Structural connector and building solution manufacturer Simpson Manufacturing recorded consolidated net sales of $597.6 million, an increase of 0.7% from $593.2 in the same quarter last year, but down significantly from first-quarter’s 8.3% growth. 

High sales volumes — most notably in the building technology and national retail end markets —  lead to North American net sales of $465.5 million, an increase of 10.8% year-over-year, Pleasanton, California-based Simpson noted in its 2023 2Q financial result statement published July 24. This growth follows low North American volumes in the first quarter, which led to decreased sales in that market.

Gross profit in 2Q was $287.5 million, an increase of 10.8% year-over-year. Gross margin increased from 48.1% to 43.7%, lead by an increase in the North American gross margin to 51.2%. This increase was attributed primarily to lower raw material costs and offset by higher factory and tooling costs.

Income from operations increased 9% year-over-year to $145 million, and diluted earnings per share increased 15.7% to $2.50.

2023 Outlook & Operation Expansion Plans

Based on demand trends, raw material costs and operating expenses, the company updated its 2023 financial outlook. Operating margin is now estimated to be in the range of 20.5% to 21.5%, and capital expenditures are estimated to be in the range of $105.0 million to $115.0 million.

“While 2023 housing starts will finish below 2022 levels, the market continues to improve relative to our earlier outlook, in part due to the high share of new single-family homes as a percentage of all single-family sales,” said Simpson President and CEO Mike Olosky. “We continue to believe in the sustainable strength of the housing market in the mid to long-term given the shortage of new housing.”

Olosky said key attributes of the company’s business model, including a diverse portfolio, long-standing relationships, innovation, and other efforts, will help stem some of the short-term downward pressure.

The company said it has identified a greenfield opportunity to replace a facility in Gallatin, Tennessee, to expand its manufacturing capacity and supply chain efficiencies in an effort to enhance its customer service.