory is created.
If on-hand supply of a product exceeds projected demand or if the Company believes the product is no longer marketable, the product is considered obsolete inventory. The Company revalues obsolete inventory to its net realizable value and has consistently applied this methodology. The Company believes that this approach is suitable for impairments of slow-moving and obsolete inventory.
The Company estimates net realizable value based on estimated selling price less further costs through completion and disposal. The Company impairs slow-moving products by comparing inventories on hand to projected demand. If on-hand supply of a product exceeds projected demand or if the Company believes the product is no longer marketable, the product is considered obsolete inventory.
The Company applies net realizable value and makes estimates for obsolescence to the gross value of inventory. The Company estimates net realizable value is based on estimated selling price less further costs expected to be incurred t hrough completion and disposal. The Company impairs slow-moving products by comparing inventories on hand to projected demand.
Political and economic events such as rising energy costs, volatility in the steel market, stressed product transportation systems and increasing interest rates can also have an effect on our gross and operating profits as well.
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. Increasing interest rates, tariffs, political uncertainty due to rising energy costs, volatility in the steel market and stressed product transportation systems, can also have an effect on our gross and operating profits as well.
Lower housing starts could result in lower demand, which would affect the Company's sales and possibly operating profit, Unlike lumber or other products that have a more direct correlation to United States housing starts, our products are used to a greater extent in areas that are subject to natural forces, such as seismic or wind events.
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.
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.
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. 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.
For the fiscal year ended December 31, 2023, the Company returned $95.2 million to the Company's stockholders, which represents 28.1% of our free cash flow from operations during the same period.
For the fiscal year ended December 31, 2024, the Company returned $146.5 million to the Company's shareholders, which represents 92.8% of our free cash flow from operations during the same period. Since the beginning of 2021 to the fiscal year ended December 31, 2024, the Company has returned $430.0 million to shareholders, which represents 45.7% of our free cash flow.
On October 19, 2023, the Company's Board of Directors (the "Board") authorized the Company to repurchase up to $100.0 million of the Company's common stock, effective January 1, 2024 through December 31, 2024.
The Company purchased and received approximately 559 thousand shares of it’s common stock on the open market at an average price of $178.83 per share. On October 23, 2024, the Company's Board of Directors (the "Board") authorized the Company to repurchase up to $100.0 million of the Company's common stock, effective January 1, 2025 through December 31, 2025.
We believe this progress is the result of our high service levels, increasingly diverse portfolio of products and software as well as our commitment to innovation and developing complete solutions for the markets we serve.
In addition, due to our high service levels, increasingly diverse portfolio of products and software as well as our commitment to innovation and developing complete solutions for the markets we serve, we believe we can continue to achieve above market growth in the North America relative to U.S. housing starts for fiscal 2025 and beyond.
Our revenues are derived from manufacturing and sales of building construction materials. Our operating cash flows are subject to seasonality and are cyclically associated with the volume and timing of construction project starts. For example, trade accounts receivable is generally at its lowest at the end of the fourth quarter and increases during the first, second and third quarters.
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.
Prior year costs included a $13.6 million non-recurring fair-value adjustment for inventory costs as a result of purchase accounting with respect to the acquisition of ETANCO. Asia/Pacific • For information about the Company’s Asia/Pacific segment, please refer to the table above setting forth changes in our operating results for the years ended December 31, 2023 and 2022.
Asia/Pacific • For information about the Company’s Asia/Pacific segment, please refer to the table above setting forth changes in our operating results for the years ended December 31, 2024 and 2023.
Net Sales The following table shows net sales by segment for the years ended December 31, 2022 and 2023, respectively: (in thousands) North America Europe Asia/ Pacific Total December 31, 2022 $ 1,701,041 $ 400,303 $ 14,743 $ 2,116,087 December 31, 2023 1,716,422 480,756 16,625 2,213,803 Increase $ 15,381 $ 80,453 $ 1,882 $ 97,716 Percentage increase 0.9 % 20.1 % 12.8 % 4.6 % The following table shows segment net sales as percentages of total net sales for the years ended December 31, 2022 and 2023, respectively: North America Europe Asia/ Pacific Total Percentage of total 2022 net sales 80 % 19 % 1 % 100 % Percentage of total 2023 net sales 78 % 22 % — % 100 % Gross Profit The following table shows gross profit by segment for the years ended December 31, 2022 and 2023, respectively: (in thousands) North America Europe Asia/ Pacific Admin & All Other Total December 31, 2022 $ 810,730 $ 125,616 $ 4,910 $ 37 $ 941,293 December 31, 2023 862,557 177,048 5,679 (1,529) 1,043,755 Increase $ 51,827 $ 51,432 $ 769 $ (1,566) $ 102,462 Percentage increase 6.4 % 40.9 % * * 10.9 % * The statistic is not meaningful or material.
Net Sales The following table shows net sales by segment for the years ended December 31, 2024 and 2023, respectively: (in thousands) North America Europe Asia/ Pacific Total December 31, 2023 $ 1,716,422 $ 480,756 $ 16,625 $ 2,213,803 December 31, 2024 1,735,879 479,055 17,205 2,232,139 Increase (decrease) $ 19,457 $ (1,701) $ 580 $ 18,336 Percentage increase (decrease) 1.1 % (0.4) % 3.5 % 0.8 % The following table shows segment net sales as percentages of total net sales for the years ended December 31, 2024 and 2023, respectively: North America Europe Asia/ Pacific Total Percentage of total 2023 net sales 77.5 % 21.7 % 0.8 % 100.0 % Percentage of total 2024 net sales 77.8 % 21.5 % 0.7 % 100.0 % Gross Profit The following table shows gross profit by segment for the years ended December 31, 2024 and 2023, respectively: (in thousands) North America Europe Asia/ Pacific Admin & All Other Total December 31, 2023 $ 862,557 $ 177,048 $ 5,679 $ (1,529) $ 1,043,755 December 31, 2024 850,504 168,982 5,798 567 1,025,851 Increase (decrease) (12,053) (8,066) 119 2,096 (17,904) Percentage decrease (1.4) % (4.6) % * * (1.7) % * The statistic is not meaningful or material.
Our commitment to continuous improvement has fostered our core Company ambitions, which we continue to pursue including: • Strengthen our values-based culture; • Be the partner of choice; • Be an innovative leader in the markets we operate; • Above market growth relative to the United States housing starts; • An operating income margin within the top quartile of our proxy peers; • Remain within the top quartile of our proxy peers for operating income margin; and • Integrate ETANCO and restoring our return on invested capital to be within the top quartile of our proxy peers.
Our commitment to continuous improvement has fostered our core Company ambitions, which we will pursue including: • Strengthen our values-based culture; • Be the partner of choice; • Be an innovative leader in the markets we operate; • Above market growth relative to the U.S. housing starts (exceeding our historical average volume performance in North America of approximately 250 basis points above the housing starts market); • An operating income margin at or above 20%; and • Earnings per share growth exceeding net revenue growth.
Cash flows from operating activities years ended December 31, 2022 and 2021 are incorporated by reference to Form 10-K 202 2 filing. Contingencies From time to time, we are subject to various claims, lawsuits, legal proceedings (including litigation, arbitration or regulatory actions) and other matters arising in the ordinary course of business.
Contingencies From time to time, we are subject to various claims, lawsuits, legal proceedings (including litigation, arbitration or regulatory actions) and other matters arising in the ordinary course of business. Periodically, we evaluate the status of each matter and assess our potential financial exposure.
Business Outlook Based on business trends and conditions, the Company's outlook for the full fiscal year ending December 31, 2024 is as follows: • Operating margin is estimated to be in the range of 20.0% to 21.5%, including $86.1 million in depreciation and amortization expense. • 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 approximately $200.0 million, which includes $120.0 million for the Columbus, Ohio facility expansion and the new Gallatin, Tennessee fastener facility construction, some of which may carry over to fiscal year 2025. 32 Results of Operations Our discussion of our results focuses on 2023 and 2022 and year-to-year comparisons between those periods.
The operating margin range includes a projected gain between $10.0 million to $12.0 million from the sale of the old Gallatin facility based on a $19.0 million contracted sale price. • The effective tax rate is estimated to be in the range of 25.5% to 26.5%, 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 approximately $150.0 million to $170.0 million, which includes $75.0 million for the Columbus, Ohio facility expansion and construction of the new Gallatin, Tennessee facility.
We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies. 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 do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies. 1 Average price paid per share of common shares repurchased excludes excise tax.
We completed our annual impairment assessment by performing a qualitative assessment during the annual impairment assessment performed in the fourth quarter of 2022. For this qualitative assessment, we assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting units.
We applied the ("Step 0") approach in the fourth quarter of 2024 to assess qualitative factors related to the goodwill of the reporting units to determine whether it is necessary to perform an impairment test. For this qualitative assessment, we assessed various assumptions, events and circumstances that could have affected the estimated fair value of the reporting units.
Cash used in investing activities of $103.3 million during the year ended December 31, 2023, was mostly for capital spending of $88.8 million, which was primarily used for machinery and equipment purchases and facility expansion projects including a land purchase.
Cash used in investing activities of $259.3 million during the year ended December 31, 2024, was primarily for capital spending of $180.4 million for facility expansion projects, and machinery and equipment purchases as well as $79.2 million for the acquisitions of Calculated Structured Designs, Inc.; Monet DeSauw, Inc. and certain properties of Callaway Properties, LLC ("Monet"); and QuickFrames USA, LLC.
Selling expense increased 20.4% to $204.0 million from $169.4 million, primarily due to increases of $14.0 million in personnel costs, $7.3 million in sales commission expense, $2.8 million in travel-related expenses, $2.8 million in professional fees, and $2.5 million in other variable compensation.
Selling expense increased 7.6% to $219.4 million from $204.0 million, primarily due to increases of $17.3 million in personnel costs and $4.0 million in advertising and trade shows, partially offset by a decrease of $7.9 million in variable compensation costs.
Research and development and other engineering expense increased 34.8% to $92.2 million from $68.4 million, primarily due increased personnel costs of $11.7 million and professional fees of $5.7 million associated with our strategic growth initiatives and to further our Building Technologies offering, $3.2 million in variable compensation, and $1.2 million in depreciation and amortization.
Research and development and other engineering expens e increased 1.5% to $93.6 million from $92.2 million, primarily due increased personnel costs of $4.6 million partially offset by a decrease of $3.2 million in variable incentive compensation costs.
The remaining $80.0 million in 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, as well as investments for adjacencies and key growth initiatives.
The remaining $75.0 million to $95.0 million in capital expenditures will be primarily focused on purchases of new equipment to support increased productivity and efficiencies, the timing of which is subject to future events and circumstances.
Since the beginning of 2021 to the fiscal year ended December 31, 2023, we have returned $283.5 million to stockholders, which represents 36.2% of our free cash flow and 39 over the same period the Company has repurchased over $1.4 million shares of the Company's common stock, which represents approximately 3.2% of the outstanding shares of the Company's common stock.
During the same period the Company has repurchased approximately 2.0 million shares of the Company's common stock, which represents approximately 4.5% of the outstanding shares of the Company's common stock.
As we continue to make progress on our growth initiatives, we believe we can continue to achieve above market growth in the United States relative to United States housing starts for fiscal 2024 and beyond. These examples further emulate our Founder, Barclay Simpson’s, nine principles of doing business, and more specifically the focus and obsession on customers and users.
These examples further emulate our Founder, Barclay Simpson’s, nine principles of doing business, and more specifically the focus and obsession on customers and users. Non-GAAP Financial Measures In addition to financial information prepared in accordance with GAAP, we use Adjusted EBITDA as a non-GAAP financial measure in evaluating the ongoing operating performance of our business.
Based on current information and subject to future events and circumstances, capital expenditures are estimated to be approximately $200.0 million for 2024 including the expected spend of $120.0 million on our previously announced Columbus, Ohio facility expansion and replacement of Gallatin, Tennessee facility, with some spend potentially may carrying over to 2025.
In which Monet was acquired for $48.7 million net of cash received. Based on current forecasts, capital expenditures are estimated to range between $150.0 million to $170.0 million for 2025 including the expected spend of $75.0 million to complete the Columbus, Ohio facility expansion and replacement of Gallatin, Tennessee facility.
Factors Affecting Our Results of Operations The Company’s business, financial condition and results of operations depends in large part on the level of United States housing starts and residential construction activity. Both single-family and multi-family housing starts decreased during 2023 compared to the prior two years, primarily due to interest rate increases and inflation.
We believe this will also provide a better approximation of our cash flows compared to operating income. Factors Affecting Our Results of Operations The Company’s business, financial condition, and results of operations depend in large part on the level of U.S. housing starts and residential construction activity.
Europe • Net sales increased 20.1%, primarily due to the acquisition and integration of ETANCO as well as the positive effect of $12.7 million in foreign currency translation related mostly to Europe's currencies strengthening against the United States dollar. • Gross margin increased to 36.8% from 31.4% resulting in an increase in gross profit of $51.4 million, primarily due to lower raw material costs as a percentage of net sales.
Net sales benefited from the positive effect of approximately $3.7 million in foreign currency translation. • Gross margin decreased to 35.3% from 36.8% , p rimarily due to higher factory and overhead as well as warehouse and freight costs, partly offset by lower material costs, as a percentage of net sales. • Income from operations decreased $12.2 million, primarily due to lower gross profit as well as $5.0 million in higher operating expenses including personnel costs.
Europe sales increased 20.1% for the year ended December 31, 2023 compared to December 31, 2022, primarily due to ETANCO as well as the positive effect of $12.7 million in foreign currency translation related mostly to Europe's currencies strengthening against the United States dollar.
Europe net sales decreased slightly for the fiscal year December 31, 2024 compared to December 31, 2023, due to lower sales volumes, offset by the positive effect of $3.7 million in foreign currency translation. Both wood and concrete construction product sales decreased for the twelve months ended December 31, 2024 compared to the twelve months ended December 31, 2023.
During 2023, we purchased and received approximately 361 thousand shares of the Company’s common stock on the open market at an average price of $138.60 per share, for a total of $50.0 million under a previously announced $100.0 million share repurchase authorization (which expired at the end of 2023).
From February 1, 2025 to February 28, 2025, the Company repurchased 146,640 shares of the Company’s common stock in the open market at an average price of $170.48 per share for a total of approximately $25.0 million.
North America • Net sales increased 0.9% primarily due to higher sales volumes, partly offset by price decreases implemented during the first quarter of 2023. • Gross margin increased to 50.3% from 47.7%, primarily due to lower raw material and labor costs as a percentage of net sales. • Research and development and engineering expense increased $21.9 million, primarily due increased personnel costs of $7.0 million and professional fees of $5.8 million associated with our strategic growth initiatives and to further our Building Technologies offering, $3.1 million in variable compensation, and $1.0 million in depreciation and amortization. 35 • Selling expense increased $23.6 million, primarily due to increases of $10.5 million in personnel costs, $5.0 million in sales commission expense, $2.2 million in professional fees, $2.1 million in travel-related expenses, and $1.6 million in other variable compensation. • General and administrative expense increased $18.9 million, primarily due to increases of $6.9 million in personnel costs, $4.3 million in computer software and hardware costs, $2.7 million in variable compensation, and $1.4 million in depreciation and amortization. • Income from operations decreased $12.7 million , primarily due to higher operating expenses including personnel costs, professional fees, variable compensation, sales commission expense, and computer software and hardware costs.
North America • Net sales increased 1.1% primarily due to higher sales volumes and incremental sales from the Company's 2024 acquisitions. • Gross margin decreased to 49.0% from 50.3%, primarily due to higher factory and overhead as well as warehouse costs, partially offset by lower material costs, as a percentage of net sales. • Research and development and engineering expense decreased $0.3 million. • Selling expense increased $14.3 million, primarily due to increases of $16.9 million in personnel costs, $2.9 million in advertising and trade shows, partially offset by a decrease of $7.7 million in variable compensation costs. 1 Adjusted EBITDA is a non-GAAP financial measure and it is defined in the Non-GAAP Financial Measures Item 7.
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We operate in three business segments determined by geographic region: North America, Europe and Asia/Pacific. In 2021, we shared our strategy for continuing to achieve above market revenue growth through a combination of organic and inorganic opportunities.
Added
As of January 1, 2024, the Company's share repurchases are subjected to a 1.0% excise tax enacted by the Inflation Reduction Act of 2022.
Removed
Our organic opportunities focused on expanding our product line with our current customers while also identifying new opportunities within our core competencies of wood and concrete products. These new growth opportunities focused on gaining share with OEM customers, DIY and construction contractors, and providing more solutions for mass timber, concrete and structural steel construction.
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The amount of excise tax incurred is included in the Company's Consolidated Statement of Stockholders' Equity for the year ended December 31, 2024. 2 Pursuant to the $100.0 million repurchase authorization from the Board of Directors on October 19, 2023, and which expired on December 31, 2024.
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A few recent examples include: • The acquisition and integration of ETANCO which has resulted in additional scale for our legacy European operations, as well as the opportunity to realize synergies in those operations; • Converted component manufacturers to using our truss software and purchasing our truss plate and connectors solution sets, including a major component manufacturer; • Our announced alliance with Structural Technologies drove record revenue of our concrete strengthening solutions, while our field support and strong industry relationships continued to drive specifications of our anchors, fasteners, cold-formed steel, and structural steel products on commercial projects; 30 • Expansion of our Outdoor Accents® decorative hardware, fasteners and anchors product lines, which contributed to our growth in the DIY or construction contractor segments of our national retail market; • Designed, manufactured, and installed many critical connections in the construction of a 112-foot wood building that was used for the world’s tallest shake table test; • Completed strategic asset acquisitions to accelerate the expansion of our product line to meet our customer needs; • Made strategic investments in software development critical to the component manufacturing market segment as well as other digital product offerings to support customers in our residential and national retail markets; • Achieved an industry-leading product fulfillment rate and increased our same day delivery service in North America; • Completed our path-to-market shift away from two-step distribution in North America, enabling us to sell our complete product line and drive additional market share gains; • Continued growing United States sales volumes above United States housing starts growth; • Rolled out over 50 new products during 2023 (a Company record); • Re-aligned our North America sales team to be customer market focused with the five groups: residential, commercial, OEM, national retail and component manufacturers; and • Invested in venture capital funds and other companies focused on the home building industry and related new technologies.
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See "Note 5 — Stockholder's Equity". 29 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.
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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.
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Within the North America segment, our sales efforts are aligned to customer market teams dedicated to serving the following markets: • Residential; • Commercial; • Original Equipment Manufacturers ("OEM"); • National Retail; and • Component Manufacturers Our organic growth opportunities are focused on expanding our product lines with our current customers while also identifying new market share gain opportunities within our core product and market competencies.
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Our concrete construction product sales increased 9.9% over the same periods due to product price increases to offset rising raw material costs and higher sales volumes. Over the last several years, our historical average volume growth in North America has exceeded the housing starts market growth by approximately 250 basis points.
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Examples include: • Added approximately $1.0 billion in revenue and $200.0 million in operating profit. • 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.
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We believe 2024 North America sales volumes will continue to outpace the housing starts market with 2024 housing starts projected to grow in the low single digits relative to fiscal year 2023 housing starts. 31 During 2023, work continued on the Columbus facility expansion and work commenced on replacing our Gallatin facility.
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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.
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Europe's operating results for the fiscal year ending December 31, 2023 includes twelve months of ETANCO operating results, while fiscal year ending December 31, 2022 includes the results of ETANCO as of the April 1, 2022 acquisition date.
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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. • Strengthened our senior leadership team through a combination of internal development and external experts.
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Gross profit increased $51.4 million primarily due to the acquisition of ETANCO as well as due to lower material costs. Cost of sales in the prior year period included a $13.6 million inventory fair-value adjustment as a result of purchase accounting with respect to the acquisition of ETANCO. Operating income increased $34.9 million, primarily due to ETANCO.
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As a result, we are now in an even stronger market position in connectors with significant gains in both fasteners and anchors.
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Operating income in the prior period was negatively impacted by the $13.6 million in non-recurring fair-value adjustments noted above and $12.7 million in higher acquisition and integration costs. Fiscal 2024 operating margins will include anticipated integration costs estimated to range between $4.0 million to $5.0 million. Our Asia/Pacific segment has generated revenues from both wood and concrete construction products.
Added
The Company defines 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, net loss or gain on disposal of assets, interest income or expense, and foreign exchange and other expense (income).
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We believe that the Asia/Pacific segment is not significant to our overall performance.
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We use adjusted EBITDA to 30 provide 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 as well as acquisition and integration costs will have on our operating results.
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The following table sets forth, for the years indicated, the Company’s operating results as a percentage of net sales for the years ended December 31, 2023, 2022 and 2021, respectively: Years Ended December 31, 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 52.9 % 55.5 % 52.0 % Gross profit 47.1 % 44.5 % 48.0 % Research and development and other engineering expenses 4.2 % 3.2 % 3.8 % Selling expense 9.2 % 8.0 % 8.6 % General and administrative expense 12.1 % 10.8 % 12.3 % Total operating expense 25.5 % 22.0 % 24.7 % Acquisition and integration related costs 0.2 % 0.8 % — % Net gain on disposal of assets — % (0.1) % — % Income from operations 21.4 % 21.8 % 23.3 % Interest expense, net and other 0.2 % (0.4) % (0.2) % Other and foreign exchange loss, net (0.1) % (0.2) % (0.4) % Income before taxes 21.5 % 21.2 % 22.8 % Provision for income taxes 5.5 % 5.4 % 5.9 % Net income 16.0 % 15.8 % 16.9 % Comparison of the Years Ended December 31, 2023 and 2022 Unless otherwise stated, the results announced 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 year ended December 31, 2023, against the results of operations for the year ended December 31, 2022 and include the results of the acquisition of FIXCO Invest S.A.S ("ETANCO") on April 1, 2022. 2023 full year comparisons include twelve months of ETANCO operating results for the fiscal year ending December 31, 2023 compared to nine months for the fiscal year ending December 31, 2022.
Added
Overall housing starts decreased 3.9% over the trailing twelve months ending December 31, 2024 compared to the trailing twelve months ending December 31, 2023. Lower housing starts in the U.S. could result in lower demand, which would affect the Company's sales and possibly operating profit.
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Unless otherwise stated, the results announced below, when referencing “both years,” refer to the year ended December 31, 2022 and the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed4 unchanged
Biggest changeSteel cost started decreasing at the end of 2022 with prices stabilizing by the end of 2023 . While steel is typically available from numerous suppliers, the price of steel is a commodity subject to fluctuations that apply across broad spectrums of the steel market. We do not use any derivative or hedging instruments to manage steel price risk.
Biggest changeSteel cost started decreasing at the end of 2022 with prices stabilizing by the end of 2023 and during 2024 . While steel is typically available from numerous suppliers, the price of steel is a commodity subject to fluctuations that apply across broad spectrums of the steel market.
We may manage our exposure to transactional exposures by entering into foreign currency forward contracts for forecasted transactions and projected cash flows for foreign currencies in future periods. In 2022 and 2023, we entered into financial 40 contracts at various times to hedge the risk of fluctuations associated with the Euro and the Chinese Yuan.
We may manage our exposure to transactional exposures by entering into foreign currency forward contracts for forecasted transactions and projected cash flows for foreign currencies in future periods. In 2022 and 2023, we entered into financial contracts at various times to hedge the risk of fluctuations associated with the Euro and the Chinese Yuan.
We estimate that if the exchange rate were to change by 10% in any one country where we have our operations, the change in net income would not be material to our operations taken as a whole.
We estimate that if the exchange rate were to change by 10.0% in any one country where we have our operations, the change in net income would not be material to our operations taken as a whole.
Refer to Note 9, "Derivatives Instruments" to the Company’s consolidated financial statements, for further information on our interest rate swap contracts in effect as of December 31, 2023. Commodity Price Risk In the normal course of business, we are exposed to market risk related to our purchase of steel, a significant raw material upon which our manufacturing depends.
Refer to "Note 9 — Derivatives Instruments" to the Company’s consolidated financial statements, for further information on our interest rate swap contracts in effect as of December 31, 2024. Commodity Price Risk In the normal course of business, we are exposed to market risk related to our purchase of steel, a significant raw material upon which our manufacturing depends.
The gain was partially offset by $25.7 million in accumulated other comprehensive losses from foreign currency forward contracts. Refer to “Note 5 — Stockholders Equity” to the Company’s consolidated financial statements. Interest Rate Risk Our primary exposure to interest rate risk results from outstanding borrowings under the Amended and Restated Credit Agreement, which bears interest at variable rates.
The loss was partially offset by $2.5 million in accumulated other comprehensive losses from foreign currency forward contracts. Refer to “Note 5 — Stockholders' Equity” to the Company’s consolidated financial statements. Interest Rate Risk Our primary exposure to interest rate risk results from outstanding borrowings under the Amended and Restated Credit Agreement, which bears interest at variable rates.
As of December 31, 2023, the outstanding debt under the Amended and Restated Credit Agreement subject to interest rate fluctuations was $485.7 million. The variable interest rates on the Credit Agreement fluctuate and expose us to short-term changes in market interest rates as our interest obligation on this instrument is based on prevailing market interest rates.
As of December 31, 2024, the outstanding debt under the Amended and Restated Credit Agreement subject to interest rate fluctuations was $388.1 million. The variable interest rates on the Credit Agreement fluctuate and expose us to short-term changes in market interest rates as our interest obligation on this instrument is based on prevailing market interest rates.
If the price of steel increases, our variable costs would also increase. While historically we have successfully mitigated these increased costs through the implementation of price increases, in the future we may not be able to successfully mitigate these costs, which could cause our operating margins to decline. 41
While historically we have successfully mitigated these increased costs through the implementation of price increases, in the future we may not be able to successfully mitigate these costs, which could cause our operating margins to decline. 41
Refer to “Note 9 — Derivative Instruments” to the Company’s consolidated financial statements. Foreign currency translation adjustments on our underlying assets and liabilities resulted in an accumulated other comprehensive gain of $19.7 million for the year ended December 31, 2023, due to the effects of the strengthening United States Dollar in relation to almost all o ther countries.
Refer to “Note 9 — Derivative Instruments” to the Company’s consolidated financial statements. Foreign currency translation adjustments on our underlying assets and liabilities resulted in an accumulated other comprehensive loss of $37.3 million for the year ended December 31, 2024, due to the effects of the strengthening United States Dollar in relation to almost all other countries.
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We do not use any derivative or hedging instruments to manage steel price risk. If the price of steel increases, our variable costs would also increase.

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