Simpson Manufacturing Co., Inc.

Previous wording

•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.

Current wording

•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 fiscal periods.

Previous wording

•Made significant footprint investments in both production and warehouses. 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.

Current wording

•Made significant footprint investments in both production and warehouses. 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. We recently announced a greenfield development to replace our leased equipment fabrication and assembly facility in Fulton, Missouri, as well asplans to expand our facility in McKinney, Texas — supporting both maintenance needs and growth objectives to drive efficiencies and advance our key initiatives.

Previous wording

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. As a result, North America net sales increased in recent quarters even as demand did not increase. However, increased selling prices were 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.

Current wording

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. As a result, North America net sales increased in recent quarters even as demand did not increase. However, increased selling prices were 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 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 with mixed results. We believe Europe net sales could increase in future quarters even if demand does not increase.

Previous wording

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), adjusted to exclude provision for income taxes, depreciation and amortization, acquisition integration and restructuring costs, non-qualified deferred compensation adjustments, lease termination costs, severance costs related to cost saving initiatives, net loss or gain on disposal of assets, interest income or 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.

Current wording

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 on a consistent basis from period to period. We define Adjusted EBITDA as net income (loss), adjusted to exclude provision for income taxes, depreciation and amortization, acquisition integration and restructuring costs, non-qualified deferred compensation adjustments, lease termination costs, severance costs related to cost saving initiatives, net loss or gain on disposal of assets, interest income or 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.

Previous wording

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 U.S. housing starts have been decreasing year over year since 2021. Lower housing starts in the U.S. could result in lower demand, which would affect our sales and possibly operating profit.

Current wording

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 U.S. housing starts have been decreasing year over year since 2021. A sustained reduction in U.S. housing starts or residential construction activity could result in lower demand for our products, which would adversely affect our sales and operating profit.

Previous wording

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.

Current wording

Costs for our raw materials, and particularly steel and certain wood products, have experienced significant price increases during 2026. 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.

Previous wording

We are closely monitoring the recent tariff and trade policy actions taken by the U.S. and foreign governments as well as the recent Middle East conflict. As the situation continues to remain fluid due to the rapidly changing global trade environment, we are still evaluating the potential implications of these events on our business. While we are largely domestically sourced, we continue to monitor macroeconomic trends from these events such as the impact of interest rates, disruptions to trade or transportation routes, cyberattack, 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. Additionally, economic pressures on our customers, including the potential of higher inflation, fluctuations in foreign currencies and consumer confidence, driven by economic concerns or price increases as a result of these events, such as those we previously announced, could reduce demand for our products and services negatively affecting our net sales and profitability in the future.

Current wording

While we are largely domestically sourced, we continue to monitor macroeconomic trends such as the impact of interest rates, disruptions to trade or transportation routes from conflicts in the Middle East, cyberattacks, changing foreign exchange rates, inflation, and the effects of tariffs and trade policies in markets where we and our supplier operate. Additionally, economic pressures on our customers, including the potential of higher inflation, fluctuations in foreign currencies and consumer confidence, driven by economic concerns or price increases as a result of these events, such as those we previously announced, could reduce demand for our products and services negatively affecting our net sales and profitability in the future.

Previous wording

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.

Current wording

Trade policy actions taken by the U.S. government during 2025 and 2026, together with potential modifications to existing tariffs and the imposition of additional tariffs, export controls or other trade measures by the United States or other countries, have contributed to 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. Tariffs currently in effect primarily affect our North America segment, because we procure fasteners and a small number of other products from countries subject to these tariffs. We continue to monitor the potential for new or increased U.S. tariffs and retaliatory measures by other countries that may adversely affect the global economy and our business.

Previous wording

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 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.

Current wording

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. 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 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.

Previous wording

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 six months ended June 30, 2026 compared to the six months ended June 30, 2025 due to price increases that took effect in June 2025 and October 2025, and an increase in sales volumes. Our wood construction product net sales increased 6.9% for the six months ended June 30, 2026 compared to June 30, 2025. Our concrete construction product net sales increased 13.2% over the same periods.

Current wording

Historically, our North America segment has generated more revenues from wood construction products compared to concrete construction products. North America net sales increased 6.4% to $1,486.2 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 due to price increases, and higher sales volumes. Our wood construction product net sales increased 5.4% for the nine months ended September 30, 2026 compared to September 30, 2025. Our concrete construction product net sales increased 12.5% over the same periods.

Previous wording

Operating income increased 14.5% to $276.3 million. The increase was primarily due to the increases in net sales as well as lower operating expense including lower personnel costs, and travel and fuel costs.

Current wording

Operating income increased 12.8% to $413.3 million. The increase was primarily due to the increases in net sales as well as lower operating expense including lower personnel costs, travel and entertainment costs and professional fees. During 2026, the ramp-up of our Gallatin facility resulted in startup inefficiencies associated primarily with the insourcing of heat-treating and coating processes. These inefficiencies decreased during the second and third quarters as production levels improved. We continue to increase production volumes and expect the facility to support increased vertical integration, service levels and manufacturing flexibility over time.

Previous wording

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. 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 andensure superior levels of customer service.

Current wording

We recently announced plans for a greenfield development to replace our leased equipment fabrication and assembly facility in Fulton, Missouri, as well as plans to expand our facility in McKinney, Texas. 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, while improving production efficiencies and safety in the workplace, as well as reducing our reliance on certain outsourced finished goods and component products.

Previous wording

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

Current wording

Gross profit increased $6.3 million and gross margins increased to 36.9% from 36.5%primarily driven by lower material costs, partly offset by higher factory and tooling costs, as a percentage of net sales.

Previous wording

Europe net sales increased 7.0%for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, due to both increased unit sales volumes and price increases as well as the positive effect of approximately $17.8 million in foreign currency translation. Wood construction product net sales increased 7.3%for the six months ended June 30, 2026 compared to June 30, 2025 and concrete construction product net sales, which are mostly project based, increased 5.7%over the same periods. Gross profit increased$10.4 million and gross margins increased to 37.3% from 35.7%primarily driven by higher pricing and lower material costs, partly offset by higher factory and tooling costs, as a percentage of net sales. Operating income increased $1.8 million and operating margin remained flat at 10.1%. Operating expenses were negatively affected by approximately $2.2 million in foreign currency 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 on-going footprint optimization efforts. We believe in Europe's long-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.

Current wording

Operating income increased $1.0 million and operating margin remained relatively flat at 10.7%. Operating expenses were negatively affected by approximately $4.4 million in foreign currency translation. In local currency, operating expenses increased by less than 1%.

Previous wording

•Consolidated operating margin is estimated to be in the range of 19.7% 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.

Current wording

•Consolidated operating margin is estimated to be in the range of 20.0% to 20.5%. The operating margin range includes an approximately $11.0 million gain on the sale of vacant land in the fourth quarter of 2026.

Previous wording

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 June 30, 2026, against the results of operations for the three months ended June 30, 2025. Unless otherwise stated, the results announced below, when referencing “both quarters,” refer to the three months ended June 30, 2025 and the three months ended June 30, 2026. 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 June 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.

Current wording

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 September 30, 2026, against the results of operations for the three months ended September 30, 2025. Unless otherwise stated, the results announced below, when referencing “both quarters,” refer to the three months ended September 30, 2025 and the three months ended September 30, 2026. 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 September 30, 2025 have been recast for comparison purposes and to conform to the current period classification, with $1.6 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.

Previous wording

Second Quarter 2026 Consolidated Financial Highlights

Current wording

Third Quarter 2026 Consolidated Financial Highlights

Previous wording

Net sales increased 6.3% to $671.1 million from $631.1 million. Wood construction product sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 84.7% and 84.9% of the Company's total sales in the second 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 15.1% and 15.0% of the Company's total sales in the second quarters of 2026 and 2025, respectively.

Current wording

Net sales increased 2.3% to $638.1 million from $623.5 million. Wood construction product sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 83.7% and 84.1% of the Company's total sales in the third 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 16.1% and 15.7% of the Company's total sales in the third quarters of 2026 and 2025, respectively.

Previous wording

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

Current wording

Gross profit increased 1.4% to $291.6 million from $287.7 million primarily due to higher net sales while gross margins decreased to 45.7% from 46.1%. From a product perspective, gross margin decreased to 44.9% from 46.2% for wood construction products and increased to 49.7% from 48.0% for concrete construction products.

Previous wording

Our effective income tax rate decreased to 25.7% from 25.8%.

Current wording

Our effective income tax rate increased to 25.4% from 25.3%.

Previous wording

Consolidated net incomewas $127.0 million compared to $103.5 million. Diluted earnings per share was $3.09 compared to $2.47.

Current wording

Consolidated net incomewas $109.1 million compared to $107.4 million. Diluted earnings per share was $2.68 compared to $2.58.

Previous wording

Adjusted EBITDA 1 of $196.1 million increased 22.6% compared to $159.9 million, primarily due to higher gross profits.

Current wording

Adjusted EBITDA 1 of $167.2 million increased 7.4% compared to $155.7 million, primarily due to higher gross profits.

Previous wording

•Selling expense decreased 6.7%, primarily due to decreases of $2.2 million in travel and fuel expenses, $2.0 million in personnel costs, $0.6 million in advertising and trade shows expenses, $0.5 million in professional services and legal expenses, and $0.2 million in software related costs, net of amount capitalized.

Current wording

•Research and development and engineering expense decreased 10.0%, primarily due to decreases of $0.8 million in personnel costs, $0.6 million in patent expenses, $0.5 million in leasing expenses, and $0.2 million in depreciation and amortization costs, which is partially offset by increases of $0.4 million in professional services and legal fees.

Previous wording

•General and administrative expense increased 7.9%, primarily due to increases of $2.3 million in professional services and legal expenses, $1.0 million in accrued product repairment expenses, $0.7 million in variable compensations, $0.5 million in depreciation and amortization costs, $0.5 million in patent expenses, and $0.5 million in leasing expenses, which is offset by decrease of $1.2 in personnel costs, and $0.8 million in software related costs, net of amount capitalized.

Current wording

•General and administrative expense decreased 6.9%, primarily due to decreases of $1.1 million in professional services and legal expenses, $1.0 million in donation expenses, $0.9 million in personnel costs, $0.7 million in bad debt expenses,$0.3 million in variable compensations, $0.3 million in employee training expenses, and $0.3 million in severance expenses which is offset by increases of $0.7 million in patent expenses, and $0.5 million in software related costs, net of amount capitalized.

Previous wording

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

Current wording

•Income from operations increased by$11.8 million, primarily due to the increases in net sales as well as lower operating expense including lower personnel costs, professional fees and bad debt reserve charges.

Previous wording

Results of Operations for the Six Months Ended June 30, 2026, Compared with the Six Months Ended June 30, 2025

Current wording

Results of Operations for the Nine Months Ended September 30, 2026, Compared with the Nine Months Ended September 30, 2025

Previous wording

Unless otherwise stated, the results announced below, when providing comparisons (which are generally indicated by words such as “increased,” “decreased,” “unchanged” or “compared to”), compare the results of operations for the six months ended June 30, 2026, against the results of operations for the six months ended June 30, 2025. Unless otherwise stated, the results announced below, when referencing “both periods,” refer to the six months ended June 30, 2025 and the six months ended June 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 six months ended June 30, 2025 have been recast for comparison purposes and to conform to the current period classification, with $3.0 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.

Current wording

Unless otherwise stated, the results announced below, when providing comparisons (which are generally indicated by words such as “increased,” “decreased,” “unchanged” or “compared to”), compare the results of operations for the nine months ended September 30, 2026, against the results of operations for the nine months ended September 30, 2025. Unless otherwise stated, the results announced below, when referencing “both periods,” refer to the nine months ended September 30, 2025 and the nine months ended September 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 nine months ended September 30, 2025 have been recast for comparison purposes and to conform to the current period classification, with $4.6 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.

Previous wording

Year-to-Date (6-months) 2026 Consolidated Financial Highlights

Current wording

Year-to-Date (nine-months) 2026 Consolidated Financial Highlights

Previous wording

The following table illustrates the differences in our operating results for the six months ended June 30, 2026, from the six months ended June 30, 2025, and the increases or decreases for each category by segment:

Current wording

The following table illustrates the differences in our operating results for the nine months ended September 30, 2026, from the nine months ended September 30, 2025, and the increases or decreases for each category by segment:

Previous wording

Net sales increased 7.6% to $1,259.0 million from $1,170.0 million. Wood construction product sales represented 84.7% and 85.1% of the Company's total sales in the first six months of 2026 and 2025, respectively. Concrete construction product sales represented 15.1% and 14.7%of the Company's total sales in the first six months of 2026 and 2025, respectively.

Current wording

Net sales increased 5.8% to $1,897.2 million from $1,793.5 million. Wood construction product sales represented 84.3% and 84.8% of the Company's total sales in the first nine months of 2026 and 2025, respectively. Concrete construction product sales represented 15.4% and 15.0%of the Company's total sales in the first nine months of 2026 and 2025, respectively.

Previous wording

•General and administrative expense increased 4.8%, primarily due to increases of $1.1 million in professional services and legal expenses, $1.3 million in depreciation and amortization expenses, $1.2 million in software related costs, net of amount capitalized, $1.0 million in leasing expenses, $1.0 million in accrued product repairment expenses, $1.1 million in patent expenses, and$0.4 million in variable compensation, which is partially offset by decreases of $2.9 million in personnel costs.

Current wording

General and administrative expense increased to $237.8 million from $233.6 million, primarily due to increases of $5.4 million in variable compensation, $2.6 million in software related costs, net of amount capitalized, $2.1 million in depreciation and amortization expenses, $1.9 million in patent expenses, $1.3 million in leasing expenses,$1.0 million in severance costs, which is partially offset by decreases of $4.3 million in personnel costs,$2.8 million in professional services and legal expenses, $1.4 million in donation expenses, and $1.6 million in bad debt expenses.

Previous wording

Oureffective income tax rate decreased to 25.0% from 25.6%.

Current wording

Oureffective income tax rate decreased to 25.2% from 25.5%.

Previous wording

Consolidated net incomewas $215.3 million compared to $181.4 million. Diluted earnings per share was $5.22 compared to $4.33.

Current wording

Consolidated net incomewas $324.4 million compared to $288.9 million. Diluted earnings per share was $7.90 compared to $6.89.

Previous wording

Adjusted EBITDA 2 of $335.4 million increased 18.9% compared to $282.1 million primarily due to higher gross profits.

Current wording

Adjusted EBITDA 2 of $502.7 million increased 14.8% compared to $437.8 million primarily due to higher gross profits.

Previous wording

The following table represents net sales by segment for the six-month periods ended June 30, 2025 and 2026:

Current wording

The following table represents net sales by segment for the nine-month periods ended September 30, 2025 and 2026:

Previous wording

The following table represents segment sales as percentages of total net sales for the six-month periods ended June 30, 2025 and 2026, respectively:

Current wording

The following table represents segment sales as percentages of total net sales for the nine-month periods ended September 30, 2025 and 2026, respectively:

Previous wording

The following table represents gross profit (loss) by segment for the six-month periods ended June 30, 2025 and 2026:

Current wording

The following table represents gross profit (loss) by segment for the nine-month periods ended September 30, 2025 and 2026:

Previous wording

The following table represents gross margins by segment for the six-month periods ended June 30, 2025 and 2026:

Current wording

The following table represents gross margins by segment for the nine-month periods ended September 30, 2025 and 2026:

Previous wording

•Gross margin decreased from 49.6% to 49.1%, reflecting primarily the impact from tariffs and higher labor and factory and overhead costs, as a percentage of net sales, partially offset by cost savings initiatives.

Current wording

•Gross margin decreased from 49.3% to 48.9%, reflecting primarily the impact from tariffs and higher labor and factory and overhead costs, as a percentage of net sales, partially offset by cost savings initiatives.

Previous wording

Research and development and engineering expense decreased 9.8% to $36.6 million from $40.6 million, primarily due to decreases of $1.0 million in personnel costs, $1.0 million in patent expenses, $0.6 million in depreciation and amortization costs, $0.5 million in professional services and legal fees, $0.3 million in software related costs, net of amount capitalized, and $0.2 million in travel and fuel expenses.

Current wording

•Research and development and engineering expense decreased 11.6%, primarily due to decreases of $2.0 million in personnel costs, $1.7 million in patent expenses, $0.7 million in depreciation and amortization costs, $0.6 million in leasing expenses, $0.6 million in professional services and legal fees, $0.3 million in travel and fuel expenses, and $0.2 million in software related costs, net of amount capitalized.