Financial Data and Key Metrics Changes - The company's Q3 2021 net sales reached $396.7 million, an increase of 8.9% compared to the prior year period, primarily driven by product price increases to offset rising raw material costs [7][27] - Gross margins improved to 49.9% from 47.9% in the prior quarter and 47.6% in the year-ago period, reflecting strong pricing power despite higher material costs [10][29] - Income from operations increased to $100.6 million, leading to earnings per diluted share of $1.70, compared to $1.54 in the previous year [11][35] Business Line Data and Key Metrics Changes - In North America, net sales increased by 6.8% to $338.6 million, driven by price increases, although sales volumes declined, particularly in the home center channel [27] - European net sales rose by 22.5% to $54.8 million, benefiting from higher sales volumes compared to the previous year's COVID-19 related slowdown [28] - Gross margin for wood products was 50.2%, up from 48% in the prior year, while concrete products saw a margin of 44.6%, compared to 42.1% previously [30] Market Data and Key Metrics Changes - U.S. housing starts improved by 19.5% during the first nine months of 2021 compared to the same period last year, indicating a positive trend in the housing market [15] - In Europe, sales improved due to strengthening demand and effective inventory management amid supply chain shortages [16] Company Strategy and Development Direction - The company is focused on growth in OEM repair, remodel, DIY, and mass timber markets, aiming to be a leader in engineered load-ready construction fastening solutions [17][19] - There is an emphasis on expanding presence in concrete construction and structural steel markets, with existing product and distribution capabilities already in place [18][20] - The company is pursuing both organic growth and M&A opportunities to enhance its product offerings and market share [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic challenges, including supply chain constraints and rising raw material costs, but expressed confidence in the company's ability to manage these issues [24][49] - The company anticipates significant gross margin compression beginning in fiscal 2022 due to higher raw material costs, despite maintaining an industry-leading operating margin in the long term [11][46] - Management remains optimistic about the company's strategic initiatives driving improved operational performance and returns on investment capital [41][47] Other Important Information - The company declared a quarterly cash dividend of $0.25 per share, payable on January 27, 2022, reflecting strong cash generation and commitment to shareholder returns [40] - Inventory levels increased to $385.5 million, primarily due to rising steel prices, with careful management practices in place to ensure product availability [37] Q&A Session Summary Question: Contribution from pricing in North America - The contribution from pricing in the quarter was approximately $75 million [52] Question: Home center business performance - The home center business experienced a significant decline due to inventory leveling and tough comparables from the previous year [56] Question: Lead times for customer orders - The company maintains lead times of over 97%, typically within 24 to 48 hours, which is a key differentiator [59] Question: Impact of price increases on customer demand - Customers have not significantly reduced demand despite price increases, primarily due to the availability of products [64] Question: Changes in building codes and standards - There is emerging interest in building to resiliency standards, which could impact future revenue and competitive positioning [68] Question: Challenges with overseas sourcing - The company faces longer lead times for products sourced from overseas, prompting interest in increasing domestic manufacturing capabilities [73]

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Simpson Manufacturing Co., Inc.'s unaudited condensed consolidated financial statements and detailed notes for specified periods [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | ASSETS (in thousands) | June 30, 2021 | December 31, 2020 | June 30, 2020 | | :---------------------- | :------------ | :---------------- | :------------ | | Cash and cash equivalents | $305,796 | $274,639 | $315,448 | | Trade accounts receivable, net | $249,931 | $165,128 | $233,867 | | Inventories | $310,254 | $283,742 | $265,365 | | Total current assets | $901,703 | $753,139 | $834,902 | | Total assets | $1,373,974 | $1,232,569 | $1,284,503 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | June 30, 2021 | December 31, 2020 | June 30, 2020 | | :---------------------- | :------------ | :---------------- | :------------ | | Total current liabilities | $232,454 | $194,061 | $193,414 | | Long term debt, net of current portion | — | — | $150,000 | | Total liabilities | $287,069 | $251,626 | $390,291 | | Total stockholders' equity | $1,086,905 | $980,943 | $894,212 | | Total liabilities and stockholders' equity | $1,373,974 | $1,232,569 | $1,284,503 | - Total assets increased by **$141.4 million** (11.5%) from December 31, 2020, to June 30, 2021, primarily driven by increases in current assets, particularly trade accounts receivable and inventories[10](index=10&type=chunk) - Long-term debt, net of current portion, was reduced to **zero** as of June 30, 2021, from **$150 million** at June 30, 2020[10](index=10&type=chunk) - Total stockholders' equity increased by **$105.9 million** (10.8%) from December 31, 2020, to June 30, 2021[10](index=10&type=chunk) [Condensed Consolidated Statements of Earnings and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20and%20Comprehensive%20Income) | (in thousands except per-share amounts) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $410,281 | $326,076 | $757,922 | $609,744 | | Gross profit | $196,446 | $149,800 | $358,727 | $279,466 | | Income from operations | $101,728 | $72,212 | $170,112 | $121,562 | | Net income | $72,483 | $53,479 | $122,872 | $90,305 | | Diluted EPS | $1.66 | $1.22 | $2.82 | $2.05 | | Cash dividends declared per common share | $0.25 | $0.23 | $0.48 | $0.46 | - Net sales increased by **25.8%** for the three months ended June 30, 2021, and by **24.3%** for the six months ended June 30, 2021, compared to the respective prior-year periods[12](index=12&type=chunk) - Net income increased by **35.5%** to **$72.5 million** for the three months ended June 30, 2021, and by **36.1%** to **$122.9 million** for the six months ended June 30, 2021, year-over-year[12](index=12&type=chunk) - Diluted EPS grew by **36.1%** to **$1.66** for the three months and by **37.6%** to **$2.82** for the six months ended June 30, 2021, compared to the same periods in 2020[12](index=12&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) | (in thousands) | Balance at Dec 31, 2020 | Net Income | Dividends Declared | Stock-based Compensation | Other Changes | Balance at Jun 30, 2021 | | :------------- | :---------------------- | :--------- | :----------------- | :----------------------- | :------------ | :---------------------- | | Total Stockholders' Equity | $980,943 | $122,872 | $(20,816) | $9,826 | $(5,920) | $1,086,905 | - Total stockholders' equity increased from **$980.9 million** at December 31, 2020, to **$1,086.9 million** at June 30, 2021, primarily due to net income of **$122.9 million**, partly offset by cash dividends declared of **$20.8 million**[17](index=17&type=chunk) - For the six months ended June 30, 2021, stock-based compensation added **$9.8 million** to additional paid-in capital[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :------------- | :----------------------------- | :----------------------------- | | Operating activities | $81,632 | $42,766 | | Investing activities | $(26,214) | $(13,444) | | Financing activities | $(25,603) | $57,733 | | Net increase in cash and cash equivalents | $31,157 | $85,238 | | Cash and cash equivalents at end of period | $305,796 | $315,448 | - Net cash provided by operating activities significantly increased to **$81.6 million** for the six months ended June 30, 2021, from **$42.8 million** in the prior-year period[19](index=19&type=chunk) - Cash used in investing activities increased to **$26.2 million**, primarily due to capital expenditures and an investment in a venture capital fund[19](index=19&type=chunk) - Cash used in financing activities was **$25.6 million**, mainly for dividends paid and taxes on employee stock, a shift from **$57.7 million** provided in the prior year which included proceeds from lines of credit[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Basis of Presentation](index=9&type=section&id=1.%20Basis%20of%20Presentation) - The financial statements are prepared in conformity with GAAP, requiring management estimates and assumptions, particularly in the context of COVID-19 impacts[22](index=22&type=chunk) - Revenue is recognized when control of a product is transferred to a customer, typically at the F.O.B. shipping point[25](index=25&type=chunk) - The Company uses derivative instruments (foreign currency forward contracts) as cash flow hedges to mitigate foreign currency exchange rate risk, with fair value changes included in accumulated other comprehensive loss[29](index=29&type=chunk) - The Company does not expect a material impact from the transition from LIBOR to alternative reference interest rates, but will continue to monitor the impact[36](index=36&type=chunk) [2. Revenue from Contracts with Customers](index=12&type=section&id=2.%20Revenue%20from%20Contracts%20with%20Customers) - Wood construction products accounted for **87%** of total net sales in the six months ended June 30, 2021, and **86%** in the same period of 2020[38](index=38&type=chunk) - Concrete construction products represented **13%** and **14%** of total net sales for the six months ended June 30, 2021 and 2020, respectively[39](index=39&type=chunk) - Service sales (after-market repair, engineering, software licenses) were less than **1.0%** of net sales[41](index=41&type=chunk) [3. Net Income Per Share](index=13&type=section&id=3.%20Net%20Income%20Per%20Share) | (in thousands, except per share amounts) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income available to common stockholders | $72,483 | $53,479 | $122,872 | $90,305 | | Basic weighted-average shares outstanding | 43,434 | 43,471 | 43,406 | 43,787 | | Diluted weighted-average shares outstanding | 43,641 | 43,663 | 43,620 | 43,980 | | Basic EPS | $1.67 | $1.23 | $2.83 | $2.06 | | Diluted EPS | $1.66 | $1.22 | $2.82 | $2.05 | [4. Stockholders' Equity](index=13&type=section&id=4.%20Stockholders%27%20Equity) - As of June 30, 2021, the Company held **150,974** shares of its common stock as treasury shares[45](index=45&type=chunk) [5. Stock-Based Compensation](index=13&type=section&id=5.%20Stock-Based%20Compensation) | Stock-Based Compensation Expense (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Expense | $3,300 | $5,200 | $9,800 | $5,400 | - During the six months ended June 30, 2021, the Company granted **133,717** restricted stock units (RSUs) to employees, with an estimated weighted average fair value of **$100.93** per share[47](index=47&type=chunk) - As of June 30, 2021, the aggregate unamortized stock compensation expense was approximately **$21.3 million**, to be recognized over a weighted-average period of **2.5 years**[49](index=49&type=chunk) [6. Trade Accounts Receivable, Net](index=14&type=section&id=6.%20Trade%20Accounts%20Receivable%2C%20Net) | (in thousands) | At June 30, 2021 | At December 31, 2020 | At June 30, 2020 | | :------------- | :--------------- | :------------------- | :--------------- | | Trade accounts receivable | $255,077 | $170,001 | $239,220 | | Allowance for doubtful accounts | $(1,446) | $(2,110) | $(2,007) | | Allowance for sales discounts and returns | $(3,700) | $(2,763) | $(3,346) | | Total | $249,931 | $165,128 | $233,867 | - Net trade accounts receivable increased by **$84.8 million** from December 31, 2020, to June 30, 2021[50](index=50&type=chunk) [7. Inventories](index=14&type=section&id=7.%20Inventories) | (in thousands) | At June 30, 2021 | At December 31, 2020 | At June 30, 2020 | | :------------- | :--------------- | :------------------- | :--------------- | | Raw materials | $101,163 | $95,777 | $110,883 | | In-process products | $24,117 | $21,803 | $18,661 | | Finished products | $184,974 | $166,162 | $135,821 | | Total | $310,254 | $283,742 | $265,365 | - Total inventories increased by **$26.5 million** from December 31, 2020, to June 30, 2021, primarily in finished products[51](index=51&type=chunk) [8. Derivative Instruments](index=14&type=section&id=8.%20Derivative%20Instruments) - The Company uses short-term foreign currency forward contracts to hedge currency exposures, primarily for Chinese Yuan (CNY) transactions[52](index=52&type=chunk)[53](index=53&type=chunk) - As of June 30, 2021, outstanding foreign currency derivative contracts had an aggregate notional amount to buy **CNY36.9 million** by selling **$5.4 million**[53](index=53&type=chunk) - For the six months ended June 30, 2021, gains of **$0.2 million** on these contracts were recognized as a reduction of cost of sales[54](index=54&type=chunk) [9. Property, Plant and Equipment, Net](index=15&type=section&id=9.%20Property%2C%20Plant%20and%20Equipment%2C%20Net) | (in thousands) | At June 30, 2021 | At December 31, 2020 | At June 30, 2020 | | :------------- | :--------------- | :------------------- | :--------------- | | Land | $28,373 | $28,553 | $28,068 | | Buildings and site improvements | $202,573 | $203,421 | $200,205 | | Machinery, equipment, and software | $392,860 | $372,923 | $359,997 | | Less accumulated depreciation and amortization | $(393,653) | $(377,460) | $(360,719) | | Capital projects in progress | $19,239 | $20,656 | $13,751 | | Total | $255,353 | $255,184 | $247,119 | - Net property, plant and equipment remained relatively stable at **$255.4 million** as of June 30, 2021, compared to **$255.2 million** at December 31, 2020[55](index=55&type=chunk) [10. Goodwill and Intangible Assets, Net](index=15&type=section&id=10.%20Goodwill%20and%20Intangible%20Assets%2C%20Net) | Goodwill (in thousands) | At June 30, 2021 | At December 31, 2020 | At June 30, 2020 | | :---------------------- | :--------------- | :------------------- | :--------------- | | North America | $96,393 | $96,311 | $96,099 | | Europe | $36,296 | $38,059 | $34,929 | | Asia/Pacific | $1,432 | $1,474 | $1,307 | | Total | $134,121 | $135,844 | $132,335 | | Intangible Assets, Net (in thousands) | At June 30, 2021 | At December 31, 2020 | At June 30, 2020 | | :------------------------------------ | :--------------- | :------------------- | :--------------- | | North America | $16,288 | $18,089 | $12,857 | | Europe | $7,461 | $8,711 | $9,282 | | Total | $23,749 | $26,800 | $22,139 | - Amortization expense for definite-lived intangible assets was **$3.4 million** for the six months ended June 30, 2021, with a weighted-average amortization period of **6.4 years**[57](index=57&type=chunk) [11. Leases](index=17&type=section&id=11.%20Leases) | (in thousands) | At June 30, 2021 | At December 31, 2020 | At June 30, 2020 | | :------------- | :--------------- | :------------------- | :--------------- | | Operating lease right-of-use assets | $43,374 | $45,792 | $36,930 | | Total operating lease liabilities | $43,864 | $46,342 | $36,992 | | Total finance lease liabilities | $48 | $384 | $998 | | Lease Expense (in thousands) | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :--------------------------- | :------------------------------- | :----------------------------- | | Operating lease cost | $3,055 | $6,017 | | Total finance lease cost | $108 | $216 | - The weighted-average remaining lease term for operating leases was **6.91 years** as of June 30, 2021, with a weighted-average discount rate of **5.28%**[65](index=65&type=chunk) [12. Debt](index=19&type=section&id=12.%20Debt) - The Company's primary credit facility is a **$300.0 million** unsecured revolving credit facility with Wells Fargo Bank, which was extended to July 12, 2026, in July 2021[66](index=66&type=chunk)[78](index=78&type=chunk) - As of June 30, 2021, there were no outstanding balances on the Credit Facility, and the Company was in compliance with its financial covenants[66](index=66&type=chunk)[67](index=67&type=chunk) [13. Commitments and Contingencies](index=19&type=section&id=13.%20Commitments%20and%20Contingencies) - The Company accrues for environmental liabilities when probable and estimable, not expecting a material adverse effect on financial condition[68](index=68&type=chunk) - The Company is involved in various legal proceedings, including the Gentry Homes, Ltd. v. Simpson Strong-Tie Company Inc. case, where a settlement in principle has been reached[69](index=69&type=chunk)[71](index=71&type=chunk) - The Company believes that all or part of the damages for claims in the Gentry case may be covered by its insurance policies[72](index=72&type=chunk) [14. Segment Information](index=20&type=section&id=14.%20Segment%20Information) - The Company operates in three geographic segments: North America, Europe, and Asia/Pacific[73](index=73&type=chunk) | Net Sales by Segment (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $350,557 | $286,807 | $651,120 | $535,857 | | Europe | $56,438 | $37,379 | $100,734 | $70,111 | | Asia/Pacific | $3,286 | $1,890 | $6,068 | $3,776 | | Total | $410,281 | $326,076 | $757,922 | $609,744 | | Income (Loss) from Operations by Segment (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $95,123 | $72,196 | $164,533 | $125,757 | | Europe | $5,873 | $2,696 | $8,164 | $1,026 | | Asia/Pacific | $203 | $(75) | $628 | $(679) | | Total | $101,728 | $72,212 | $170,112 | $121,562 | | Net Sales by Product Group (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Wood construction products | $355,787 | $280,724 | $657,365 | $523,244 | | Concrete construction products | $54,305 | $45,304 | $99,828 | $86,316 | | Other | $189 | $48 | $729 | $184 | | Total | $410,281 | $326,076 | $757,922 | $609,744 | [15. Subsequent Events](index=21&type=section&id=15.%20Subsequent%20Events) - On July 14, 2021, the Board declared a quarterly cash dividend of **$0.25** per share, totaling an estimated **$10.8 million**, payable on October 28, 2021[77](index=77&type=chunk) - In July 2021, the Credit Facility term was extended from July 23, 2022, to July 12, 2026, and certain covenants were modified for additional flexibility[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition, operational results, growth initiatives, COVID-19 impacts, and performance analysis [Overview](index=22&type=section&id=Overview) - The Company designs, manufactures, and sells high-quality building construction products across three geographic segments: North America, Europe, and Asia/Pacific[87](index=87&type=chunk) - Key growth initiatives focus on expanding into new markets (OEM, repair & remodel, mass timber, concrete, structural steel) within core wood and concrete product competencies[88](index=88&type=chunk) - The Company's Five-year Ambitions include strengthening its values-based culture, being the business partner of choice, striving for innovation, achieving above-market growth relative to U.S. housing starts, and maintaining top quartile operating income margins and return on invested capital[90](index=90&type=chunk)[93](index=93&type=chunk) - Despite COVID-19 challenges, the Company has not experienced significant supply chain disruptions and continues to meet customer needs[93](index=93&type=chunk) - Increased selling prices are expected to boost net sales, but rising material costs (especially steel, with a projected **300-400 basis point** impact on operating margins over **12-18 months**), sourcing complications, and a tight labor market could negatively affect operating margins for the remainder of 2021[95](index=95&type=chunk)[96](index=96&type=chunk) [Factors Affecting Our Results of Operations](index=24&type=section&id=Factors%20Affecting%20Our%20Results%20of%20Operations) - The Company's results are influenced by U.S. housing starts, residential construction activity, and demand in areas prone to natural forces (seismic/wind events)[95](index=95&type=chunk)[97](index=97&type=chunk) - Sales are seasonal, typically lower in Q1 and Q4, and can be affected by weather conditions, political/economic events (e.g., tariffs), and volatile raw material costs, particularly steel[98](index=98&type=chunk) [ERP Integration](index=24&type=section&id=ERP%20Integration) - The Company is implementing a fully integrated SAP ERP platform, with North America operations completed in 2021 and company-wide completion expected in 2022[101](index=101&type=chunk) - Annual operating expenses are expected to increase through 2024 due to SAP implementation, primarily from training costs and depreciation of capitalized costs[101](index=101&type=chunk) [Business Segment Information](index=24&type=section&id=Business%20Segment%20Information) - North America wood construction product net sales increased **23.2%** and concrete construction product net sales increased **15.2%** for Q2 2021, primarily due to higher product prices[102](index=102&type=chunk) - Europe net sales increased for Q2 2021, with wood construction product sales up **53.7%** and concrete construction product sales up **40.6%**, driven by higher sales volumes and positive foreign currency translation[104](index=104&type=chunk) - Increased steel costs and product sourcing complications are expected to negatively affect operating margins in North America and Europe in the second half of 2021 and into 2022[103](index=103&type=chunk)[104](index=104&type=chunk) [Business Outlook](index=25&type=section&id=Business%20Outlook) - For the full fiscal year ending December 31, 2021, the Company estimates an operating margin in the range of **19.5% to 21.0%**[107](index=107&type=chunk) - The estimated effective tax rate for 2021 is between **25.0% and 26.0%**[107](index=107&type=chunk) - Capital expenditures for fiscal year 2021 are estimated to be in the range of **$55 million to $60 million**[107](index=107&type=chunk) [Results of Operations for the Three Months Ended June 30, 2021, Compared with the Three Months Ended June 30, 2020](index=25&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202021%2C%20Compared%20with%20the%20Three%20Months%20Ended%20June%2030%2C%202020) | (in thousands) | Q2 2020 | Q2 2021 | Change ($) | Change (%) | | :------------- | :------ | :------ | :--------- | :--------- | | Net sales | $326,076 | $410,281 | $84,205 | 25.8% | | Gross profit | $149,800 | $196,446 | $46,646 | 31.1% | | Income from operations | $72,212 | $101,728 | $29,516 | 40.9% | | Net income | $53,479 | $72,483 | $19,004 | 35.5% | - Gross margins increased to **47.9%** from **45.9%**, primarily due to product price increases[109](index=109&type=chunk) - Total operating expenses increased by **22.0%** to **$94.7 million**, driven by increases in personnel costs, professional fees, and commissions across R&D, selling, and G&A[110](index=110&type=chunk)[111](index=111&type=chunk) - North America net sales increased **22.2%** due to product price increases and marginally higher sales volumes, with Canada benefiting from foreign currency translation[116](index=116&type=chunk) - Europe net sales increased **51.0%** due to higher sales volumes and a positive foreign currency translation effect of approximately **$5.3 million**[120](index=120&type=chunk) [Results of Operations for the Six Months Ended June 30, 2021, Compared with the Six Months Ended June 30, 2020](index=28&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202021%2C%20Compared%20with%20the%20Six%20Months%20Ended%20June%2030%2C%202020) | (in thousands) | H1 2020 | H1 2021 | Change ($) | Change (%) | | :------------- | :------ | :------ | :--------- | :--------- | | Net sales | $609,744 | $757,922 | $148,178 | 24.3% | | Gross profit | $279,466 | $358,727 | $79,261 | 28.4% | | Income from operations | $121,562 | $170,112 | $48,550 | 39.9% | | Net income | $90,305 | $122,872 | $32,567 | 36.1% | - Gross profit margins increased to **47.3%** from **45.8%**, driven by lower labor costs and factory expense, and product price increases, partly offset by higher material, warehouse, and shipping costs[122](index=122&type=chunk) - Total operating expenses increased by **19.4%** to **$188.7 million**, primarily due to higher personnel costs, professional fees, and stock-based compensation across all categories[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - North America net sales increased **21.5%** due to higher sales volumes and product price increases, with Canada benefiting from **$3.3 million** in foreign currency translation[130](index=130&type=chunk) - Europe net sales increased **43.7%** due to higher sales volumes and positive **$8.8 million** foreign currency translations[131](index=131&type=chunk) [Effect of New Accounting Standards](index=31&type=section&id=Effect%20of%20New%20Accounting%20Standards) - Refer to Note 1 for details on accounting standards not yet adopted, specifically ASU 2020-04 (Reference Rate Reform) related to LIBOR transition[133](index=133&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Liquidity and Sources of Capital](index=31&type=section&id=Liquidity%20and%20Sources%20of%20Capital) - The Company's **$300.0 million** unsecured revolving credit facility was extended to July 12, 2026, with no outstanding balances as of June 30, 2021[134](index=134&type=chunk)[135](index=135&type=chunk) - Principal uses of liquidity include operating costs, working capital, capital expenditures, share repurchases, cash dividends, and other investments[136](index=136&type=chunk) | Cash Flow Indicators (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $81,632 | $42,766 | | Net cash used in investing activities | $(26,214) | $(13,444) | | Net cash used in financing activities | $(25,603) | $57,733 | - Capital expenditures for fiscal year 2021 are projected to be **$55 million to $60 million**, primarily for safety, equipment replacement, and productivity improvements[140](index=140&type=chunk) - The Board approved changing the capital return threshold from **50%** of cash flow from operations to **50%** of free cash flow (cash flow from operations minus capital expenditures)[142](index=142&type=chunk) - From 2015 to 2020, the Company returned **$637.7 million** to stockholders through stock repurchases and dividends, representing **70.2%** of total cash flow from operations[143](index=143&type=chunk) - In July 2021, the Company repurchased **182,752** shares for **$20.0 million**[144](index=144&type=chunk) [Off-Balance Sheet Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company did not have any off-balance sheet arrangements as of June 30, 2021[145](index=145&type=chunk) [Inflation and Raw Materials](index=34&type=section&id=Inflation%20and%20Raw%20Materials) - While general inflation rates have been low, the cost of steel, lumber, and petroleum products have increased, potentially affecting future inflation rates[146](index=146&type=chunk) - Increased steel prices, the Company's main raw material, may adversely affect gross profit margins if higher costs cannot be recovered through timely price increases[146](index=146&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the Company's exposure to market risks, specifically foreign exchange risk and interest rate risk, and the strategies employed to manage them [Foreign Exchange Risk](index=34&type=section&id=Foreign%20Exchange%20Risk) - The Company is exposed to foreign exchange rate risk from international operations and foreign vendor purchases[148](index=148&type=chunk) - Foreign currency forward contracts are used to hedge transactional exposures, particularly for the Chinese Yuan[149](index=149&type=chunk) - Foreign currency translation adjustments resulted in an accumulated other comprehensive loss of **$1.8 million** for the six months ended June 30, 2021, due to the weakening U.S. dollar[150](index=150&type=chunk) [Interest Rate Risk](index=35&type=section&id=Interest%20Rate%20Risk) - The primary interest rate risk arises from variable-rate borrowings under the Credit Facility, exposing the Company to short-term market interest rate fluctuations[151](index=151&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the effectiveness of the Company's disclosure controls and procedures and discusses changes in internal control over financial reporting, particularly in relation to the ongoing SAP ERP implementation [Disclosure Controls and Procedures](index=35&type=section&id=Disclosure%20Controls%20and%20Procedures) - As of June 30, 2021, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level[152](index=152&type=chunk) - Internal controls, while designed to provide reasonable assurance, cannot prevent all fraud and material errors due to inherent limitations[153](index=153&type=chunk) [Changes in Internal Control over Financial Reporting](index=35&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - The ongoing SAP ERP implementation, operational in North America and parts of Europe, is causing changes to processes and internal control over financial reporting[154](index=154&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control during the three months ended June 30, 2021[156](index=156&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the Company's involvement in legal proceedings, noting that no current proceedings are expected to have a material adverse effect, but acknowledges the inherent uncertainty of litigation outcomes - The Company is not currently a party to any legal proceedings expected to have a material adverse effect on its financial condition, cash flows, or results of operations[158](index=158&type=chunk) - The resolution of any claim or litigation is subject to inherent uncertainty and could materially impact the Company's financial condition[158](index=158&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes or new risk factors have been identified since the filing of the Annual Report on Form 10-K for the year ended December 31, 2020[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's common stock repurchase program, including the authorized amount and the remaining value available for repurchases - The Board authorized the repurchase of up to **$100.0 million** of common stock, expiring December 31, 2021[160](index=160&type=chunk) - As of June 30, 2021, **$100.0 million** remained available under this authorization, with no repurchases made during the six months ended June 30, 2021[160](index=160&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there have been no defaults upon senior securities - There were no defaults upon senior securities[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[163](index=163&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report - There is no other information to report[165](index=165&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q, including certificates of incorporation, bylaws, CEO/CFO certifications, and XBRL-related documents - The exhibit index includes the Certificate of Incorporation, Amended and Restated Bylaws, CEO/CFO Certifications, Section 1350 Certifications, and various XBRL documents[168](index=168&type=chunk)

Simpson Manufacturing Co., Inc. (NYSE:SSD) Q2 2021 Earnings Conference Call July 26, 2021 5:00 PM ET Company Participants Kim Orlando - ADDO Investor Relations Karen Colonias - President and Chief Executive Officer Brian Magstadt - Chief Financial Officer and Treasurer Conference Call Participants Daniel Moore - CJS Securities Tim Wojs - Baird Kurt Yinger - D.A. Davidson Julio Romero - Sidoti & Company Operator Greetings. Welcome to Simpson Manufacturing Company Incorporated Second Quarter 2021 Earnings Con ...

STRONG FOUNDATION. STRONGER FUTURE. Simpson Manufacturing Co., Inc. Investor Presentation June 2021 SIMPSON Manufacturing Safe Harbor This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 2 IE of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by words such as "anticipate," "believe," "estimate," "expect," "inte ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-13429 Simpson Manufacturing Co., Inc. (Exact name of registrant as specified in its charter) Indicate by check mark whether the ...

Simpson Manufacturing Co., Inc (NYSE:SSD) Q1 2021 Earnings Conference Call April 26, 2021 5:00 PM ET Company Participants Kim Orlando - ADDO, IR Karen Colonias - Simpson’s President and CEO Brian Magstadt - CFO & Treasurer Conference Call Participants Daniel Moore - CJS Securities Tim Wojs - Robert Baird Kurt Yinger - D.A. Davidson Julio Romero - Sidoti & Company Operator Greetings and welcome to Simpson Manufacturing Company’s First Quarter 2021 Earnings Conference Call. At this time, all participants are ...

PART I [Business Overview](index=5&type=section&id=Item%201.%20Business) Simpson Manufacturing Co., Inc. designs, engineers, and manufactures wood and concrete construction products for residential, commercial, and DIY markets, with operations dependent on the construction industry and steel as a primary raw material - The company is a leading manufacturer of wood and concrete construction products, marketing them to residential, light industrial, commercial, remodeling, and DIY markets[18](index=18&type=chunk) - A key distribution strategy includes expanding product offerings through home centers. The company successfully brought back Lowe's as a customer in Q2 2020, completing a rollout to over **1,700 stores** by year-end[25](index=25&type=chunk)[33](index=33&type=chunk) - The company's primary raw material is steel. It faces uncertainty regarding steel prices due to factors like import tariffs and international trade disputes[38](index=38&type=chunk)[39](index=39&type=chunk) - The business is seasonal and cyclical, with sales historically lower in the first and fourth quarters, and is highly dependent on the North American residential construction market[43](index=43&type=chunk) Employee Count by Region as of Dec 31, 2020 | Region | Employee Count | | :--- | :--- | | North America | 2,591 | | Europe | 670 | | Asia Pacific | 301 | | **Total** | **3,562** | [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces various material risks including the impact of the COVID-19 pandemic, dependency on the cyclical housing market, reliance on large customers, raw material price volatility, product liability, cybersecurity threats, and international operational challenges [Risks Related to the COVID-19 Pandemic](index=11&type=section&id=Risks%20Related%20to%20the%20COVID-19%20Pandemic) The COVID-19 pandemic poses significant risks to the company's operations, supply chain, and customer demand, potentially leading to economic downturns, operational disruptions, and increased compliance costs with uncertain full impact - The COVID-19 pandemic could negatively impact operations, supply chains, and customer demand, potentially compressing margins and being adversely affected by a resulting economic downturn[58](index=58&type=chunk) - Compliance with new health and safety regulations, such as those from the COVID-19 pandemic, may require altering manufacturing processes and could increase capital expenditures and other expenses[61](index=61&type=chunk) [Risks Related To Our Business And Our Industry](index=12&type=section&id=Risks%20Related%20To%20Our%20Business%20And%20Our%20Industry) The company's business faces industry-specific risks including dependence on cyclical housing markets, potential loss of large customers, challenges in new product development, intense competition, raw material price volatility, and reliance on third-party transportation - A significant portion of product sales depends on housing starts, making the business vulnerable to economic cycles, interest rates, and consumer confidence[63](index=63&type=chunk) - The company has a few large customers, and the loss of any one could materially reduce net sales and income. Customer consolidation increases this risk[65](index=65&type=chunk)[67](index=67&type=chunk) - Steel is the principal raw material, and its price fluctuates due to factors beyond the company's control, including import tariffs. The inability to pass cost increases to customers could adversely affect profitability[76](index=76&type=chunk)[77](index=77&type=chunk) [Product, Services and Sales Risks](index=14&type=section&id=Product,%20Services%20and%20Sales%20Risks) The company faces product and service risks including potential product liability claims, design or manufacturing defects, and recalls, which could harm its reputation and financial results, alongside significant liabilities from errors in engineering services or design software - The company is exposed to product liability claims, and while insured above a certain amount, it bears the costs of defense and damages up to the retention amount. A major claim could exceed insurance coverage[80](index=80&type=chunk)[81](index=81&type=chunk) - Defects in products, if not discovered before installation, could lead to unsafe structures, property damage, or personal injury, potentially resulting in significant liability for the company[82](index=82&type=chunk)[83](index=83&type=chunk) - Errors in the company's planning/design software or engineering services could lead to litigation and liability for correcting deficiencies or compensating for damages[86](index=86&type=chunk) [Risks Related to Our Intellectual Property and Information Technology](index=16&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property%20and%20Information%20Technology) The company faces significant technology and intellectual property risks, including the commercial success of new software, IP protection, cybersecurity threats, and operational disruptions from complex IT system upgrades and failures - The company is investing heavily in software and applications, but may not be able to create commercially successful products or keep up with rapid technological changes[87](index=87&type=chunk)[88](index=88&type=chunk) - The company is subject to cybersecurity risks, and a security breach could lead to misappropriation of confidential information, negative publicity, and significant costs. Compliance with data privacy regulations like GDPR and CCPA is also a challenge[92](index=92&type=chunk)[93](index=93&type=chunk) - The company is increasingly dependent on complex software systems like SAP and Workday. System updates or conversions are costly, complex, and time-consuming, and any failures or delays could disrupt business operations[95](index=95&type=chunk) [Risks Related to International Operations](index=23&type=section&id=Risks%20Related%20to%20International%20Operations) With **17.5%** of 2020 sales from outside the U.S., the company is exposed to international risks including currency fluctuations, political instability, complex legal and tax environments, compliance with regulations, and potential disruptions at its China manufacturing facility - In 2020, international sales were **$222.4 million**, or **17.5%** of consolidated sales. The business is subject to risks like currency exchange rate fluctuations, changing laws, and political conditions[117](index=117&type=chunk) - The company's manufacturing facility in Jiangsu, China, creates supply chain risks. An event like the COVID-19 pandemic could interfere with commercial activity and require seeking alternative, potentially more costly, supply sources[125](index=125&type=chunk) - Significant tariffs or other restrictions on imports, particularly from China, could increase costs, require price hikes that may lose customers, or force a costly shift in production[126](index=126&type=chunk) [Unresolved Staff Comments](index=26&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[135](index=135&type=chunk) [Properties](index=26&type=section&id=Item%202.%20Properties) The company operates **53** properties globally, totaling approximately **4.2 million** square feet, with **3.0 million** owned and **1.2 million** leased, including its headquarters and principal manufacturing facilities in the U.S., Europe, and China Owned and Leased Facilities by Region (as of Feb 25, 2021) | Region | Number of Properties | Owned (sq. ft. in thousands) | Leased (sq. ft. in thousands) | Total (sq. ft. in thousands) | | :--- | :--- | :--- | :--- | :--- | | North America | 25 | 2,235 | 821 | 3,056 | | Europe | 17 | 533 | 342 | 875 | | Asia/Pacific | 10 | 175 | 41 | 216 | | Administrative and all other | 1 | 89 | — | 89 | | **Total** | **53** | **3,032** | **1,204** | **4,236** | - The company owns its headquarters in Pleasanton, CA, and principal U.S. manufacturing facilities in California, Texas, Illinois, Ohio, and Tennessee. It also owns major facilities in France, Denmark, Germany, Poland, Switzerland, Sweden, Portugal, and China[136](index=136&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the normal course of business, with further details provided in Note 14 of the Consolidated Financial Statements - The company is involved in various legal proceedings arising in the normal course of business. Further details are provided in Note 14 of the Consolidated Financial Statements[139](index=139&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safely%20Disclosure) This item is not applicable to the company - Not applicable[140](index=140&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under "SSD"; in 2020, it paid **$40.3 million** in dividends and repurchased **$13.5 million** in shares, with a new **$100.0 million** repurchase program authorized for 2021 - The company's common stock is listed on the New York Stock Exchange (NYSE) under the symbol "SSD"[142](index=142&type=chunk) - In 2020, the company paid a total of **$40.3 million** in cash dividends. A quarterly dividend of **$0.23 per share** was declared in January 2021[143](index=143&type=chunk) Share Repurchases in Q4 2020 | Period | Total Shares Purchased | Average Price Paid per Share | Total Value (approx. in millions) | | :--- | :--- | :--- | :--- | | Oct 1 - Oct 31, 2020 | 55,624 | $88.97 | $4.9 | | Nov 1 - Nov 30, 2020 | 32,630 | $89.86 | $2.9 | | Dec 1 - Dec 31, 2020 | 63,344 | $89.74 | $5.7 | | **Total** | **151,598** | | **$13.5** | - On December 16, 2020, the Board authorized a new share repurchase program of up to **$100.0 million**, effective from January 1, 2021, through December 31, 2021[146](index=146&type=chunk) [Selected Financial Data](index=30&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents a five-year summary of key financial data, highlighting **$1.27 billion** in net sales, **$252.4 million** in income from operations, **$187.0 million** in net income, and **$4.27** diluted EPS for fiscal year 2020 Selected Financial Data (2016-2020) | (in thousands, except per-share data) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Statement of Operations Data:** | | | | | | | Net sales | $1,267,945 | $1,136,539 | $1,078,809 | $977,025 | $860,661 | | Income from operations | $252,363 | $181,254 | $172,625 | $138,273 | $141,670 | | Net income | $187,000 | $133,982 | $126,633 | $92,617 | $89,734 | | Diluted EPS | $4.27 | $2.98 | $2.72 | $1.94 | $1.86 | | Cash dividends declared per share | $0.92 | $0.91 | $0.87 | $0.81 | $0.70 | | **Balance Sheet Data (End of Year):** | | | | | | | Total assets | $1,232,569 | $1,095,366 | $1,021,663 | $1,037,523 | $979,974 | | Total stockholders' equity | $980,943 | $891,957 | $855,514 | $884,778 | $865,842 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's strong 2020 financial performance, with net sales increasing **11.6%** to **$1.27 billion** and net income rising to **$187.0 million**, driven by market factors and improved gross margin, alongside its strong liquidity and 2021 outlook - The company withdrew its 2020 guidance and financial targets for its '2020 Plan' in April 2020 due to uncertainties from the COVID-19 pandemic[154](index=154&type=chunk) - Despite initial concerns, 2020 sales increased compared to 2019, driven by the return of Lowe's, increased housing starts, and a strong home repair and remodel market[160](index=160&type=chunk) - The company is continuing its multi-year implementation of an SAP ERP system, with North American operations completed and a company-wide rollout targeted for 2022, contingent on the lifting of travel restrictions[170](index=170&type=chunk) 2021 Business Outlook | Metric | 2021 Estimate | | :--- | :--- | | Operating margin | 16.5% to 18.5% | | Depreciation and amortization | $44 million to $48 million | | Effective tax rate | 25.0% to 26.0% | | Capital expenditures | $50 million to $55 million | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) For 2020, net sales increased **11.6%** to **$1.27 billion**, gross profit grew **17.1%** to **$576.4 million** with margin expanding to **45.5%**, and income from operations surged **39.2%** to **$252.4 million**, leading to **$187.0 million** in net income Comparison of Operations (2020 vs. 2019) | (in thousands) | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $1,267,945 | $1,136,539 | 11.6% | | Gross profit | $576,384 | $492,130 | 17.1% | | Income from operations | $252,363 | $181,254 | 39.2% | | Net income | $187,000 | $133,982 | 39.6% | | Diluted EPS | $4.27 | $2.98 | 43.3% | - Gross profit margin increased to **45.5%** in 2020 from **43.3%** in 2019, mainly due to lower material costs[180](index=180&type=chunk) - Wood construction products constituted **85%** of total net sales in 2020, up from **84%** in 2019, while concrete products made up the remaining **15%**[179](index=179&type=chunk) Net Sales by Segment (2020 vs. 2019) | (in thousands) | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | North America | $1,101,891 | $972,849 | 13.3% | | Europe | $156,713 | $155,144 | 1.0% | | Asia/Pacific | $9,341 | $8,546 | 9.3% | | **Total** | **$1,267,945** | **$1,136,539** | **11.6%** | [Liquidity and Sources of Capital](index=39&type=section&id=Liquidity%20and%20Sources%20of%20Capital) The company maintains strong liquidity with **$274.6 million** in cash and an undrawn **$300 million** credit facility, supported by **$207.6 million** in cash from operations, while allocating capital to **$37.9 million** in capital expenditures, **$76.2 million** in share repurchases, and **$40.4 million** in dividends - Primary liquidity sources are cash on hand, cash flow from operations, and a **$300.0 million** credit facility expiring in July 2022. As of Dec 31, 2020, there were no amounts outstanding under this facility[207](index=207&type=chunk) Cash Flow Summary | (in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $207,572 | $205,662 | $160,080 | | Net cash used in investing activities | $(39,853) | $(28,021) | $(10,249) | | Net cash used in financing activities | $(126,777) | $(108,154) | $(155,393) | - In 2020, the company used **$76.2 million** for common stock repurchases and **$40.4 million** for cash dividends[211](index=211&type=chunk) Contractual Obligations as of Dec 31, 2020 | Contractual Obligation (in thousands) | Total | Less than 1 year | 1 — 3 years | 3 — 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Primary line-of credit annual facility fees | $900 | $600 | $300 | $— | $— | | Operating lease obligations | $46,342 | $10,696 | $15,613 | $10,348 | $9,685 | | Purchase obligations | $38,119 | $37,536 | $583 | $— | $— | | **Total** | **$85,361** | **$48,832** | **$16,496** | **$10,348** | **$9,685** | [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily foreign currency exchange rate risk from international operations, which it hedges with forward contracts, and interest rate risk, which is not material due to no variable interest-rate debt outstanding as of year-end 2020 - The company is exposed to foreign currency exchange rate risk from its international operations. In 2020, it entered into forward contracts to hedge risks associated with the Chinese Yuan[223](index=223&type=chunk)[224](index=224&type=chunk) - The company has no variable interest-rate debt outstanding, and estimates that a **100 basis point** change in U.S. interest rates would not have a material impact[225](index=225&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=47&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal year 2020, including balance sheets, statements of operations, equity, and cash flows, along with the independent auditor's unqualified opinions on both financial statements and internal controls, noting inventory valuation as a critical audit matter [Reports of Independent Registered Public Accounting Firm](index=48&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Grant Thornton LLP issued an unqualified opinion on Simpson Manufacturing's consolidated financial statements for the three years ended December 31, 2020, and on the effectiveness of internal control over financial reporting, identifying inventory valuation as a critical audit matter - The auditor, Grant Thornton LLP, issued an unqualified opinion on the consolidated financial statements[230](index=230&type=chunk) - The auditor also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2020[231](index=231&type=chunk)[243](index=243&type=chunk) - Inventory valuation was identified as a critical audit matter due to the significant management judgment and estimation uncertainty involved in forecasting future demand and assessing market conditions for slow-moving and obsolete inventory[235](index=235&type=chunk)[236](index=236&type=chunk) [Consolidated Financial Statements](index=52&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial position and results for 2020, showing total assets of **$1.23 billion**, total liabilities of **$251.6 million**, total stockholders' equity of **$980.9 million**, and net income of **$187.0 million** on net sales of **$1.27 billion** Consolidated Balance Sheet Highlights (as of Dec 31) | (in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $274,639 | $230,210 | | Total current assets | $753,139 | $640,907 | | Total assets | $1,232,569 | $1,095,366 | | **Liabilities & Equity** | | | | Total current liabilities | $194,061 | $158,907 | | Total liabilities | $251,626 | $203,409 | | Total stockholders' equity | $980,943 | $891,957 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | (in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net sales | $1,267,945 | $1,136,539 | $1,078,809 | | Gross profit | $576,384 | $492,130 | $480,287 | | Income from operations | $252,363 | $181,254 | $172,625 | | Net income | $187,000 | $133,982 | $126,633 | [Notes to Consolidated Financial Statements](index=56&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies including revenue recognition and inventory valuation, provide segment information showing North America as the largest with **$1.1 billion** in 2020 net sales, discuss contingencies like the Gentry Homes lawsuit, and detail **$76.2 million** in 2020 stock repurchases - The company recognizes revenue when control transfers to the customer, which is generally F.O.B. shipping point[283](index=283&type=chunk) - In 2020, the company repurchased **1,053,314 shares** for **$76.2 million**. A new **$100.0 million** repurchase authorization was approved for 2021[311](index=311&type=chunk) - The company is a defendant in a lawsuit, Gentry Homes, Ltd. v. Simpson Strong-Tie, related to alleged corrosion of its products. The company admits no liability and cannot reasonably ascertain the likelihood or amount of a potential loss[361](index=361&type=chunk)[362](index=362&type=chunk) Net Sales by Product Group | (in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Wood Construction | $1,082,877 | $948,768 | $913,202 | | Concrete Construction | $184,631 | $187,462 | $165,317 | | Other | $437 | $309 | $290 | | **Total** | **$1,267,945** | **$1,136,539** | **$1,078,809** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=81&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants regarding accounting principles, practices, or financial statement disclosures - None[389](index=389&type=chunk) [Controls and Procedures](index=81&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020, while continuing to monitor changes from the ongoing SAP ERP system implementation - As of December 31, 2020, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[390](index=390&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020, based on the COSO framework[391](index=391&type=chunk) - The company is in the process of a multi-year implementation of an SAP ERP platform, which is resulting in changes to its internal control over financial reporting. Management believes necessary steps have been taken to maintain appropriate controls during this transition[393](index=393&type=chunk)[394](index=394&type=chunk) [Other Information](index=82&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[397](index=397&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=83&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the company's proxy statement for the 2021 Annual Meeting of Stockholders[400](index=400&type=chunk) [Executive Compensation](index=83&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the company's definitive Proxy Statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the company's proxy statement for the 2021 Annual Meeting of Stockholders[401](index=401&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=83&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership of certain beneficial owners and management is incorporated by reference from the company's definitive Proxy Statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the company's proxy statement for the 2021 Annual Meeting of Stockholders[402](index=402&type=chunk) [Certain Relationship and Related Transactions, and Director Independence](index=83&type=section&id=Item%2013.%20Certain%20Relationship%20and%20Related%20Transactions,%20and%20Director%20Independence) Information concerning certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive Proxy Statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the company's proxy statement for the 2021 Annual Meeting of Stockholders[403](index=403&type=chunk) [Principal Accounting Fees and Services](index=83&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information concerning principal accounting fees and services is incorporated by reference from the company's definitive Proxy Statement for its 2021 Annual Meeting of Stockholders - Information is incorporated by reference from the company's proxy statement for the 2021 Annual Meeting of Stockholders[404](index=404&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=83&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including consolidated financial statements, Schedule II, and various exhibits such as governance documents, credit agreements, and required certifications - The consolidated financial statements and Schedule II (Valuation and Qualifying Accounts) are filed as part of the report[406](index=406&type=chunk)[407](index=407&type=chunk) - Exhibits filed include governance documents, credit agreements, employee compensation plans, a list of subsidiaries, consent of the auditor, and CEO/CFO certifications[409](index=409&type=chunk)[411](index=411&type=chunk) [Form 10-K Summary](index=87&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[412](index=412&type=chunk)

Simpson Manufacturing Co, Inc. (NYSE:SSD) Q4 2020 Earnings Conference Call February 8, 2021 5:00 PM ET Company Participants Kimberly Orlando - ADDO Investor Relations Karen Colonias - President, CEO & Director Brian Magstadt - CFO & Treasurer Conference Call Participants Daniel Moore - CJS Securities Timothy Wojs - Robert W. Baird & Co. Julio Romero - Sidoti & Company Kurt Yinger - D.A. Davidson & Co. Operator Greetings, and welcome to the Simpson Manufacturing Company's Fourth Quarter and Full Year 2020 Ea ...

Financial Data and Key Metrics Changes - The company reported a 17.5% year-over-year increase in sales to $364.3 million, with a sequential increase of 11.7% compared to Q2 2020 [7][31] - Gross profit margin improved to 47.6% from 44.4% in the prior year quarter, driven by lower material and labor costs [7][33] - Income from operations increased by 49.8% year-over-year to $91.3 million, with earnings of $1.54 per diluted share compared to $0.97 in the prior year [9][39] Business Line Data and Key Metrics Changes - North America segment sales increased by 19.4% to $316.9 million, primarily due to the return of a home center customer and increased repair and remodel activity [31] - In Europe, sales increased by 6% to $44.8 million, benefiting from higher sales volumes and approximately $2.1 million from positive foreign currency translations [32] Market Data and Key Metrics Changes - U.S. housing starts grew by 11.4% year-over-year and 29.9% compared to Q2 2020, with notable increases in the West and South regions [16] - The company experienced a significant increase in sales volume in the repair and remodel space, with home center channel sales improving by 125% over the prior year [12][13] Company Strategy and Development Direction - The company aims to grow market share in Europe and has acquired a small connector manufacturer in the UK to enhance its product line [18] - Investments in software capabilities are seen as crucial for remaining competitive in the wood construction space, with over 40% of core wood connector sales linked to customers with software needs [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of the business model despite macroeconomic challenges, citing strong brand recognition and a disciplined capital allocation strategy [28][50] - The company anticipates solid demand trends to continue through the end of the year, although seasonality may impact Q4 performance [29][46] Other Important Information - The company has maintained a healthy balance sheet with cash and cash equivalents totaling $311.5 million as of September 30, 2020 [40] - A new Chief Operating Officer will join the company at the end of November, expected to drive innovation and growth opportunities [26][27] Q&A Session Summary Question: Revenue impact of inventory sell at Lowe's - The sell-in for Lowe's in Q3 was significant, with home center customers up 125% compared to last year, but specific revenue impacts are still being assessed [52][54] Question: Contribution of small acquisitions to revenue - The small software application acquisition did not contribute meaningful revenue in Q3, while the European acquisition is expected to generate $3 million to $3.5 million annually but had no impact in Q3 [59] Question: Expectations for gross and operating margins in 2021 - Management expects gross and operating margins to pull back as they exit 2020 due to increased customer engagement costs and growth investments [60][62] Question: Revenue trends in October - Revenue growth for Q4 is expected to be around 3% year-over-year, with October tracking in line with this expectation [64][72] Question: European business performance - The European segment is recovering well, with improved operating margins despite lower gross margins year-over-year, and management is optimistic about continued strength [96] Question: Impact of lumber prices on customers - While lumber prices have fluctuated, the company has not faced direct supply issues, and recent trends indicate a decrease in lumber prices, which may help housing affordability [99][100]

Company Overview - Simpson Manufacturing Co's market capitalization was $423 billion as of September 18, 2020[11] - The company's 2019 revenue was $114 billion[11] - Since 2017, 83% of cash flow from operations has been returned to stockholders[8] Market and Products - The addressable market for Wood Connectors & Truss is $15 billion, with Simpson's share being $786 million (52%)[20, 24] - The addressable market for Fasteners is $13 billion, with Simpson's share being $161 million (22%)[20, 24] - The addressable market for Concrete is $730 million, with Simpson's share being $187 million (14%)[20, 24] - Over 40% of core wood connector sales are to customers with software needs[33, 35] Financial Performance and Strategy - In Q2 2020, net sales were $3261 million, a 70% year-over-year increase[56] - Q2 2020 gross margin was 459%, a 190 basis points year-over-year improvement[56] - The company repurchased $304 million in shares from 2017 to YTD 2020[12, 64]