Simpson Manufacturing Company, Inc. · NYSE:SSD
Simpson Manufacturing — Investor Presentation (January 2019)
30 slides from Simpson Manufacturing's investor presentation, Jan 8, 2019
Slide 1: The Power to Strengthen
Karen Colonias CEO Brian Magstadt CFO The Power to Strengthen January 2019
Slide 2: Safe Harbor
Safe Harbor This document 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 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements rel
Slide 3: Company Overview
Company Overview Simpson Manufacturing Co. designs, engineers and manufactures structural connectors, anchors, software solutions and other products for new construction, retro-fitting and do-it-yourself markets Wood Construction Products Concrete Construction Products Simpson Manufacturing Co. oper
Slide 4: Global Presence
Global Presence Home Office 27 Manufacturing Locations 37 Warehouses, Sales Offices & R&D Facilities Countries of distribution Our > 24,000 Customers distribute our product through their own distribution channels 4
Slide 5: Products for Wood Construction
Products for Wood Construction 244 55 1,152 163 184 Engineers Engineering & Patents Patents Code Reports Lab Technicians Pending Products Sample product lines: Truss plates, screw-delivery systems, holdowns, fasteners, joist hangers, wood & steel shearwalls, moment frames Product Applications Single
Slide 6: Products for Concrete Construction
Products for Concrete Construction Products Sample product lines: powder-actuated tools, mechanical anchors, adhesives, concrete repair systems, carbon fiber Product Applications Bridges Concrete Piers Agricultural Silos DIY – Home Depot 6
Slide 7: Addressable Market Opportunity
Addressable Market Opportunity(1) Addressable Market $1.3 B (9%) $5.8 B Addressable Market $730 M (13%) $15.0 B $1.5 B Addressable Market: $1.5 B (100%) Fasteners (Addressable) Concrete (Addressable) Wood Connectors & Truss (Addressable) (1) Note: Market sizes and market shares based on internal est
Slide 8: Simpson's Market Share
Simpson’s Market Share(1) SSD’s Share $143 M (11%) $730 M SSD’s Share $155 M (21%) $1.3 B $1.5 B SSD’s Share $679 M (45%) Fasteners (SSD Share) Concrete (SSD Share) Wood Connectors & Truss (SSD Share) (1) Note: Market sizes based on internal estimates using information as of December 31, 2017. Inclu
Slide 9: Net Sales Correlation to U.S. Housing Starts
Net Sales Correlation to U.S. Housing Starts Our investments in adjacent products and markets have helped mitigate our exposure to a cyclical U.S. housing market over time… $1,000 2.0 $900 1.8 $800 1.6 $700 1.4 Housing Starts (M) $600 1.2 $500 1.0 ($M) $400 0.8 $300 0.6 $200 0.4 $100 0.2 $0 0.0 2006
Slide 10: Strategic Growth Initiatives
Strategic Growth Initiatives Rationale …while also allowing us to provide a complete product solution to our customers and to improve sales and margins in our core wood connector business. EUROPE CONCRETE SOFTWARE • Attractive opportunity to • Sharpening focus on • Preserves market share of grow woo
Slide 11: Operating Income Margin Outperformance
Operating Income Margin Outperformance Simpson Historical Operating Income Margin Versus Peer Average(1) 25.0% 19.9% 20.0% 16.2% 15.1% 14.1% 13.7% 15.0% 13.2% 13.2% (2) 12.3% 14.2% 11.6% 11.2% 9.4% 11.8% 10.0% 9.1% 9.0% 7.3% 6.0% 6.0% 4.9% 5.0% 2.5% 2.3% 0.0% (1.2%) (5.0%) (8.2%) (10.0%) (9.4%) (15.
Slide 12: Strong Business Drives Shareholder Value
Strong Business Drives Shareholder Value A Strong Unique Business Model… Enables Us to Deliver Value to Shareholders Simpson is seen as a thought leader in defining evolving The Board employs a balanced capital allocation strategy building codes in collaboration with customers and that utilizes free
Slide 13: Thoughtful Deployment of Capital
Thoughtful Deployment of Capital We seek profitable growth opportunities in the building products range to create long-term value while consistently returning capital to our shareholders. Based on shareholder feedback, the initial results of an extensive review of our capital allocation strategy and
Slide 14: The SAP Project
The SAP Project SAP STRATEGY Why? Legacy platform no longer able to support growing and complex needs of the business Current focus on converting all North American locations before other foreign operations to create efficiencies No scope creep helps contain costs Limited customization helps
Slide 15: Track Record of Shareholder Engagement and Responsiveness
Track Record of Shareholder Engagement and Responsiveness • Members of our management and Board engaged with stockholders, representing ~51% of our shares, regarding compensation and governance topics, which resulted in the following changes: Introduced long-term incentive award with three year re
Slide 16: 3-Year Relative Price Performance
3-Year Relative Price Performance Recent stock price performance reflects clarity surrounding business strategy, growth prospects and operational efficiencies 140% 120% 100% 80% 60% SSD: +59% Proxy Peers: +41% 40% S&P 500: +23% 20% DJUSBM: +7% 0% -20% -40% Simpson Manufacturing Co., Inc. DJ US TM/Bu
Slide 17: Simpson Strong-Tie Research & Testing Lab
Simpson Strong-Tie Research & Testing Lab Washington State University • Funding for Research & Test Simpson Strong-Tie Labs at Washington State Materials Demonstration Lab University and Cal Poly, Cal Poly, San Luis Obispo San Luis Obispo • We hire Engineering, Architectural and Marketing graduates
Slide 18: Robust Sustainability Programs
Robust Sustainability Programs We believe in doing what’s right for our people, customers and community Environmental Efforts Social Programs Manufacturing Process Employee Involvement Our value engineering process optimizes design while Our employees dedicate hundreds of volunteer hours each maximi
Slide 19: 2020 Plan
2020 PLAN
Slide 20: 2020 Plan Key Objectives
2020 Plan KEY OBJECTIVES FY 2016A 2020 TARGETS FOCUS ON ORGANIC • $861 M Net Sales • ~8% Organic Net Sales CAGR(1) 1 GROWTH • ~26% - 27% Operating Expenses as a % of RATIONALIZE COST • 31.8% Operating Expenses as Net Sales STRUCTURE TO a % of Net Sales • ~21% - 22% Operating Income Margin(2) 2 INCRE
Slide 21: 2020 Plan Improvements by Initiative
2020 Plan Improvements by Initiative In an effort to both reduce costs and drive profitability, we will be focused on operational improvements in our key focus areas. EUROPE CONCRETE SOFTWARE • Consolidated European • Cease development of • Holding R&D expenses management team to one low-margin conc
Slide 22: Focus on Organic Growth
Focus on Organic Growth ORGANIC GROWTH TARGET ORGANIC GROWTH DRIVERS • Steady growth in North America and Europe • Estimate YOY growth in U.S. housing starts in mid single-digit ~$1.2 B range • Improved economic conditions in Europe $861 M • Concrete market share improvement from approximately 10% t
Slide 23: Focus on Higher-Margin Markets in Concrete
Focus on Higher-Margin Markets in Concrete CONCRETE STRATEGY • Reprioritized efforts in the concrete space to drive improved profitability • Ceased development of lower-margin concrete repair lines (excluding bridge & marine) • Reduced our addressable market to $1.3 billion from $3.5 billion previou
Slide 24: Software Critical to Preserve & Grow Core Business
Software Critical to Preserve & Grow Core Business Over 40% of our core wood connector business is tied to customers with software needs INVESTMENTS IN SOFTWARE Acquired CG Visions (January 2017) Proprietary Truss Software • Provides expertise and resources to offer • Ongoing development to support
Slide 25: Simpson Strong-Tie Technology Strategy
Simpson Strong-Tie Technology Strategy Technology strengthens our value proposition as the industry trusted partner in construction solutions and building software systems. Design Input Estimation Workflow Output CG Visions Pipeline Bill of Back-Office Web 2D / 3D Material Systems Apps Takeoffs Simp
Slide 26: Improve Working Capital & Balance Sheet Discipline
Improve Working Capital & Balance Sheet Discipline INVENTORY TURN IMPROVEMENT DRIVERS OF CAPITAL RELEASE • Established internal team to better manage inventory without impacting 4x product availability standards • Delivering products typically within 24 hours is a key competitive factor • Eliminatin
Slide 27: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Given our confidence the 2020 Plan will drive improved operational performance in our business, we plan to purchase additional shares of our stock • Improve cash flow through better management of working capital and Cash Flow from overall balance sheet discipl
Slide 28: Summary
Summary We believe our execution on the 2020 Plan will create substantial value for all shareholders of Simpson Manufacturing Company 2017 → 2020: Focusing on organic growth Rationalizing our cost structure to improve Company-wide profitability Improving working capital management and balance
Slide 29: Return on Invested Capital (ROIC) Definition
Return on Invested Capital (“ROIC”) Definition When referred to in this presentation, the Company’s return on invested capital (“ROIC”) for a fiscal year is calculated based on (i) the net income of that year as presented in the Company’s consolidated statements of operations prepared pursuant to ge
Slide 30: Simpson's People Make the Difference
www.simpsonmfg.com/financials Simpson’s People Make the Difference 30
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