What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-03 · 135 added, 118 removed, 240 unchanged (51% of the section changed)

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The information on our website is not incorporated by reference into this report or other material we file with or furnish to the SEC, except as explicitly noted or as required by law.

The following discussion and analysis provides 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.

The following discussion and analysis provide 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 Consolidated Financial Statements and notes thereto included in this report.

“Strong-Tie” and our other trademarks appearing in this report are our property.

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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.

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

1 Average price paid per share of common shares repurchased excludes excise tax.

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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, 2025.

2 Pursuant to the $100.0 million repurchase authorization from the Board of Directors on October 19, 2023, and which expired on December 31,

2 Pursuant to the $120.0 million repurchase authorization from the Board of Directors on October 23, 2025 which expired on December 31,

See “Note 5 — Stockholder's Equity”.

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.

Within the North America segment, our sales efforts are aligned to customer market teams dedicated to serving the following markets:

Asia/Pacific.

Within the North America segment, our sales efforts are dedicated to serving customers across the following end-use markets:

• Residential;

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• 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.

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.

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.

Our organic growth opportunities are focused on expanding product lines with our current customers while also identifying new market share gain opportunities within our core product and market competencies.

To grow in these markets, we aspire to be among the leaders in engineered load-rated construction building products and systems, as well as digital product offerings.

We intend to leverage our engineering expertise, deep-rooted relationships with top builders, engineers, contractors, code officials and distributors, and our ongoing commitment to testing, research and innovation.

Importantly, we have existing products, testing results, distribution and manufacturing capabilities to support our ambitions.

Achieving this growth will depend on expanding our sales and marketing efforts to promote our products across end users and distribution channels, broadening our customer base, and introducing new products over time.

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%;

• Earnings per share growth exceeding net revenue growth.

Since announced in 2021, we made great progress on our key growth initiatives.

• Be the business partner of choice;

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

• Drive above market volume growth relative to U.S.

housing starts;

• Maintain an operating income margin at or above 20%;

• Deliver earnings per share growth ahead 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 revenue and $200.0 million in operating profit.

• Added approximately $1.0 billion in revenue, 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.

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

• Realigned our sales team by end market, significantly reduced two-step distribution, and made significant investments in our field sales and engineering teams.

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• 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.

As a result, we are now in an even stronger market position in connectors with significant gains in both fasteners and anchors.

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.

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.

• Expanded our equipment product line which helped drive increase sales in the component manufacturing market space.

• Streamlined internal processes and focused development efforts on high-impact new products.

• Promoted high-potential talent and external experts to senior leadership.

As a result, we have further strengthened our market position in connectors with significant gains in both fasteners and anchors.

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 2025 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.

During the fiscal year ended December 31, 2025, tariff and trade policy actions have impacted our results of operations and are expected to continue to do so.

We also experienced increased foreign currency exchange rate volatility, which we attribute, in part, to the rapidly changing global trade environment.

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.

We believe North America net sales could increase in future periods even if demand does not increase.

However, increased selling prices are expected to be offset by higher non-material costs including labor, energy, transportation, and equipment incurred over the prior three years and potentially by

future costs increases.

In addition, the price increases are expected to partially offset increased costs related to tariffs affecting a portion of our fastener and anchors sales, but do not offset tariffs announced after December 31, 2025.

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.

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).

We use adjusted EBITDA to

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.

We define 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).

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.

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.

Our business, financial condition, and results of operations depend in large part on the level of U.S.

housing starts and residential construction activity.

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.

housing starts have 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 same period.

Lower housing starts in the U.S.

could result in lower demand, which would affect the Company's sales and possibly operating profit.

could result in lower demand, which would affect our sales and possibly operating profit.

Unlike lumber or other products that have a more direct correlation to U.S.

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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.

We are closely monitoring the recent tariff and trade policy actions taken by the U.S.

and foreign governments.

As the situation continues to remain fluid due to the rapidly changing global trade environment, we are still evaluating the potential implications of these actions in our business.

While we are largely domestically sourced, we continue to monitor macroeconomic trends such as the impact of interest rates, changing foreign exchange rates, inflation, the effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs in markets where we and our supplier operate.

As a result of the tariffs announced by the U.S.

presidential administration on April 2, 2025, and June 15, 2025, and 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, which 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.

Additionally, economic pressures on our customers, including the potential for higher inflation, fluctuations in foreign currencies and consumer confidence, driven by economic concerns or price increases, such as those we previously announced, could reduce demand for our products and services negatively affecting our net sales and profitability in the future.

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.

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.

Increased tariffs (as noted above), 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.

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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.

Our operations also expose us to risks associated with pandemics, epidemics or other public health crises.

Business Segment Information

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North America net sales increased 4.5% for the year ended December 31, 2025, compared to December 31, 2024.

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.

For 2025, U.S.

housing starts could improve in the low-single digit range from 2024 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.

Operating income decreased 7.1% to $439.6 million from $473.2 million on lower gross profits as well as increased personnel costs software and hardware costs and professional fees, party offset by lower incentive costs.

Fiscal year 2024 operating margins were also affected by recent acquisitions including acquisition and integration related costs.

For 2025, incremental investments in the current business will be limited until the U.S.

housing market shows long-term improvement.

During 2024, work continued on our Columbus, Ohio facility expansion as well as the construction of our new Gallatin, Tennessee facility.

We expect the expansion and operation of these facilities to be completed and commence in 2025.

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.

Our wood construction product net sales increased 3.7% for the year ended December 31, 2025, compared to December 31, 2024, primarily due to tariff-driven product price increases implemented during the second quarter and fourth quarter of 2025 as well as incremental sales increases from businesses acquired during fiscal year 2024, partly offset by lower sales volumes.

North America wood product sales volumes for 2025 were down from 2024 year-over-year, due to lower housing starts and a more challenging regional mix, with the most pronounced housing 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 8.6% over the same periods primarily due to product price increases implemented during the second quarter and fourth quarter of 2025, as well as increased sales volumes.

For 2026, we expect U.S.

housing starts to be at 2025 levels, 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.

Operating income increased 2.1% to $448.8 million from $439.6 million on higher gross profits, partly offset by increased operating expenses.

The higher operating expenses were driven by higher personnel costs including severance related costs, variable incentive compensation, IT application costs, as well as the timing of higher charitable donations.

We completed construction 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 customers' 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 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.

Gross profit decreased $8.1 million primarily due to increased factory overhead, warehouse and freight costs, as a percentage of net sales.

Operating income decreased $12.2 million on lower gross profits and increased costs supporting the optimization of the European footprint, including the realization of defensive Etanco related synergies, which resulted in $5.7

million in restructuring and severance charges for fiscal year 2024.

As a result of these efforts and projected increased sales, we currently anticipate Europe's 2025 operating margin to improve compared to fiscal year 2024.

I ncremental investments in the current business will be limited until the U.S.

housing market shows long-term improvement.

We anticipate product price increases implemented during 2025 will also benefit 2026 net sales by an estimated $40.0 million, mostly in the first half of fiscal year 2026.

A portion of the product price increases were to partly offset the negative impact of tariffs for product imported into the United States.

Tariffs and increased depreciation expense will have a negative impact on North America's gross and operating margins.

Europe net sales increased 4.3% for the year ended December 31, 2025, compared to December 31, 2024, with approximately $20.4 million of the increase due to favorable foreign currency translation.

Wood construction product net sales increased 3.1% for the year ended December 31, 2025, compared to December 31, 2024, and concrete construction product net sales, which are mostly project based, increased 9.3% over the same periods.

Gross margin increased to 35.8% from 35.3% , primarily due to lower material and freight costs, partly offset by higher factory and overhead, warehouse and labor costs, as a percentage of net sales.

Gross profit was negatively impacted by footprint optimization and severance costs.

Operating income also increased $10.1 million and operating margin increased to 8.8% from 7.1%, mostly due to higher gross profits with lower integration expenses offsetting higher operating expenses.

Operating expenses were negatively affected by approximately $5.3 million in foreign currency translations.

In local currency, operating expenses decreased by approximately 2.1%.

We believe in the long-term potential given Europe's on-going housing shortage (with an increasing use of wood construction) and new environmental regulations for which we have products and solutions.

Currently we anticipate Europe results for 2026 to be improved partly due to product price increases and controlling expenses.

Our Asia/Pacific segment has generated revenues from both wood and concrete construction products.

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Based on business trends and conditions, the Company's outlook for the full fiscal year ending December 31, 2026 is as follows:

• Given the uncertainty regarding 2025 U.S.

housing starts compared to prior year housing starts, consolidated operating margin is estimated to be in the range of 18.5% to 20.5% with the low end of the range based on flat to declining 2025 housing starts compared to prior year.

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.

• Consolidated operating margin is estimated to be in the range of 19.5% to 20.5%.

The operating margin range includes a projected gain of $10.0 million to $12.0 million on the sale of vacant land.

• The effective tax rate is estimated to be in the range of 25.0% to 26.0%, incl uding 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 in the range of $75.0 million to $85.0 million.

Results of Operations

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Other and foreign exchange loss, net (0.2) % (0.1) % (0.1) %

(0.1) % (0.1) % (0.2) %

Income before taxes 19.8 % 19.4 % 21.5 %

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Net gain on disposal of assets (447) (4,697) 650 (184) (11,824) (16,502)

(276) (145) 26 (24) (28) (447)

Acquisition and integration related costs 5,813 514 (3,362) — (1,900) 1,065

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Interest income and other financing costs, net 5,277 (1,005) 259 308 3,498 8,337

3,391 597 763 (578) 1,104 5,277

Other and foreign exchange loss, net (1,209) (1,062) 3,809 (668) (4,799) (3,929)

(1,993) (3,844) (3,397) 1,485 6,540 (1,209)

Income before taxes 434,043 7,173 14,123 530 6,604 462,473

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Net income $ 322,224 $ 1,658 $ 14,825 $ 647 $ 5,729 $ 345,083

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.

Net Sales increased approximately 4.5% to $2.3 billion from prior year, primarily due to increases in pricing, higher incremental sales related to the Company ’ s 2024 acquisitions , and the positive effect of $17.7 million in foreign currency translation related mostly to Europe's currencies weakening against the United States dollar, partly offset by lower volumes .

Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 84.4% and 85.1% of the Company’s total net sales for the years ended December 31, 2025 and 2024, respectively.

Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15.5% and 14.8% of the Company’s total net sales for the years ended December 31, 2025 and 2024, respectively.

Gross profit decreased approximately 1.7% to $1.0 billion from prior year, primarily due to lower gross margins.

Gross margins decreased to 46.0% from 47.1%, primarily 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.

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.

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.

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.

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%.

Gross profit increased approximately 4.5% to $1.1 billion from prior year, primarily due to higher net sales.

Gross margin is consistent with fiscal year 2024, due to impact from tariffs, higher factory, overhead, and labor costs, which were mostly offset by lower warehouse costs.

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 45.6% to 45.8% for wood construction products and decreased from 47.5% to 47.0% for concrete construction products.

Research and development and other engineering expense increased 0.7% to $82.5 million from $81.9 million.

Selling expense increased 4.3% to $222.8 million from $213.5 million, primarily due to increases of $9.5 million in personnel costs, $4.0 million in variable compensation costs and $1.8 million in professional fees, partially offset by a decrease of $2.4 million in advertising and trade shows, $1.6 million in charitable donations, $1.5 million in Depreciation and Amortization, and $1.2 million in travel expenses.

General and administrative expense increased 9.8% to $321.7 million from $293.1 million, primarily due to increases of $10.3 million in personnel costs, $11.1 million in variable compensation costs, $1.1 million in professional fees, $3.0 million in depreciation and amortization, $1.2 million in bad debt, and $5.8 million in donations, partially offset by a decrease of $3.2 million in net capitalized computer and software expenses, $1.2 million in travel expenses.

Income from operations increased 6.5% to $458.1 million from $430.0 million primarily due to increase in net sales as noted above, a $12.9 million gain on disposal of assets from the sale of the existing Gallatin, Tennessee facility, and a decrease of $4.7 million in integration expenses.

Our effective income tax rate decreased to 25.4% from 25.8%.

Consolidated net income was $345.1 million compared to $322.2 million.

Diluted net income per share of common stock was $8.24 compared to $7.60.

Adjusted EBITDA 1 of $520.1 million decreased 6.2% compared to $554.2 million, primarily due to lower gross profits and higher operating expenses, as noted above.

Adjusted EBITDA 1 of $544.3 million increased 3.3% compared to $526.8 million, primarily due to higher gross profits as noted above.

The following table shows net sales by segment for the years ended December 31, 2025 and 2024, respectively:

(in thousands)

(in thousands) North

America Europe Asia/

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December 31, 2025 1,813,856 499,559 19,393 2,332,808

Increase (decrease)

$ 19,457 $ (1,701) $ 580 $ 18,336

Percentage increase (decrease)

1.1 % (0.4) % 3.5 % 0.8 %

Increase $ 77,977 $ 20,504 $ 2,188 $ 100,669

Percentage increase 4.5 % 4.3 % 12.7 % 4.5 %

The following table shows segment net sales as percentages of total net sales for the years ended December 31, 2025 and 2024, respectively:

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Increase (decrease) $ 36,487 $ 9,951 $ 651 $ (1,372) $ 45,717

Percentage decrease

(1.4) % (4.6) % * * (1.7) %

Percentage increase 4.3 % 5.9 % * * 4.5 %

* The statistic is not meaningful or material.

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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.

• Net sales increased 4.5% primarily due to increase in pricing and incremental sales from the Company’s 2024 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.

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GAAP (“GAAP”) net income see the schedule titled “Reconciliation of Non-GAAP Financial Measures.”

• General and administrative expense increased $7.7 million, primarily due to increases of $7.3 million in personnel costs and $4.6 million in professional and legal fees, partially offset by a decrease of $5.7 million in variable compensation costs.

• Income from operations decreased $33.7 million, primarily due to lower gross profit as well as increases in operating expenses.

The operating expense increases were driven by higher personnel costs, professional fees, and travel-related expenses, which were partially offset by a decrease in variable compensation costs.

• Net sales de creased 0.4%, primarily due to lower sales volumes.

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.

• Gross margin decreased to 48.8% from 48.9%, primarily due to higher factory and overhead as well as labor costs, partially offset by lower warehouse costs, as a percentage of net sales.

• Research and development and engineering expense decreased $0.5 million.

• Selling expense increased $8.8 million, primarily due to increases of $8.8 million in personnel costs, $3.1 million in variable compensation costs, and $2.0 million in professional fees, partially offset by a decrease of $1.6 million in advertising and trade shows expense, $1.6 million in charitable donations, and $1.5 million in depreciation and amortization expenses.

• General and administrative expense increased $23.1 million, primarily due to increases of $4.8 million in personnel costs, $2.8 million in professional and legal fees, $4.7 million in depreciation and amortization expenses, $5.7 million in charitable donations, and $6.8 million in variable compensation costs, partially offset by a decrease of $3.2 million in net capitalized computer and software expenses.

• Income from operations increased $9.2 million, primarily due to gross profit, partly offset by higher operating expenses.

• Net sales increased 4.3%, primarily due to the positive effect of approximately $20.4 million in foreign currency translation, as well as increases in sales volumes and pricing.

• Gross margin increased to 35.8% from 35.3% , p rimarily due to lower material and freight costs, partly offset by higher factory and overhead, labor and warehouse costs, as a percentage of net sales.

• Income from operations increased $10.1 million, primarily due to higher gross profits and a decrease in acquisitions and integration related costs, partly offset by increases in operating expenses mostly due to the negative effect of approximately $5.3 million in foreign currency translation.

• 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, 2025 and 2024.

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.

• General and administrative expense increased $4.4 million, primarily due to increases of $1.9 million in variable compensation costs, and $3.4 million in personnel costs, and partially offset by a decrease of $1.4 million in professional and legal fees.

Critical Accounting Policies and Estimates

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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 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.

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The Company evaluates the recoverability of goodwill in accordance with Accounting Standard Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other,” annually, or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount.

Intangible assets acquired are recognized at their fair value at the date of acquisition.

Intangible assets acquired are recognized at their fair value on the date of acquisition.

Finite-lived intangibles are amortized over their applicable useful lives.

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These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or disposition or relocation of a significant portion of a reporting unit.

During fiscal year 2023, we re-evaluated our European reporting units after a full year of operations from our acquisition of ETANCO as it has become further integrated into our other European operations resulting in changes to the management, product distribution, and operations structure of our European operations.

As a result of this re-evaluation, all European reporting units were consolidated for reporting purposes into one overall Europe reporting unit.

A qualitative assessment was performed immediately preceding the reporting unit change and determined that it was not more likely than not that any impairment existed prior to the reporting unit change.

We determined that the U.S.

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For each of these reporting units, the Company aggregated the components because management concluded that they are economically similar, and that the goodwill is recoverable from these components working in concert.

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.

We performed the ( “ Step 0 ” ) approach in the fourth quarters of 2024 and 2025 to assess qualitative factors related to the goodwill of the reporting units to determine whether it is necessary to perform an impairment test.

For the qualitative assessments, we assessed various assumptions, events and circumstances that could have affected the estimated fair value of the reporting units.

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.

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Revenue from Contracts with Customers

Generally, the Company's revenue contract with a customer exists when (1) the goods are shipped, services are rendered, and the related invoice is generated, (2) the duration of the contract does not extend beyond the promised goods or services already transferred and (3) the transaction price of each distinct promised product or service specified in the invoice is based on its

relative stated standalone selling price.

Generally, the Company’s revenue contract with a customer exists when (1) the goods are shipped, services are rendered, and the related invoice is generated, (2) the duration of the contract does not extend beyond the promised goods or services already

transferred and (3) the transaction price of each distinct promised product or service specified in the invoice is based on its relative stated standalone selling price.

The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer at a point in time.

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Our principal uses of capital include the costs and expenses associated with our operations, including financing working capital requirements and continuing our capital allocation strategy, which includes supporting capital expenditures, paying cash dividends, repurchasing the Company’s common stock, and financing other investment opportunities from time to time.

On March 30, 2022, the Company entered into an Amended and Restated Credit Agreement.

The Amended and Restated Credit Agreement provides for a 5-year revolving credit facility of $450.0 million, which includes a letter of credit-sub-facility up to $50.0 million, and for a 5-year term loan facility of $450.0 million.

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.

On December 16, 2025, the Company entered into the Second Amended and Restated Credit Agreement (the “Second Amended and Restated Credit Agreement”), which amends and restates the Company's previous agreement dated March 30, 2022.

The Second Amended and Restated Credit Agreement provides for a 5-year $600.0 million revolving credit facility, which includes a letter of credit-sub-facility up to $50.0 million, and a 5-year term loan facility of $300.0 million.

As of December 31, 2025, the Company had $74.2 million borrowings under the revolving credit facility and $300.0 million borrowings under the term loan facility.

As of December 31, 2025, the Company has $525.8 million available to borrow under the revolving credit facility.

For more information, refer to “Note 14 - Debt” in Part II, Item 8.

The Company has certain contractual obligations, primarily debt interest, operating leases, and purchase obligations, which include annual facility fees.

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Non-cash net working capital $ 586,570 $ 570,602 $ 521,362

570,602 521,362 529,945

The following table presents the significant categories of cash flows for the twelve months ended December 31, 2025, 2024 and 2023, respectively:

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In 2025, cash provided by operating activities of $458.7 million in cash and cash equivalents as a result of $345.1 million from net income and adding back $127.2 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 $13.6 million for the net change in operating assets and liabilities.

The net change in operating assets and liabilities included increases of $50.4 million in inventory and $12.7 million in other current assets as well as a $17.0 million net change in other non-current assets and liabilities.

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.

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.

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.

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.

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.

The net change in operating assets and liabilities included increases of $24.0 million net change in other non-current assets and liabilities, $13.3 million in other current assets and $10.1 million in trade accounts receivable, partly offset by a decrease of $19.9 million in inventory as well as an increase of $20.7 million in accrued liabilities and other current liabilities.

Cash used in investing activities of $136.2 million during the year ended December 31, 2025, was primarily for capital spending of $161.0 million for facility expansion projects, and machinery and equipment purchases.

Based on current forecasts, capital expenditures are estimated to range between $75.0 million to $85.0 million for 2026.

Cash used in financing activities of $186.1 million during the year ended December 31, 2025, consisted primarily of $419.0 million in loan principal payments, $120.0 million for the repurchase of the Company’s common stock and $47.6 million used to pay cash dividends, partly offset by $403.8 million in loan proceeds.

The Company purchased and received approximately 0.7 million shares of its common stock on the open market at an average price of $171.43 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.

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.

On October 23, 2025, the Board authorized the Company to repurchase an additional $20.0 million of shares of the Company’s common stock through the end of the year 2025 increasing the 2025 share repurchase authorization to $120.0 million, and authorized the Company to repurchase up to $150.0 million of shares of the Company's common stock, effective January 1, 2026 through December 31, 2026.

Further, on January 28, 2026, the Board declared a quarterly cash dividend of $0.29 per share payable on April 23, 2026 to stockholders of record on April 2, 2026, and estimated to be $12.0 million in total.

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.

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.

Cash flows from operating activities years ended December 31, 2023 and 2022 are incorporated by reference to Form 10-K 2023 filing.

For the fiscal year ended December 31, 2025, the Company returned $167.6 million to the Company's stockholders, which represents 56.3% of our free cash flow from operations during the same period.

From the beginning of 2022 to the fiscal year ended December 31, 2025, the Company has returned $531.8 million to stockholders, which represents 47.0% of our free cash flow from operations during the same period.

From the beginning of 2022 to the fiscal year ended December 31, 2025, the Company has repurchased approximately 2.4 million shares of the Company's common stock, which represents approximately 5.6% of the outstanding shares of the Company's common stock at the start of 2022.

Cash flows from operating activities for the years ended December 31, 2024 and 2023 are incorporated by reference to Form 10-K 202 4 filing .

Reconciliation of Non-GAAP Financial Measures

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Provision for income taxes 117,390 111,819

Interest (income) expense, net and other financing costs (5,277) (3,391)

Interest income, net and other financing costs (8,337) (5,277)

Depreciation and amortization 88,477 84,584

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Adjusted EBITDA $ 544,279 $ 526,803

Includes acquisition, integration, restructuring related expenses, non-qualified deferred compensation plan adjustments, other & foreign exchange loss net, and net loss or gain on disposal of assets.

Includes acquisition, integration, and restructuring related expenses, non-qualified deferred compensation adjustments, lease termination, severance costs, other & foreign exchange loss net, and net loss or gain on disposal of assets.

Contingencies

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis