Simpson Manufacturing Company, Inc. · NYSE:SSD
Simpson Manufacturing — Investor Presentation (August 2019)
29 slides from Simpson Manufacturing's investor presentation, Aug 13, 2019
Slide 1: Strength Built In
Karen Colonias CEO Brian Magstadt CFO STRENGTH BUILT IN August | 2019
Slide 2: 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 genera
Slide 3: Investment Highlights
Investment Highlights Industry leader with unique business model, strong brand recognition and trusted reputation Diversified product offerings and geographies mitigates exposure to cyclical U.S. housing market Strong market share in wood products with significant opportunities in all addressable ma
Slide 4: Company Overview
Company Overview Simpson Manufacturing Co. designs, engineers and manufactures structural connectors, anchors, fasteners, software solutions and other products for new construction, repair and remodel, and do-it-yourself markets Key Facts and Figures(1) Unique Business Model … • Ticker: NYSE:SSD • S
Slide 5: Products for Construction
Products for Construction 245 35 1,086 174 204 Engineers Engineering & Patents & Patents Code Reports Lab Technicians Trademarks Pending Wood Construction Products • Produce and market over 10,000 standard and custom products • Typically made of steel and are used primarily to strengthen, support an
Slide 6: Products for Construction (continued)
Products for Construction (continued) Concrete Construction Products • Produce and market over 1,000 standard and custom products • Composed of various materials including steel, chemicals and carbon fiber used to anchor, protect and strengthen concrete SAMPLE PRODUCT LINES: Powder-actuated tools, m
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 $165 M (13%) SSD’s Share $730 M $151 M (21%) $1.3 B $1.5 B SSD’s Share $763 M (51%) Fasteners (SSD Share) Concrete (SSD Share) Wood Connectors & Truss (SSD Share) (1) Note: Market share based on net sales as of the full year ended December 31, 2018. Market sizes
Slide 9: Global Presence
Global Presence Simpson Manufacturing Co. operates across 3 reporting segments (North America, Europe & Asia/Pacific) with 2 primary product lines (Wood Construction & Concrete Construction) Home Office 13 Manufacturing Locations 31 Warehouses, Sales Offices & R&D Facilities Countries of distributio
Slide 10: 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… $1,100 2.0 $1,000 1.8 $900 1.6 $800 1.4 Housing Starts (M) $700 1.2 $600 1.0 ($M) $500 0.8 $400 0.6 $300 $200 0.4 $100 0.2 $0 0
Slide 11: Strategic Growth Initiatives
Strategic Growth Initiatives Rationale …while also allowing us to provide a complete product solution to our customers and to improve sales and margins in our core wood connector business. EUROPE CONCRETE SOFTWARE • Attractive opportunity to • Sharpening focus on • Preserves market share of grow woo
Slide 12: Simpson Strong-Tie Software Strategy
Simpson Strong-Tie Software Strategy Over 40% of our core wood connector sales are to customers with software needs Design Input Estimation Workflow Output Simpson’s Proprietary Bill of Back-Office Web 2D / 3D Software Pipeline Material Systems Apps Takeoffs Simpson Hyphen LotSpec Truss Studio Optio
Slide 13: Competitive Advantage
Competitive Advantage Aside from our strong brand recognition and trusted reputation, Simpson is unique due to: • Strong customer support and education for engineers, builders, contractors and code officials • Provide on-site customer installation training and support • Extensive product testing cap
Slide 14: Operating Income Margin Outperformance
Operating Income Margin Outperformance Simpson Historical Operating Income Margin Versus Proxy Peer Average(1) 25.0% 19.9% 20.0% 16.4% 15.1% 14.1% 13.8% 14.1% 16.0% 15.0% 13.3% 13.2% 13.3% 12.3% 12.1% 11.6% 9.4% 9.5% 12.6% 10.7% 10.0% 7.8% 6.0% 6.1% 5.5% 5.0% 3.2% 3.2% 0.0% (0.4%) (5.0%) (6.2%) (10.
Slide 15: Strong Business Drives Stockholder Value
Strong Business Drives Stockholder Value Since 2010, Simpson has grown EPS by 370% and increased its quarterly dividend by 130%(1) Our 2018 Sales by Product… EPS(2) ($ USD Millions) Other $2.72 $0 Concrete $1.94 Construction $1.86 $165 $1.29 $1.38 $1.04 $1.05 $0.87 Wood $0.58 Construction $913 2010
Slide 16: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Simpson has established a current target capital return to stockholders of a minimum of 50% of cash flows from operations through both dividends and repurchases of its common stock • Improve cash flow through better Cash Flow from management of working capital
Slide 17: Thoughtful Deployment of Capital
Thoughtful Deployment of Capital Over the past three years(1) we have… • Increased our annual dividend by approximately 40% • Repurchased more than $230 million in shares, including a record $111 million in fiscal 2018 …resulting in returns of our cash flow from operations to stockholders of over 90
Slide 18: 2020 Plan
2020 Plan(1) KEY OBJECTIVES FY 2016 Actual 2020 PLAN FOCUS ON ORGANIC (2) 1 GROWTH • $861 M Net Sales • ~8% Organic Net Sales CAGR RATIONALIZE COST • 31.8% Operating Expenses as a % • ~26% - 27% Operating Expenses as a % of Net STRUCTURE TO of Net Sales Sales 2 INCREASE • 16.4% Operating Income Marg
Slide 19: 3-Year Relative Price Performance
3-Year Relative Price Performance Recent stock price performance reflects clarity surrounding business strategy, growth prospects and operational efficiencies SSD: +60% Proxy Peers: +54% S&P 500: +39% DJUSBM: +13% Simpson Manufacturing Co., Inc. DJ US TM/Building Materials & Fixtures Index Proxy Pee
Slide 20: 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 21: Appendix
APPENDIX
Slide 22: Wood Construction — Product Spotlight: Truss
Wood Construction — Product Spotlight Truss Products Truss Software • Truss plates are made from light-gauge • Our truss software supports our core wood product galvanized steel and are pressed into lumber to offering by providing a complete system join wood members together, which create a • Our Co
Slide 23: Wood Construction — Product Spotlight: Outdoor Accents
Wood Construction — Product Spotlight Outdoor Accents® Decorative Hardware • Outdoor Accents wood connectors and fasteners offer decorative appeal and structural strength to outdoor living areas such as pergolas, gazebos and patio covers • The hardware accommodates various lumber sizes, providing fl
Slide 24: Concrete Construction — Product Spotlight: Mechanical Anchors
Concrete Construction — Product Spotlight Mechanical Anchors • Our mechanical anchors are designed to install easily and securely into a variety of base materials — including concrete, brick and stone • For applications where there is a risk of concrete cracking, specific anchors have been designed
Slide 25: Software Critical to Preserve & Grow Core Business
Software Critical to Preserve & Grow Core Business Technology strengthens our value proposition as the industry trusted partner in construction solutions and building software systems. INVESTMENTS IN SOFTWARE Acquired CG Visions (January 2017) Proprietary Truss Software • Provides expertise and reso
Slide 26: 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 • Ceased development of • Investing in software management team to one low-margin co
Slide 27: Track Record of Stockholder Engagement and Responsiveness
Track Record of Stockholder 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 28: 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 period is calculated based on (i) the net income of the last four quarters as presented in the Company’s condensed consolidated statements of operation
Slide 29: Simpson's People Make the Difference
SIMPSON’S PEOPLE MAKE THE DIFFERENCE simpsonmfg.com/financials 29
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