Simpson Manufacturing Company, Inc. · NYSE:SSD
Simpson Manufacturing — Investor Day (March 2021)
56 slides from Simpson Manufacturing's investor day presentation, Mar 23, 2021
Slide 1: Strong Foundation. Stronger Future.
STRONG FOUNDATION. STRONGER FUTURE. Simpson Manufacturing Co., Inc. Analyst & Investor Day March 23, 2021
Slide 2: Video: Work Better Together with Simpson Strong-Tie
Video Work Better Together with Simpson Strong-Tie Terry Hammons Senior Vice President, General Counsel and Corporate Secretary 2
Slide 3: Opening Remarks
Opening Remarks Terry Hammons Senior Vice President, General Counsel and Corporate Secretary 3
Slide 4: Safe Harbor
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 general
Slide 5: Executive Presentations
Executive Presentations Karen Colonias Mike Olosky Brian Magstadt Terry Hammons President and Chief Chief Operating Officer Chief Financial Senior Vice President, Executive Officer Officer and Treasurer General Counsel and Corporate Secretary 5
Slide 6: Today's Agenda
Today’s Agenda 10:00 am PT Opening Remarks • Terry Hammons, SVP, General Counsel and Corporate Secretary 10:05 am PT Strong Foundation: Company Overview • Karen Colonias, President and Chief Executive Officer 10:25 am PT Stronger Future: Strategy Discussion • Mike Olosky, Chief Operating Officer 10:
Slide 7: Strong Foundation: Company Overview
Strong Foundation: Company Overview Karen Colonias President and Chief Executive Officer 7
Slide 8: A Pioneer in Construction Solutions
A Pioneer in Construction Solutions Simpson structural connectors are the industry standard. EXPANSION INTO FIRST OPENED STEEL SHEAR WALLS HOLDOWN TYE GILB TEST LAB FIRST CONNECTOR EXPANSION INTO FASTENERS NYSE CONNECTOR LISTING MARKET LEADER (SSD) 1970 1994 1996 1999 2005 1956 1984 1997 2001 EXPANS
Slide 9: A Pioneer in Construction Solutions (Continued)
A Pioneer in Construction Solutions (Continued) Simpson is an innovation leader in fasteners, concrete repair, moment frames, construction software and structural steel solutions. EXPANSION INTO FURTHER SS FASTENERS EXPANSION INTO SPECIAL EXPANSION INTO MOMENT FRAMES EXPANSION INTO BUILDER OUTDOOR L
Slide 10: 27-Year Trading History
27-Year Trading History 5/25/1994 8/19/2002 11/19/2004 1/1/2012 10/30/2017 7/29/2019 3/24/2020 3/16/2021 Initial public 2 for 1 stock split 2 for 1 stock split Founder Barclay Simpson Announced 2020 Updated certain COVID-19 SSD closes at all- offering at $11.50 appointed Chairman Plan 2020 Plan targ
Slide 11: Simpson's Brand and Culture
Simpson’s Brand and Culture At Simpson, we describe the unique culture of our organization as our “Secret Sauce.” OUR MISSION OUR COMPANY VALUES 1. Relentless Customer Focus 2. Long-Range View To provide solutions 3. High-Quality Products that help people design 4. Be The Leader and build safer, 5.
Slide 12: Our Strong Business Model
Our Strong Business Model Long-standing, successful relationships with: • Engineers • Connector Market Leader • Code Officials • 98 of Top 100 Builders • Builders • Thousands of Stocking • Contractors Dealers & Retailers • Lumberyards • Millions of Specifications • Home Centers • Diverse Constructio
Slide 13: Our Multilayered Approach
Our Multilayered Approach Innovation Technical & Field Support • 584 Patents & Trademarks • 307 Engineers • 77 Patents Pending • 443 Field Sales Reps • 229 Code Reports • Thousands of Jobsite Visits Research & Testing Training • 7 Accredited Test Laboratories • 26 Training Centers • Partnerships wit
Slide 14: Commitment to Innovation: State-of-the-Art Test Labs
Commitment to Innovation: State-of-the-Art Test Labs We are dedicated to research, testing, engineering and innovation through our state-of-the-art test labs, which provides us with a better understanding of how structures perform, advances our design technology and improves building safety. WOOD CO
Slide 15: Video: Research, Testing, Engineering & Innovation
Video Research, Testing, Engineering & Innovation Terry Hammons Senior Vice President, General Counsel and Corporate Secretary 15
Slide 16: 2020 Sales Breakdown
2020 Sales Breakdown We engineer, test and manufacture structural connectors, anchors, fasteners, software solutions and other products for new construction, repair and remodel, and do-it- yourself markets. 2020 Net Sales: $1.27 Billion Sales by Product ($M) Sales by Segment ($M) Asia/Pacific $9 Con
Slide 17: Core Addressable Market
Core Addressable Market(1) Wood Connectors Fasteners Concrete & Truss Market Market Market Size/ Size Size Addressable $5.8 B $15.0 B Market $2.5 B Addressable Addressable Market Market $1 B (17%) $1.3 B (9%) SSD Share SSD Share SSD Share $891 M $190 M $185 M (36%) (19%) (14%) Many opportunities to
Slide 18: Strong Foundation: 2020 Targets
Strong Foundation 2020 Companywide 2020 Targets 2016 2017 2018 2019 2020 Status Target CAGR relative to 2016 7.3% 10.0% 8.5% 9.5% 8% Operating Expense % of Revenue 31.5% 31.2% 28.9% 27.9% 25.6% 26% - 27% Operating Income Margin 16.4% 14.1% 16.0% 15.9% 19.9% 16% - 17% Europe Operating Income Margin(1
Slide 19: Stronger Future
Stronger Future Commitment to Balanced Dedication to Capital Dedication to Commitment to Corporate Allocation & Growth Innovation Social Expense Responsibility Management 19
Slide 20: Stronger Future: 5-Year Company Ambitions
Stronger Future: 5-Year Company Ambitions 1 Strengthen our values-based culture 2 Be the partner of choice 3 Be an innovation leader in the markets we operate 4 Continue above market growth rate relative to U.S. housing starts 5 Continue expanding our operating income margin to remain within the top
Slide 21: Stronger Future Strategy Discussion
Stronger Future Strategy Discussion Mike Olosky Chief Operating Officer 21
Slide 22: Commitment to Growth
Commitment to Growth KEY GROWTH INITIATIVES FOCUSED ON: STRUCTURAL OEM R&R / DIY MASS TIMBER CONCRETE STEEL LEADER IN ENGINEERED LOAD-RATED CONSTRUTION FASTENING SOLUTIONS LEADER IN CUSTOMER-FACING TECHNOLOGY 22
Slide 23: OEM
OEM KEY GOAL STRATEGY Increase our market share in OEMs. • Lead with fasteners: Market and sell existing product line • Leverage existing anchor product line • Engineer and launch value-added OEM-specific RATIONALE structural solutions • >$90 M total addressable market primarily with • Leverage Simp
Slide 24: OEM Spotlight
OEM Spotlight KEY MILESTONES • Engaged new customers in OEM target markets • Developed collated screw system for boat manufacturers • Launching new collated screw system for utility trailer flooring 24
Slide 25: R&R / DIY
R&R / DIY KEY GOAL STRATEGY Expand brand positioning: Be a known and • Improve retail execution trusted partner for R&R / DIY solutions. • Continue expanding product lines and increase in-store training RATIONALE • Enable consumers to customize, design and create bill-of-materials with software • $5
Slide 26: R&R / DIY Spotlight
R&R / DIY Spotlight KEY MILESTONES • Successfully launched over 500 products into Lowe’s stores; provided training to 1,700 stores • Increased cross-merchandising and off-shelf product placement in home centers • Integrated marketing campaigns with key retail R&R / DIY-relevant products • Developed
Slide 27: Mass Timber
Mass Timber KEY GOAL STRATEGY Become the engineers’ partner of choice for • Extend current products and develop new mass timber connections. product lines specific to the Mass Timber applications • Increase marketing efforts, leverage the brand RATIONALE and develop new relationships • $200 M total
Slide 28: Mass Timber Spotlight
Mass Timber Spotlight KEY MILESTONES • Launched first-ever Mass Timber catalog and landing page on strongtie.com • Developed and tested new connectors and fasteners for Mass Timber • Involved in the tallest shake table test of a 10-story mass timber building • Engaged in new Mass Timber construction
Slide 29: Concrete
Concrete KEY GOAL STRATEGY Become a recognized leader in concrete • Develop focus market-specific playbooks construction. • Expand our current product offering with an emphasis on innovative, cost-saving solutions RATIONALE • Invest to further expand our engineering and testing capabilities • $1.3 B
Slide 30: Concrete Spotlight
Concrete Spotlight KEY MILESTONES • Expanded Titen anchor family of products • Enhanced our Crack Injection product line • Expanded our Cold-Formed Steel (CFS) product line with improved software • Continued innovation in products and testing to grow our Composite Strengthening Systems • Taken share
Slide 31: Structural Steel
Structural Steel KEY GOAL STRATEGY Convert traditional welded connections to • Develop the bolted connection market by bolted connections. engineering premium construction products • Specify and sell direct to fabricators, erectors, installers and steel building manufacturers RATIONALE • Launch desi
Slide 32: Structural Steel Spotlight
Structural Steel Spotlight KEY MILESTONES • 40+ Yield-Link® connection projects specified in 2020 • Yield-Link embedded in widely used engineering design software • Successfully tested larger Yield-Link solutions to expand our offering • New state-of-the-art manufacturing in Riverside, CA 32
Slide 33: Construction Fasteners
Construction Fasteners 5 KEY GOAL STRATEGY Be the global market leader in engineered / • Develop critical mass by expanding our load-rated construction fastening solutions. engineered fastener business for DIY/R&R, OEM and Mass Timber markets • Provide innovative products that are preferred by RATIO
Slide 34: Video: Software Solutions from Simpson Strong-Tie
Video Software Solutions from Simpson Strong-Tie Terry Hammons Senior Vice President, General Counsel and Corporate Secretary 34
Slide 35: Customer-Facing Technology Solutions
Customer-Facing Technology Solutions • Accurate take-offs • Accurate take-offs • Options • EWP design management software • e-commerce Lumberyards Builders & Distributors • Web apps • Anchor Designer Engineers • CFS Designer & • 3rd-party software plug-ins Designers • Digital drawing library Compone
Slide 36: Video: McCall Homes Builder Solutions Case Study
Video McCall Homes Builder Solutions Case Study Terry Hammons Senior Vice President, General Counsel and Corporate Secretary 36
Slide 37: Commitment to Growth
Commitment to Growth KEY GROWTH INITIATIVES FOCUSED ON: STRUCTURAL OEM R&R / DIY MASS TIMBER CONCRETE STEEL LEADER IN ENGINEERED LOAD-RATED CONSTRUTION FASTENING SOLUTIONS LEADER IN CUSTOMER-FACING TECHNOLOGY 37
Slide 38: Financial Overview
Financial Overview Brian Magstadt Chief Financial Officer and Treasurer 38
Slide 39: Financial Overview: Capital Allocation and Expense Management
Financial Overview We are well positioned to execute our strategy given our demonstrated commitment to disciplined capital allocation and expense management. Thoughtful Deployment of Capital ($M) $193 $182 $206 $208 $160 $157 $142 $119 $70 $111 $61 $76 $37 $28 $40 $40 $40 $2 $3 $3 $58 $29 $38 $38 20
Slide 40: Historical Net Sales
Historical Net Sales Our investments in adjacent products and markets have helped mitigate our exposure to a cyclical U.S. housing market over time. $1,300 2.0 $1,200 1.8 $1,100 1.6 $1,000 Housing Starts (M) $900 1.4 $800 1.2 $700 ($M) 1.0 $600 $500 0.8 $400 0.6 $300 0.4 $200 0.2 $100 $0 0.0 2006 20
Slide 41: Consistently Strong Gross Profit Margins
Consistently Strong Gross Profit Margins 47.6% 44.9% 45.5% 44.9% 45.4% 45.5% 15 Year 44.0% 44.5% 44.5% 43.0% 43.3% Avg. 42.1% 39.8% 40.3% 43.4% 35.1% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 41
Slide 42: Operating Income Margin Outperformance
Operating Income Margin Outperformance Simpson Historical Operating Income Margin Versus Proxy Peer Average(1) 25.0% 19.9% 20.0% 19.9% 16.5% 15.1% 14.2% 16.5% - 18.5% 14.1% 16.0% 15.9% 15.0% 13.7% 13.8% 13.2% 13.3% 12.3% 12.0% 11.6% 9.4% 9.9% 11.5% 12.6% 9.5% 10.0% 7.8% 9.6% 6.0% 5.9% 5.4% 5.0% 3.8%
Slide 43: ROIC Within Top Quartile of Proxy Peers
ROIC(1) Within Top Quartile of Proxy Peers(2) 33.8% 24.7% 20.0% 18.4% 12.2% 11.3% 10.8% 10.1% 9.8% 9.1% 8.9% 7.4% 6.5% 6.2% -23.7% -24.6% (1) Return on Invested Capital (ROIC) reflects latest fiscal year reported. See appendix for ROIC definition. (2) Proxy peer average includes: AAON, AMWD, APOG, A
Slide 44: Capital Deployment History
Capital Deployment History $692 Million 2017 – 2020 Cumulative Operating Cash Flow Capital Expenditures Shareholder Returns Acquisitions • Organic growth through • Repurchases of common strategic capital • Tuck-in acquisitions stock investments in business • Strategic asset purchases • Quarterly cas
Slide 45: Use of Cash Priorities
Use of Cash Priorities Cash Flow From Operations Organic Growth / Investing in growth initiatives (engineering, people, testing, etc.) Maintenance CapEx Acquisitions Potential M&A Maintain quarterly cash dividends Dividends Consistently and moderately raise dividends Opportunistic share repurchases
Slide 46: Acquisition Strategy
Acquisition Strategy • Strengthen our business model by expanding our product lines and developing complete solutions for the markets in which we operate • Improve our market share in our growth initiatives • Improve our manufacturing capabilities and efficiencies to reduce lead-times and bring prod
Slide 47: Closing Remarks
Closing Remarks Karen Colonias President and Chief Executive Officer 47
Slide 48: Sustainability and Environmental and Social Responsibility
Sustainability and Environmental and Social Responsibility SUSTAINABILITY EFFORTS ENVIRONMENTAL PROTECTION, TAKEN TO-DATE HEALTH & SAFETY MANAGEMENT POLICY • Issued 2019 ESG report in March 2020 (Inaugural At Simpson Strong-Tie, we operate in Report) a safe and environmentally • Reported updated 202
Slide 49: Video: Simpson Strong-Tie & Habitat for Humanity – Phoenix Build
Video Simpson Strong-Tie & Habitat for Humanity – Phoenix Build Terry Hammons Senior Vice President, General Counsel and Corporate Secretary 49
Slide 50: Key Takeaways
Key Takeaways Commitment to Balanced Dedication to Capital Dedication to Commitment to Corporate Allocation & Growth Innovation Social Expense Responsibility Management • Continue above • Be an innovation • Continue • Strengthen our market growth leader in the expanding our values-based rate relativ
Slide 51: Video: Mexico Beach Hurricane Case Study
Video Mexico Beach Hurricane Case Study Terry Hammons Senior Vice President, General Counsel and Corporate Secretary 51
Slide 52: Questions?
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Slide 53: Appendix
Appendix 53
Slide 54: Non-GAAP Reconciliation
Non-GAAP Reconciliation Europe Operating Income Margin Non-GAAP Reconciliation 2016 2017 2018 2019 2020 Europe Operating Income Margin (Excluding SAP) 3.50% 2.70% (1.20%) 5.90% 7.00% SAP Expenses 1.60% 1.05% 0.47% 1.51% 1.64% Europe Operating Income Margin 1.90% 1.65% (1.67%) 4.39% 5.36% 54
Slide 55: Return on Invested Capital (ROIC) Definition
Return on Invested Capital (“ROIC”) Definition When referred to in this presentation, 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 generally accept
Slide 56: Thank You
STRONG FOUNDATION. STRONGER FUTURE. Thank You