Simpson Manufacturing Company, Inc. · NYSE:SSD
Simpson Manufacturing — Investor Presentation (September 2023)
44 slides from Simpson Manufacturing's investor presentation, September 2023
Slide 1: Strong Foundation. Stronger Future.
STRONG FOUNDATION. STRONGER FUTURE. Simpson Manufacturing Co., Inc. Investor Presentation September 2023
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 2IE of the Securities Exchange Act of 1934, as amended. Forward-looking statements generall
Slide 3: Investment Highlights
Investment Highlights Industry leader with unique business model, above market top-line growth(1), strong brand recognition and trusted reputation Diversified product offerings and geographies mitigate exposure to cyclical U.S. housing market Leadership position in structural connections for wood wi
Slide 4: 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 3. High-Quality Products To provide solutions that 4. Be The Leader help people design and build 5. Everybo
Slide 5: 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 6: 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 EXPANSION INTO MOMENT FRAMES BUILDER & LBM OUT
Slide 7: Core Addressable Market
Core Addressable Market(1) Wood Connectors Fasteners Concrete & Truss Market Market Market Size/ Size Size Addressable $10.1 B $15.0 B Market $2.5 B Addressable Addressable Market Market $1.7 B (17%) $1.3 B (9%) SSD Share SSD Share SSD Share $1.35 B $492 M $296 M (54%) (29%) (23%) Many opportunities
Slide 8: Key End Use Markets in North America
5 Key End Use Markets in North America Residential Commercial OEM National Retail Building Technology • Single Family • Retail / office • Off-site Construction • Marketing • Builder • Multifamily • Institutional • Mass Timber • eCommerce • LBM • Outdoor Living • Public & Utilities • Wood & Steel • P
Slide 9: Housing Market Projections
Housing Market Projections(1) There is a sizable shortage of new homes after more than a decade of under-building relative to population growth. 2500 2000 1.8M starts 1500 1000 940k starts 500 480k starts 0 J-01 D-01 D-02 D-03 D-04 D-05 D-06 D-07 D-08 D-09 D-10 D-11 D-12 D-13 D-14 N-15 N-16 N-17 N-1
Slide 10: Commitment to Growth
Commitment to Growth KEY GROWTH OPPORTUNITIES WITHIN 5 END USE MARKETS FOCUSED ON: OEM’s R&R / DIY MASS TIMBER CONCRETE STRUCTURAL (Residential & (Residential, National Retail, STEEL (OEM Market) National Retail Markets) (OEM Market) Commercial & OEM Markets) (Commercial Market) Goal to become the l
Slide 11: Why Simpson?
Our Strong Business Model Diverse portfolio of solutions Immersive service An increasingly diverse portfolio of products and Best-in-class field support, technical expertise, software, and a commitment to developing complete digital tools, and training to make it easy to select, solutions for the ma
Slide 12: Our Multilayered Approach
Our Multilayered Approach Innovation Technical & Field Support • 479 Issued Patents (US and foreign; utility and design) • 484 Engineers • 1,641 Registered Trademarks (US and foreign) • 739 Field Sales Reps • 220 Patents Pending (US and foreign) • Thousands of Jobsite Visits • 76 Code Reports Traini
Slide 13: Building Technology Strategy
Building Technology Strategy Our goal is to leverage and grow our suite of technology solutions across our value chain to be the partner of choice for all of our customers. Integrated, digital offerings connect building industry stakeholders to help improve construction processes Key focus areas to
Slide 14: Building Technology Development – Examples
Building Technology Development – Examples ~30 specification tools Building out our digital offerings to serve customers across the building industry 14
Slide 15: 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 • $420 M total addressable market primarily with • Leverage Simp
Slide 16: 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 • $7
Slide 17: 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 • $45 M total a
Slide 18: Concrete
Concrete KEY GOAL STRATEGY Become a recognized leader in concrete • Develop focused 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
Slide 19: 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 20: 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 21: Europe Strategy
Europe Strategy Key Focus Areas: • Integrate acquisition of ETANCO(1) and realize synergies: Offensive Synergies Defensive Synergies Expand market share Procurement optimization Enhance portfolio of solutions Manufacturing efficiencies Cross-selling opportunities Operating expense effici
Slide 22: About ETANCO Group
About ETANCO Group Acquisition creates significant synergies to drive growth, profitability and cost efficiencies. ETANCO is a leading designer, manufacturer and distributor of fixing and fastening solutions for the building construction market in Europe Established in 1952 and headquartered in
Slide 23: ETANCO Group's Key Products and Applications
ETANCO Group’s Key Products and Applications Highly complementary product mix that expands into adjacent markets 1 2 3 4 Primary Waterproofing Roofing Facade Cladding Product Fixing membrane to avoid Fixing metal roof to a Fixing of protection panels Fixing metal, concrete or stone frameworks for wa
Slide 24: 29-Year Trading History
29-Year Trading History 5/25/1994 8/19/2002 11/19/2004 1/1/2012 10/30/2017 7/29/2019 3/24/2020 3/23/2021 12/29/2021 & 9/8/2022 7/26/2023 4/1/2022 Initial public 2 for 1 2 for 1 Founder Barclay Announced Updated COVID-19 Announced 5 Announced Announced SSD closes at offering at $11.50 stock split sto
Slide 25: Strong Business Drives Stockholder Value
Strong Business Drives Stockholder Value Our 2022 Sales by Product… EPS(1) ($ USD Millions) $7.76 Concrete Construction $6.12 $282 $4.27 $2.72 $2.98 $1.86 $1.94 Wood $1.29 $1.38 $0.87 $1.05 Construction $1,832 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 and Across Operating Segments Divid
Slide 26: 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. $2,200 2.0 $2,000 1.8 $1,800 1.6 $1,600 Housing Starts (M) 1.4 $1,400 1.2 $1,200 ($M) 1.0 $1,000 0.8 $800 0.6 $600 $400 0.4 $200 0.2 $0 0.0 2006 2007 2
Slide 27: Operating Income Margin Outperformance
Operating Income Margin Outperformance Simpson Historical Operating Income Margin Versus Proxy Peer Average (1) 30.0% 25.0% 23.3% 21.8% 19.9% 20.0% 16.5% 16.0% 19.9% 20.5% - 21.5%(2) 15.1% 14.2% 15.0% 13.7% 14.1% 13.8% 15.9% 13.2% 13.3% 14.4% 12.3% 12.0% 11.6% 12.5% 9.4% 9.9% 11.5% 10.0% 12.6% 9.5%
Slide 28: ROIC Within Top Quartile of Proxy Peers
ROIC(1) Within Top Quartile of Proxy Peers(2) 58.2% 29.7% 21.7% 21.1% 20.4% 18.9% 17.6% 15.3% 13.6% 11.8% 11.1% 9.4% 8.2% 7.8% 6.2% Source: Company filings as of February 24, 2023. (1) Return on Invested Capital (ROIC) reflects latest fiscal year reported. See appendix for ROIC definition. (2) Proxy
Slide 29: Well-Positioned to Drive Growth
Well-Positioned to Drive Growth We are well-positioned to execute our growth strategy given our demonstrated commitment to disciplined capital allocation and expense management. Thoughtful Deployment of Capital Improving SG&A as a % of Net Sales $995 $79 $44 28.9% 27.9% $811 25.6% $400 24.7% $206 $2
Slide 30: Capital Return History
Capital Return History $916.9 Million 2019 – 2023 YTD(1) Cumulative Free Cash Flow defined as: Cash flow from operations ($1.16 B) less Capital expenditures ($209.3 M) Repurchases of Quarterly Cash Common Stock Dividends 26.1% 20.5% (1) Time frame represents January 1, 2019 to June 30, 2023. 30
Slide 31: Use of Cash Priorities
Use of Cash Priorities Cash Flow From Operations Organic Growth • Prioritizing facility expansions (capacity, service, efficiencies and safety) • Investing in growth initiatives (engineering, marketing, sales personnel, testing capabilities, etc.) Acquisitions • Evaluating potential M&A in the marke
Slide 32: Acquisition Strategy
Acquisition Strategy Evaluate potential M&A opportunities to accelerate traction on our key growth initiatives • Focused on strengthening our business model by expanding our product lines to develop complete solutions for the markets in which we operate • Improve our manufacturing capabilities and s
Slide 33: Sustainability and Environmental and Social Responsibility
Sustainability and Environmental and Social Responsibility 2022 ESG EFFORTS OUR APPROACH • Issued 2022 ESG Report in June 2023 At Simpson Strong-Tie, we operate in a safe • Lowered Total Recordable Incidents (TRIR) to 1.57 and environmentally responsible manner to • Decreased employee turnover rates
Slide 34: Company Ambitions
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 Maintain operating income margin within the top quartile of proxy peers 6 Integrate ETANCO and
Slide 35: Appendix
Appendix 35
Slide 36: OEM Spotlight
OEM Spotlight SOLUTION Existing line of fasteners and anchors for OEM Truck Bed Screw Truck bed and crating installations using Quik Strong Drive® TIMBER Screw Drive® tool and collated fasteners Stainless-Steel Titen HD® Anchor Quik Drive® Racking installation using Titen HD® Anchors 36
Slide 37: R&R / DIY Spotlight
R&R / DIY Spotlight SOLUTION Outdoor Accents® decorative hardware – two collections (architectural styles) for building outdoor structures. Mission Collection™ Avant Collection™ Fastener reset at home center customer New fastener sets include Quik Drive® auto-feed screw driving system (pictured abov
Slide 38: Mass Timber Spotlight
Mass Timber Spotlight SOLUTION New dedicated line of screws for cross laminated timber (CLT) Simpson products utilized in CLT renovation project at an international airport in North America SDS and SDWS SDHR and SDCP SDCF Simpson products utilized in construction of CLT MDCST48 CBH CMST commercial o
Slide 39: Concrete Spotlight
Concrete Spotlight SOLUTION A wide range of product solutions for concrete and masonry projects. Concrete anchor jobsite (above) 44oz. Carbon SET-3G™ Heli-Tie™ Helical Stitching Fabric Adhesive Tie Carbon fabric used as fiber-reinforced polymer (FRP) installation on a concrete structure (left) Titen
Slide 40: Structural Steel Spotlight
Structural Steel Spotlight SOLUTION Special moment frame Yield-Link® design used to build education buildings in California (left) and in the construction of 10 recreational/amusement locations across the U.S (below) Yield-Link® connection for structural steel framing 40
Slide 41: Building Technology Solutions
Building Technology Solutions Building technology is a key component of our business model, offering solutions to help bridge the gap between the supply / demand gap in new home construction. • Technology is critical with the housing shortage to improve new home construction timelines • Enables buil
Slide 42: 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 43: 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 44: Strong Foundation. Stronger Future.
STRONG FOUNDATION. STRONGER FUTURE.
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