SSD 10-K & 10-Q changes, risk factors and insider trading

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. Import tariffs and/or other mandates also could significantly increase the prices onof raw materials that are critical to our business, such as steel. In 2025, changes to tariffs on certain imported fastener and anchor products negatively impacted our cost structure, contributing to a decline in gross margin in the North America segment. The cost of producing our products is also sensitive to the price of energy.

In order to compete effectively we must continue to develop enhancements to our existing products, new products and services on a timely basis that meet changing consumer preferences and successfully develop, manufacture and market these new products, product enhancementsenhancements, additional technologies and services. There can be no assurance that we will be successful in developing and marketing new products, product enhancements, additional technologies and services. Many of our competitors are dedicating increasing resources to competing with us, especially as our products and services become more affected by technological advances and software innovations. Many of our competitors are also leveraging AI to improve product capabilities and operational efficiency, which could further intensify competition. Our inability to effectively compete could reduce the sales of our products and services, which could have a material adverse impact on our business, financial condition, and results of operations.

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. We make statements about our environmental, social and governance goals and initiatives through information provided on our website, press statements and other communications, including through our Environmental, Social and GovernanceCSR Report. Responding to these environmental, social and governance considerations and implementation of these goals and initiatives involves risks and uncertainties, including those described under “Forward-Looking Statements,” requires investments and are impacted by factors that may be outside our control. In addition, some stakeholders may disagree with our goals and initiativesinitiatives, and the focus of stakeholders may change and evolve over time. Stakeholders also may have very different views on where environmental, social and governance focus should be placed, including differing views of regulators in various jurisdictions in which we operate. Any failure, or perceived failure, by us to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.

In North America the residential construction industry has experienced increased complexity in some home designdesigns and builders are more aggressively trying to reduce their costs. 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.

We publicly post our privacy policies and practices concerning our processing, use, and disclosure of personally identifiable information on our websites. If we fail to adhere to our privacy policy and other published statements or applicable laws concerning our processing, use, transmission and disclosure of protected information, or if our statements or practices are found to be deceptive or misrepresentative, we could face regulatory actions, fines and other liability.liabilities.

We rely on complex software systems and hosted applications to operate our business, and our business may be disrupted if we are unable to successfully and efficiently update these systems or convert them to new systems.

We are increasingly dependent on technology systems to operate our business, reduce costs, and enhance customer service. These systems include complex software systems and hosted applications that are provided by third parties such as financial management and human capital management platforms from SAP America, Inc. and Workday, Inc. Software systems need to be updated on a regular basis with patches, bug fixes and other modifications. Hosted applications are subject to service availability and reliability of hosting environments. We also migrate from legacy systems to new systems from time to time. Maintaining existing software systems, implementing upgrades and converting them to new systems are costly and require a significant allocation of personnel and other resources. The implementation of these systems upgrades and conversions is a complex and time-consuming project involving substantial expenditures for implementation activities, consultants, system hardware and software, often requires transforming our current business and financial processes to conform to new systems, and therefore, may take longer, be more disruptive, and cost more than forecast and may not be successful. If the implementation is delayed or otherwise is not successful, it may hinder our business operations and negatively affect our financial condition and results of operations. 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. Some of such factors may not be reasonably anticipated or may be beyond our control.

In addition, we operate in many parts of the world that have experienced governmental corruptioncorruption, and we could be adversely affected by violations of the Foreign Corrupt Practices Act ("“FCPA"”) and similar worldwide anti-corruption laws. The FCPA and similar anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business. Although we mandate compliance with these anti-corruption laws, we cannot provide assurance that these measures will necessarily prevent violations of these laws by our employees or agents. 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.

If we do not obtain all necessary import and export licenses required by applicable export and import regulations, including ITAR and EAR, or do business with sanctioned countries or individuals, we may be subject to fines, penalties and other regulatory action by governmental authorities, including, among other things, having our export or import privileges suspended. Even if our policies and procedures for exports, imports and sanction regulations comply, but our employees fail or neglect to follow them in all respects, we might incur similar liability.

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. For example, economic and political conditions in countries where we are subject to taxes, including the United States, have in the past and could continue to result in significant changes in tax legislation or regulation. 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%. 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 enacted to date did not have a material impact toon our overall operations. 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. 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 taxingtax authorities with respect to income and non-income based taxes. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, also could make resolving any tax disputes more difficult and the final resolution of any tax audits could have an adverse effect on our financial performance.

The impact of public health crises,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.

Global pandemics, such as COVID-19, or other public health crises may adversely affect, among other things, our supply chain and associated costs; demand for our products and services; our operations and sales, marketing and distribution efforts; our research and development capabilities; our engineering, design, and manufacturing processes; and other important business activities. These events could result in significant losses, adversely affect our competitive position, increase our costs, require substantial expenditures and recovery time, make it difficult or impossible to provide services or deliver products to our customers or to receive components from our suppliers, create delays and inefficiencies in our supply chain and result in the need to impose employee travel restrictions. Our operations and those of our suppliers and distributors could be adversely affected if manufacturing, logistics, or other operations in key locations, are disrupted for any reason, such as those described above or other economic, business, labor, environmental, public health, regulatory or political reasons. In addition, even if our operations are unaffected or recover quickly, if our customers cannot timely resume their own operations, they may reduce or cancel their orders, or these events could otherwise result in a decrease in demand for our products.

Public health crises, suchglobal as the COVID-19 pandemic,pandemics, and the measures taken in response to such events have in the past negatively impacted, and may again in the future negatively impact, our operations and workforce, as well as those of our partners, customers and suppliers. Additionally, concerns over the economic impact of such events have, from time to time, caused increased volatility in financial and other capital markets. The negative impacts of any such events on business operations and demand for our offerings will depend on future developments and actions taken in response to such events, which may be outside our control, highly uncertain, and cannot be predicted at this time. 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. Actions taken by the U.S. government could affect our results of operations, cash flows and liquidity.

In North America,America and Europe, weather conditions and the level of severe storms can have a significant impact on the markets for residential construction and home improvement. As a result, climate change that results in altered weather conditions or storm activity could have a significant impact on our business by:

Some of our manufacturing facilities are located in geographic regions that have experienced, or may experience in the future, major natural disasters and other catastrophes, such as fires, earthquakes, floods and hurricanes. Our disaster recovery plan may not be adequate or effective to respond into such events. Further, although we maintain various formforms and levels of insurance to protect us against potential loss exposures, the scope of our available insurance coverage may not be adequate to protect us against all potential risks. For example, we do not carry earthquake insurance and other insurance that we carry is limited in the risks covered and the amount of coverage. 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.

In the ordinary course of business, the products that we design and/or manufacture, and/or the services we provide, have led to product liability claims or other legal claims being filed against us. To the extent that plaintiffs are successful in showing that a defect in a product’s design, manufacture or warnings led to personal injury or property damage, or that our provision of services resulted in similar injury or damage, we may be subject to claims for damages. Although we are insured for damages above a certain amount, we bear the costs and expenses associated with defending claims, including frivolous lawsuits, and are responsible for damages up to the insurance retention amount. The insurance that we carry is limited in the amountterms of coverage and may not be adequate to cover all of our resulting costs, business interruption and lost profits if we are subject to product liability claims. We might also face increases in premiums and reductions in the availability of insurance covering product liability, which could have a significant impact on our business. 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.

Many of our products are integral to the structural soundness or safety of the structures in which they are usedused, and we have on occasion found flaws and deficiencies in the design, manufacturing, assembling, labeling, product formulations, chemical mixes or testing of our products. We also have on occasion found flaws and deficiencies in raw materials and finished goods produced by others and used with or incorporated into our products. Some flaws and deficiencies have not been apparent until after the products were installed or used by customers.

While we generally attempt to limit our contractual liability and our exposure to price or expense increases, we may have uncapped liabilities or significant exposure under some contracts,contracts and could suffer material losses under such contracts.

We enter into many types of contracts with our customers, suppliers and other third parties, including in connection with our expansion into new markets and new product lines. Under some of these contracts, our overall liability may not be limited to a specified maximum amountamount, or we may have significant potential exposure to price or expense increases. If we receive claims under these contracts or experience significant price increases or comparable expense increases, we may incur liabilities significantly in excess of the revenues associated with such contracts, which could have a material adverse effect on our results of operations.

Our planning/design software applications facilitate the creation by customers of complex construction and building designs and isare extremely complex. If our software applications contain defects or errors, our engineers prepare, approve or seal drawings that contain defects or we are otherwise involved in any design or construction that contains flaws, regardless of whether we caused such flaws, we may be required to correct deficiencies and may become involved in litigation. Further, if any damage or injury is not covered by our insurance and we are held to be liable, we could be required to correct such damage and to compensate persons who might have suffered injury, and our business, reputation, financial condition, results of operations and cash flows could be materially and adversely affected.

Our work forceworkforce could become increasingly unionized in the future and our unionized or union-free work forceworkforce 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 20252026 and 2028.2029. 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.strike. Although we believe that our relations with our employees are generally good, we have experienced strikes in the past, and no assurance can be given that we will be able to successfully extend or renegotiate our collective bargaining agreements as they expire. 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.

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. Furthermore, there is no assurance that any such transaction will result in synergistic benefits. A potential acquisition, divestiture, or other strategic transaction may involve a number of risks including, but not limited to:

As a result, if we fail to evaluate and execute these transactions properly, we might not achieve the anticipated benefits of such transactionstransactions, and we may incur costs in excess of what we anticipate. These risks would likely be greater in the case of larger transactions.

If we do not obtain all material licenses and permits required by environmental, health and safety laws and regulations, or otherwise fail to comply with applicable laws and regulations, we may be subject to regulatory action by governmental authorities. If our policies and procedures are flawed, or our employees fail or neglect to follow our policies and procedures in all respects, we might incur liability. Relevant laws and regulations could changechange, or new ones could be adopted that require us to incur substantial expenseexpenses to comply. Permit requirements may change, and we may face delays or denials in obtaining or renewing permits, which could limit or disrupt our operations. We may also be required to install additional pollution control equipment or modify our operations to comply with new or more stringent requirements, which could require significant capital expenditures.

We are currently subject to conflict mineral disclosure regulations in the U.S. and may be affected by new regulations concerning conflict and similar minerals adopted by other jurisdictions where we operate. While we have been successful to date in adapting to such regulations, we have and will continue to incur added costs to comply with the disclosure requirements, including costs related to determining the source of such minerals used in our products. We may not be able to ascertain the origins of such minerals thatas we use and may not be able to satisfy requests from customers to certify that our products are free of conflict minerals. These requirements also could constrain the pool of suppliers from which we source such minerals. We may be unable to obtain conflict-free minerals at competitive prices. Such consequences will increase costs and may materially and adversely affect our manufacturing operations and profitability.

When we provide engineering servicesservices, we are subject to various local, state and federal rules and regulations which can increase our potential liability.

As part of our product offerings, we may provide engineering and design-related services to our clients. Some of these services require us to stamp drawings or otherwise be involved in the engineering process. While we generally attempt to limit our liability through our internal processes and through our legal agreements with third parties to which we provide such services, under various local, state and federal rules and regulations these limitations may not be effectiveeffective, and we may be held liable for engineering failures. Any such liability could materially and adversely affect our profitability.

Our amended and restated certificate of incorporation and bylaws contain provisions that may discourage, delay or prevent a change in control of our Company or changes in our management that our stockholders may deem advantageous. For example, under our charter documents, our stockholders cannot call special meetings and cannot take action bywith written consent.

The following discussion and analysis providesprovide information which management believes is relevant to an assessment and understanding of the Company’s consolidated financial condition and results of operations. This discussion should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and notes thereto included in this report.

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.1 WithinAverage price paid per share of common shares repurchased excludes excise tax. As of January 1, 2024, the NorthCompany's Americashare segment, our sales effortsrepurchases are alignedsubjected to customera market1.0% teamsexcise dedicatedtax toenacted servingby the followingInflation markets:Reduction Act of 2022. The amount of excise tax incurred is included in the Company's Consolidated Statement of Stockholders' Equity for the year ended December 31, 2025.

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.

In order toTo grow in these markets, we aspire to be among the leaders in engineered load-rated construction building products and systemssystems, andas well as digital product offerings. We also aspireintend to leverage our engineering expertise, deep-rooted relationships with top builders, engineers, contractors, code officials and distributors, along withand our ongoing commitment to testing, research and innovation. Importantly, we currently have existing products, testing results, distribution and manufacturing capabilities to support our ambitions. ThisAchieving this growth will ultimatelydepend be a function ofon expanding our sales and/or marketing functionsefforts to promote our products to differentacross end users and distribution channels, expandingbroadening our customer base, and introducing new products inover the future.time.

•Be the business partner of choice;

•BeStrive to be an innovative leader in the markets we operate;

•AnMaintain an operating income margin at or above 20%; and

•EarningsDeliver earnings per share growth exceedingahead of net revenue growth.

Since announced in 2021, we have made great progress on our key growth initiatives. Examples include:

•Added approximately $1.0 billion in revenuerevenue, with sales growing $100.7 million or 4.5%. from fiscal year 2024 compared to fiscal year 2025, and $200.0 million in operating profit.

As a result, we arehave nowfurther instrengthened an even strongerour market position in connectors with significant gains in both fasteners and anchors. In addition, duedriven toby our high service levels, increasingly diverse portfolio of products and software as well as ourand commitment to innovation and developingdelivering complete solutions forto the markets we serve, we believe we can continue to achieve above market growth in the North America relative to U.S. housing starts forin fiscal 2025 and beyond. These examplesactions further emulatereflect our Founder, Barclay Simpson’s, nine principles of doing business, andparticularly moreour specifically therelentless focus and obsessioncommitment onto customers and users.

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. TheWe Company definesdefine 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, lease termination costs, severance costs related to cost saving initiatives, net loss or gain on disposal of assets, interest income or expense, and foreign exchange and other expense (income). WeThis use adjusted EBITDA to provideprovides 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 and acquisition as well as acquisition and integration costs will have on our operating results. We believe this will also provide a better approximation of our cash flows compared to operating income.

The Company’sOur business, financial condition, and results of operations depend in large part on the level of U.S. housing starts and residential construction activity. Overall U.S. housing starts decreasedhave 3.9%been decreasing year over year since 2021. Based on preliminary calendar year 2025 housing starts reporting, the year over year decrease in our sales volumes closely tracked with the decrease in total housing starts over the trailingsame twelve months ending December 31, 2024 compared to the trailing twelve months ending December 31, 2023.period. Lower housing starts in the U.S. could result in lower demand, which would affect the Company'sour sales and possibly operating profit.

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. IncreasingIncreased tariffs (as noted above), political uncertainty, fluctuating foreign currency rates, mortgage interest rates, tariffs, political uncertainty due toand rising energy costs, volatility in the steel market and stressed product transportation systems,costs can also have an effect on our gross and operating profits as well. 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 basebase, and customer purchases are becoming less seasonal. Changes in raw material cost could impact the amount of inventory on-hand,on-hand and negatively affect our gross profit and operating margins depending on the timing of raw material purchases or how much sales prices can be increased to offset any increases in raw material costs. Changes in labor, freight and warehousing costs, could also negatively impact gross profit depending on timing and amount of sales price can be increased to offset the higher costs.

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%4.5% for the year ended December 31, 20242025, compared to December 31, 2023.2024. Our wood construction product net sales increased 0.5%3.7% for the year ended December 31, 20242025, compared to December 31, 2023,2024, primarily due to increasedtariff-driven product price increases implemented during the second quarter and fourth quarter of 2025 as well as incremental sales volumes,increases from businesses acquired during fiscal year 2024, partly offset by lower sales volumes. North America wood product pricesales decreasesvolumes implementedfor during2025 were down from 2024 year-over-year, due to lower housing starts and a more challenging regional mix, with the firstmost quarterpronounced ofhousing 2023.start declines in Southern and Western United States, where our product content per unit is typically higher due to stronger area building codes. Our concrete construction product sales increased 5.0%8.6% over the same periods.periods primarily due to product price increases implemented during the second quarter and fourth quarter of 2025, as well as increased sales volumes. For 2025,2026, we expect U.S. housing starts couldto improvebe inat the low-single digit range from 20242025 levels, with growth weighted towards the second half of the year. With the investments we have made, we believe we will be able to continue to grow net sales above the US housing starts market, one of our company ambitions.

DuringWe 2024,completed workconstruction continued onof our Columbus, Ohio facility expansionin asthe wellsecond asquarter of 2025 and the construction of our new Gallatin, Tennessee facility.facility We expectin the expansionfourth and operationquarter of these facilities to be completed and commence in 2025. The expandedcost andof newboth projects was at or below budget. These facilities willare expected to improve our overall service, production efficiencies and safety in the workplace, as well as reduce our reliance on certain outsourced finished goods and component productsproducts. andThese continuefacilities towill help ensure we have ample capacity to meet our customercustomers' needs. These investments reinforce our core business model differentiators to remain the partner of choice as we continue to produce products locally and ensure superior levels of customer service. Incremental investments in the current business will be limited until the U.S. housing market shows long-term improvement.

•Given the uncertainty regarding 2025 U.S. housing starts compared to prior year housing starts, consolidatedConsolidated operating margin is estimated to be in the range of 18.5%19.5% to 20.5% with the low end of the range based on flat to declining 2025 housing starts compared to prior year.20.5%. The operating margin range includes a projected gain betweenof $10.0 million to $12.0 million fromon the sale of thevacant old Gallatin facility based on a $19.0 million contracted sale price.land.

Net Sales increased approximately 0.8%4.5% to $2.2$2.3 billion from prior year, primarily due to increases in pricing, higher sales volumes, incremental sales fromrelated to the Company'sCompany’s 2024 acquisitions, and the positive effect of $3.7$17.7 million in foreign currency translation related mostly to Europe's currencies weakening against the United States dollar.dollar, partly offset by lower volumes. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85.1%84.4% and 85.4%85.1% of the Company’s total net sales for the years ended December 31, 20242025 and 2023,2024, respectively. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 14.8%15.5% and 14.5%14.8% of the Company’s total net sales for the years ended December 31, 20242025 and 2023,2024, respectively.

Gross profit decreasedincreased approximately 1.7%4.5% to $1.0$1.1 billion from prior year, primarily due to lowerhigher grossnet margins.sales. Gross marginsmargin decreasedis toconsistent 46.0%with fromfiscal 47.1%,year primarily2024, due to impact from tariffs, higher factoryfactory, overhead, and overhead as well as warehouse and freightlabor costs, partlywhich were mostly offset by lower materialwarehouse costs, as a percentage of net sales.costs. Gross margins, including some inter-segment expenses, which were eliminated upon consolidation, and excluding certain expenses that are allocated according to product group, decreasedincreased from 47.2%45.6% to 45.6%45.8% for wood construction products and increaseddecreased from 46.0%47.5% to 47.5%47.0% for concrete construction products.

Research and development and other engineering expense increased 1.5%0.7% to $93.6$82.5 million from $92.2$81.9 million, primarily due increased personnel costs of $4.6 million partially offset by a decrease of $3.2 million in variable incentive compensation costs.million.

General and administrativeSelling expense increased 3.5%4.3% to $277.5$222.8 million from $268.1$213.5 million, primarily due to increases of $12.8$9.5 million in personnel costs, $7.1$4.0 million in variable compensation costs and $1.8 million in professional fees, and $1.6 million in depreciation and amortization, partially offset by a decrease of $13.2$2.4 million in variableadvertising compensationand costs.trade shows, $1.6 million in charitable donations, $1.5 million in Depreciation and Amortization, and $1.2 million in travel expenses.

Our effective income tax rate increaseddecreased to 25.8%25.4% from 25.7%.25.8%.

Adjusted EBITDA1 of $520.1$544.3 million decreasedincreased 6.2%3.3% compared to $554.2$526.8 million, primarily due to lowerhigher gross profits and higher operating expenses, as noted above.

•Net sales increased 1.1%4.5% primarily due to higherincrease salesin volumespricing and incremental sales from the Company'sCompany’s 2024 acquisitions.acquisitions, partly offset by lower volumes.

1 Adjusted EBITDA is a non-GAAP financial measure and it is defined in the Non-GAAP Financial Measures Item 7. For a reconciliation of Adjusted EBITDA to U.S. GAAP ("“GAAP”) net income see the schedule titled "“Reconciliation of Non-GAAP Financial Measures."”

•General and administrativeSelling expense increased $7.7$8.8 million, primarily due to increases of $7.3$8.8 million in personnel costscosts, $3.1 million in variable compensation costs, and $4.6$2.0 million in professional and legal fees, partially offset by a decrease of $5.7$1.6 million in variableadvertising compensationand costs.trade shows expense, $1.6 million in charitable donations, and $1.5 million in depreciation and amortization expenses.

Forward-looking statements are subject to inherent uncertainties, risks and other factors that are difficult to predict and could cause our actual results to vary in material respects from what we have expressed or implied by these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those expressed in or implied by our forward-looking statements include,include the cyclicality and impact of general economic conditions; the effect of military conflicts, tariffs and international trade policies on our business operations,operations; the effects of inflation and labor and supply shortages on our operations,operations and the operations of our customers, suppliers and business partners,partners; volatile supply and demand conditions affecting prices and volumes in the markets for both our products and raw materials we purchase; the impact of foreign currency fluctuations; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; and those factors discussed under Item 1A. Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.2025, Additionalsubsequent risksQuarterly include:Reports theon cyclicalityForm and impact of general economic conditions; changing conditions in global markets including the impact of military conflicts, sanctions and tariffs, quotas10-Q and other tradereports actionswe andfile import restrictions;with the impact of pandemics, epidemics or other public health emergencies; the impact of foreign currency fluctuations; potential limitations on our ability to access capital resources and borrowings under our existing credit agreement; restrictions on our business and financial covenants under our credit agreement; reliance on employees subject to collective bargaining agreements; and our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any.SEC.

•Earnings per share grew $0.64 per share to $8.24 per share of 8.4% from fiscal year 2024 compared to fiscal year 2025 exceeding sales growth over the sale fiscal periods.

•Made significant footprint investments in both production and warehouses. 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. Additional warehouse capabilities will also enhance next day delivery for our North American customers.

As a result, we havecontinue furtherto strengthened our market position in connectors withmake significant gains in both fasteners and anchors.anchors as well as realizing high single digit growth in the component manufacturing and OEM market. In addition, driven by our high service levels, increasingly diverse portfolio of products and software and commitment to innovation and delivering complete solutions to the markets we serve, we believe we can continue to achieve above market growth in the North America relative to U.S. housing starts in fiscal year 2026 and beyond. These actions reflect our Founder, Barclay Simpson’s, nine principles of doing business, particularly our relentless focus and commitment to customers and users.

We increased prices in the U.S. effective June 2, 2025 on certain wood connectors, fasteners and mechanical anchors, and again effective October 15, 2025 on certain fasteners and mechanical anchors, in response to tariffs. WeAs believea result, North America net sales could increaseincreased in futurerecent periodsquarters even ifas demand doesdid not increase. However, increased selling prices are expected to bewere offset by higher non-material costs including labor, energy, transportation, and building and equipment depreciation (from recent footprint investments, as noted above) incurred over the three years and potentially by future costs increases. In addition, the price increases are expected to partially offset increased costs related to the tariffs affecting a portion of our fastener and anchors sales, but do not offset tariffs announced after December 31, 2025. We also increased prices in Europe effective the second half of 2025 and during the first quarter of 2026, which have increased recent net sales. We believe Europe net sales could increase in future quarters even if demand does not increase. Similarly to North America, the price increases are expected to offset high costs incurred over recent years.

In addition to financial information prepared in accordance with GAAP, we use Adjusted EBITDA, a non-GAAP financial measure in evaluating our ongoing operating performance. We define Adjusted EBITDA as net income (loss) before income taxes,, adjusted to exclude provision for income taxes, depreciation and amortization, integration,acquisition acquisitionintegration and restructuring costs, non-qualified deferred compensation adjustments, goodwill impairment, gain on bargain purchase, lease termination costs, severance costs related to cost saving initiatives, net loss or gain on disposal of assets, interest income or expense,expense and other financing costs, and foreign exchange and other expense (income). This provides 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 and acquisition as well as integration costs will have on our operating results. We believe this will also provide a better approximation of our cash flows compared to operating income.

As a result of the tariffs announced by the U.S. presidential administration during 2025 and 2026 potential tariff modifications or the imposition of tariffs or export controls by other countries there is significant economic uncertainty. The extent and duration of tariffs and the resulting impact on macroeconomic conditions and on our business are uncertain and may depend on various factors beyond our control. We are closely monitoring the potential for the imposition of new or additional U.S. tariffs on imports, as well as potential retaliatory tariffs or other measures other countries may impose on U.S. imports, that may adversely affect the global economy. We are currently uncertain as to the ultimate impact these measures may have given the rapidly changing environment surrounding tariffs and other related political topics; however, if enacted as currently proposed, we expect that the proposed tariffs would primarily impact our North America segment as we procure fasteners and a small number of other products from countries that will be subjected to the these tariffs.

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. Increased tariffs (as noted above), Middle East conflicts, political uncertainty, fluctuating foreign currency rates, mortgage interest rates, and rising costs can also have an effect on our gross and operating profits as well. 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. Changes in raw material cost could impact the amount of inventory on-hand, and negatively affect our gross profit and operating margins depending on the timing of raw material purchases or how much sales prices can be increased to offset any increases in raw material costs. Changes in labor, freight and warehousing costs, could also negatively impact gross profit depending on timing and amount of sales price can be increased to offset the higher costs.

Historically, our North America segment has generated more revenues from wood construction products compared to concrete construction products. North America net sales increased for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025 due to price increases that took effect in June 2025 and October 2025, aand slightan increase in sales volumes and the positive effect of approximately $1.2 million in foreign currency translation.volumes. Our wood construction product net sales increased 8.6%6.9% for the threesix months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025. Our concrete construction product net sales increased 18.6%13.2% over the same periods.

We completed the expansion of our Columbus, Ohio facility in the second quarter of 2025 and the construction of our new Gallatin, Tennessee facility in the fourth quarter of 2025. The cost of both projects was at or below budget. These facilities are expected to 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. These facilities will help ensure we have ample capacity to meet our customer needs. These investments reinforce our core business model differentiators to remain the partner of choice as we continue to produce products locally and ensure superior levels of customer service.

Europe net sales increased 6.3%7.0% for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025, due to both increased unit sales volumes and price increases as well as the positive effect of approximately $13.2$17.8 million in foreign currency translations as well as price increases. partly offset by lower sales volumes as a result of unfavorable weather conditions.translation. Wood construction product net sales increased 6.7%7.3% for the threesix months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 and concrete construction product net sales, which are mostly project based, increased 4.7%5.7% over the same periods. Gross profit increased $3.9$10.4 million primarily due to higher net sales as well asand gross margins increasingincreased to 36.3%37.3% from 35.2%35.7% dueprimarily todriven aby decreasehigher inpricing and lower material costs, partly offset by higher factory and overheadtooling costs, as a percentage of net sales. Operating income decreasedincreased $2.2$1.8 million whileand operating margin decreasedremained toflat 5.9%at from 8.2%, partly due to increased operating expenses.10.1%. Operating expenses were negatively affected by approximately $3.8$2.2 million in foreign currency transactions as well as $1.5 million in one-time cost savings initiative costs.translation. In local currency, operating expenses increased by 5% partly due to one-time cost savings initiative costs. We currently anticipate Europe results for 2026 to benefit from recent price increases and recent cost savings initiatives, including theon-going closingfootprint ofoptimization the fastener manufacturing business in Sweden.efforts. We believe in Europe's long termlong-term potential given on-going housing shortage (with an increasing use of wood construction) and new environmental regulations for which we have products and solutions.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026, Compared with the Three Months Ended MarchJune 31,30, 2025

Unless otherwise stated, the 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 three months ended MarchJune 31,30, 2026, against the results of operations for the three months ended MarchJune 31,30, 2025. Unless otherwise stated, the results announced below, when referencing “both quarters,” refer to the three months ended MarchJune 31,30, 2025 and the three months ended MarchJune 31,30, 2026. In the first quarter of 2026, the Company reclassified certain software amortization costs related to the Company's component manufacturing efforts from general and administrative expense to cost of sales. Additionally, for the year ended December 31, 2025, the Company reclassified certain quality assurance costs from general and administrative expense to cost of sales. The financial results for the three months ended MarchJune 31,30, 2025 have been recast for comparison purposes and to conform to the current period classification, with $1.5 million of costs being reclassified from general and administrative expense to cost of sales. The reclassification did not have any impact on the total income from operations.

FirstSecond Quarter 2026 Consolidated Financial Highlights

The following table shows the change in the Company's results of operations from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026, and the increases or decreases for each category by segment:

Net sales increased 9.1%6.3% to $588.0$671.1 million from $538.9$631.1 million. Wood construction product sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 84.6%84.7% and 85.3%84.9% of the Company's total sales in the firstsecond quarters of 2026 and 2025, respectively. Concrete construction product sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15.2%15.1% and 14.4%15.0% of the Company's total sales in the firstsecond quarters of 2026 and 2025, respectively.

Gross profit increased 6.1%8.6% to $265.9$318.2 million from $250.6$292.9 million primarily due to higher net sales while gross margins decreasedincreased to 45.2%47.4% from 46.5%.46.4%. From a product perspective, gross margin slightly decreasedincreased to 46.1%47.3% from 46.2%47.0% for wood construction products and decreasedincreased to 40.2%48.3% from 49.5%45.0% for concrete construction products, respectively.

SellingGeneral and administrative expense increased 0.6%10.5% to $54.5$83.6 million from $54.2$75.6 million, primarily due to increases of $0.5$4.6 million in variable compensation, $2.2 million in professional services and legal costs, $1.0 million in accrued product repairment expenses, $0.7 million in severance costs, $0.7 million in patent-filing expenses reclassified from selling expense, $0.5 million in advertisingdepreciation and trade showsamortization costs, and $0.4 million in leasing expenses, which is offset by decreasesdecrease of $0.5 million in personnel costs and $0.2 million in software related costs, net of amount capitalized.capitalized, and $1.7 million in personnel costs.

The following table shows net sales by segment for the three months ended MarchJune 31,30, 2026 and 2025, respectively:

The following table shows segment net sales as percentages of total net sales for the three months ended MarchJune 31,30, 2026 and 2025, respectively:

The following table shows gross profit (loss) by segment for the three months ended MarchJune 31,30, 2026 and 2025, respectively:

The following table shows gross margin by segment for the three months ended MarchJune 31,30, 2026 and 2025, respectively:

•Net sales increased 9.8%,6.0%, primarily due to price increases that took effect in June 2025 and October 2025 andpartly anoffset increaseby a slight decrease in unit sales volumes, as well as the positive effect of approximately $1.2 million in foreign currency translation.volumes.

•Gross margin decreasedincreased to 47.8%50.2% from 49.8%, reflecting49.5%, primarily thedue impactto fromlower tariffsmaterial and higher material, labor and factory and overhead costs,costs as a percentage of net sales.sales and cost savings initiatives.

•Selling expense decreased 3.3%,10.0%, primarily due to decreases of $0.8$2.1 million in personnel costs, $0.4 million in variable compensation, $0.2 million in software related costs, net of amount capitalized,travel and $0.2fuel millionexpenses, in severance costs, partially offset by increases of $0.4$1.0 million in advertising and trade show costs, and $1.0 million in personnel costs.

•General and administrative expense increased 1.7%,7.9%, primarily due to increases of $2.0$2.3 million in softwareprofessional relatedservices costs,and netlegal ofexpenses, amount capitalized, $0.6$1.0 million in patentsaccrued costs,product repairment expenses, $0.7 million in variable compensations, $0.5 million in depreciation and amortization costs, $0.5 million in leasingpatent costs,expenses, and $0.2$0.5 million in severanceleasing costs,expenses, which is offset by decreasesdecrease of $1.8$1.2 in personnel costs, $1.2and $0.8 million in professionalsoftware servicerelated costs, andnet $0.3of millionamount in variable compensation.capitalized.

•Income from operations increased by $13.5$21.5 million, primarily due to the increases in net sales as well as lower operating expense including lower personnel costs, professionaland software licensing fees as well as a reduction in travel and variableentertainment incentive compensation.costs.

•Net sales increased 6.3%7.6% due to both increased unit sales volumes and price increases as well as the positive effect of approximately $13.2$3.7 million in foreign currency translation as well as price increases, partly offset by decreased sales volumes.translation.

•Gross margin increased to 36.3%38.2% from 35.2%,36.2%, primarily driven by higher pricing and lower material costs, partly offset by higher factory and tooling costs, and labor costs as a percentage of net sales.

•Income from operations decreasedincreased by $2.2$4.0 million to $7.1$19.7 million from $9.3$15.7 million primarily due to lowerhigher salesgross volumes.profits. Operating expenses were negatively affected by approximately $3.8$0.7 million in foreign currency translation.

•For information about the Company's Asia/Pacific segment, please refer to the tables above setting forth changes in our operating results for the three months ended MarchJune 31,30, 2026 and 2025.

•Loss from operations decreased to $11.0$8.5 million from $12.2$11.8 million primarily due to highera gross$5.5 profits.million gain from an eminent domain settlement, which is offset by increases of $2.4 million in general and administrative expenses.