PLEASANTON, Calif. — Simpson Manufacturing Co. Inc., a leader in engineered structural connectors and building solutions, announced its financial results for the second quarter of 2023.
The company's consolidated net sales of $597.6 million increased 0.7% from $593.2 million in the second quarter of 2022. North America net sales of $465.5 million increased 2.0% from $456.4 million, mostly due to higher volumes, while Europe net sales of $127.8 million decreased 4.1% from $133.2 million, primarily due to lower volumes.
Consolidated gross profit of $287.5 million increased 10.8% from $259.3 million. Gross margin increased to 48.1% from 43.7%. North America gross margin increased to 51.2% from 48.0%, primarily from lower raw material costs, offset by higher factory and tooling costs as a percentage of net sales.
Consolidated income from operations of $145.0 million increased 9.0% from $133.1 million. The increase was primarily due to increased gross profit, which was partly offset by higher operating expenses, including increased personnel costs from the increase in the number of employees supporting production, engineering and sales activities as well as increased variable compensation. Operating expenses were partly offset by lower acquisition and integration costs. Consolidated operating margin increased to 24.3% from 22.4%.
North America income from operations of $143.4 million increased $6.1 million from $137.3 million. The increase was primarily due to higher gross profit, which was partly offset by increased personnel costs from the increase in the number of employees supporting production, engineering and sales activities and variable compensation.
Net income was $107.2 million, or $2.50 per diluted share of the company's common stock, compared to net income of $93.6 million, or $2.16 per diluted share.
"We delivered solid performance in a difficult operating environment with our second quarter net sales of $597.6 million increasing 0.7% year-over-year led by improved volumes in our North America segment, most notably in the building technology and national retail end use markets," said Mike Olosky, president and CEO. "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.
"We continue to believe in the sustainable strength of the housing market in the mid to long-term given the shortage of new housing. We are confident key attributes of our business model will help stem some of the short-term downward pressure including our diverse portfolio of solutions, long-standing relationships, perpetual innovation, immersive service, unparalleled availability and delivery, and impactful industry outreach efforts. Europe net sales were down 4.1% year-over-year on lower volumes; however, ETANCO continued to perform well in a challenging market by maintaining consistent sales year-over-year."
The company updated its 2023 financial outlook based on two quarters of financial information to reflect its latest expectations regarding demand trends, raw material costs and operating expenses:
- Operating margin is now estimated to be in the range of 20.5% to 21.5%.
- The effective tax rate is estimated to be in the range of 25% to 26%, including both federal and state income tax rates and assuming no tax law changes are enacted.
- Capital expenditures are estimated to be in the range of $105.0 million to $115.0 million.
The Company continues to make progress on its efforts to integrate ETANCO into its operations and to realize previously identified offensive and defensive synergies in the years ahead. However, these efforts will continue to result in additional costs in 2023 that have been planned since the Company announced the transaction. Management continues to believe the Company remains well positioned to capture meaningful benefits from these synergies, subject to macroeconomic changes, which are expected to delay realization of some of the offensive synergy opportunities.
