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. Analyst & Investor Day
STRONG FOUNDATION. STRONGER FUTURE. Simpson Manufacturing Co., Inc. Analyst & Investor Day March 23, 2021 Exhibit 99.1
Slide 2: Video: Work Better Together with Simpson Strong-Tie
2 Video Terry Hammons Senior Vice President, General Counsel and Corporate Secretary Work Better Together with Simpson Strong-Tie
Slide 3: Opening Remarks
3 Opening Remarks Terry Hammons Senior Vice President, General Counsel and Corporate Secretary
Slide 4: Forward-Looking Statements
4 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
Slide 5: Executive Presentations
5 Executive Presentations Karen Colonias President and Chief Executive Officer Mike Olosky Chief Operating Officer Brian Magstadt Chief Financial Officer and Treasurer Terry Hammons Senior Vice President, General Counsel and Corporate Secretary
Slide 6: Today's Agenda
6 Today’s Agenda Opening Remarks10:00 am PT • Terry Hammons, SVP, General Counsel and Corporate Secretary Strong Foundation: Company Overview10:05 am PT • Karen Colonias, President and Chief Executive Officer Stronger Future: Strategy Discussion 10:25 am PT • Mike Olosky, Chief Operating Officer Fin
Slide 7: Strong Foundation: Company Overview
7 Strong Foundation: Company Overview Karen Colonias President and Chief Executive Officer
Slide 8: A Pioneer in Construction Solutions
8 A Pioneer in Construction Solutions 1956 1970 1984 1996 1997 1999 2005 Simpson structural connectors are the industry standard. 1994 NYSE LISTING (SSD) OUR FOUNDER BARC SIMPSON EXPANSION INTO CONCRETE EXPANSION INTO FASTENERS FIRST CONNECTOR CONNECTOR MARKET LEADER EXPANSION INTO WOOD SHEAR WALLS
Slide 9: A Pioneer in Construction Solutions (Continued)
9 A Pioneer in Construction Solutions (Continued) 2011 2013 2016 20192012 2008 2009 20202017 EXPANSION INTO SS FASTENERS EXPANSION INTO ORDINARY MOMENT FRAMES FURTHER EXPANSION INTO CONCRETE REPAIR AND CFS EXPANSION INTO SPECIAL MOMENT FRAMES EXPANSION INTO FRP/CARBON FIBER SOLUTIONS AND TRUSS SOFTW
Slide 10: 27-Year Trading History
10 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 27-Year Trading History 5/25/1994 Initial public offering at $11.50 (or $2.875 adjusted for two stock splits in August 2002 & November 2004). 3/16/2021 SSD closes at all- time high of $109.27 3/24/2020 COVID-19 pandemic declared 8/19/2002 2 for 1 stock sp
Slide 11: Simpson's Brand and Culture
11 Simpson’s Brand and Culture At Simpson, we describe the unique culture of our organization as our “Secret Sauce.” To provide solutions that help people design and build safer, stronger structures. OUR MISSION OUR COMPANY VALUES 1. Relentless Customer Focus 2. Long-Range View 3. High-Quality Produ
Slide 12: Our Strong Business Model
12 • Innovation • Research & Testing • Technology • Technical & Field Support • Training • Product Availability Long-standing, successful relationships with: • Engineers • Code Officials • Builders • Contractors • Lumberyards • Home Centers • Pro Dealers Our Strong Business Model • Connector Market
Slide 13: Our Multilayered Approach
13 Our Multilayered Approach • 584 Patents & Trademarks • 77 Patents Pending • 229 Code Reports Innovation Research & Testing Technical & Field Support Product Availability Technology • 7 Accredited Test Laboratories • Partnerships with Key Universities • 307 Engineers • 443 Field Sales Reps • Thous
Slide 14: Commitment to Innovation: State-of-the-Art Test Labs
14 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
Slide 15: Video: Research, Testing, Engineering & Innovation
15 Video Terry Hammons Senior Vice President, General Counsel and Corporate Secretary Research, Testing, Engineering & Innovation
Slide 16: 2020 Net Sales: $1.27 Billion
16 2020 Net Sales: $1.27 Billion 2020 Sales Breakdown We engineer, test and manufacture structural connectors, anchors, fasteners, software solutions and other products for new construction, repair and remodel, and do-it- yourself markets. Sales by Product ($M) Wood Construction $1,083 Concrete Cons
Slide 17: Core Addressable Market
17 Core Addressable Market(1) Wood Connectors & Truss Concrete Market Size $15.0 B Addressable Market $1.3 B (9%) SSD Share $185 M (14%) Market Size $5.8 B Addressable Market SSD Share $190 M (19%) Market Size/ Addressable Market $2.5 B SSD Share $891 M (36%) Fasteners $1 B (17%) (1) Note: Market sh
Slide 18: Strong Foundation: Companywide 2020 Targets
18 Strong Foundation Companywide 2020 Targets 2016 2017 2018 2019 2020 2020 Target Status 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 Margi
Slide 19: Stronger Future
19 Stronger Future Dedication to Growth Commitment to Balanced Capital Allocation & Expense Management Dedication to Corporate Social Responsibility Commitment to Innovation
Slide 20: Stronger Future: 5-Year Company Ambitions
20 Stronger Future: 5-Year Company Ambitions Strengthen our values-based culture Be the partner of choice Be an innovation leader in the markets we operate Continue above market growth rate relative to U.S. housing starts Continue expanding our operating income margin to remain within the top quarti
Slide 21: Stronger Future Strategy Discussion
21 Stronger Future Strategy Discussion Mike Olosky Chief Operating Officer
Slide 22: Commitment to Growth
22 Commitment to Growth OEM R&R / DIY STRUCTURAL STEEL MASS TIMBER KEY GROWTH INITIATIVES FOCUSED ON: CONCRETE LEADER IN ENGINEERED LOAD-RATED CONSTRUTION FASTENING SOLUTIONS LEADER IN CUSTOMER-FACING TECHNOLOGY
Slide 23: OEM
23 OEM RATIONALE KEY GOAL STRATEGY • >$90 M total addressable market primarily with fastening technologies • Potential to develop other engineered solutions • 2,500 existing Simpson products applicable for OEM needs • Our solutions make the industry more efficient • Aligned with the Simpson business
Slide 24: OEM Spotlight
24 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
Slide 25: R&R / DIY
25 RATIONALE KEY GOAL STRATEGY • $500-$700 M total addressable market: decks, patios, porches, pergolas, gazebos, fencing and garage organization • Existing product line with potential for several extensions • Established channel/partners • Proven approach with Outdoor Accents • Aligned with the Sim
Slide 26: R&R / DIY Spotlight
26 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 • Develop
Slide 27: Mass Timber
27 Mass Timber RATIONALE KEY GOAL STRATEGY • $200 M total addressable market • Strong double digit growth rate in N. America • Positive environmental impact • New market; many product opportunties • Aligned with the Simpson business model Become the engineers’ partner of choice for mass timber conne
Slide 28: Mass Timber Spotlight
28 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 construct
Slide 29: Concrete
29 Concrete RATIONALE KEY GOAL STRATEGY • $1.3 B total addressable market • Growth rate linked to infrastructure spend • Simpson is a recognized leader in concrete and cold-formed steel solutions • Many products and applications require engineering, testing and code approval • Aligned with the Simps
Slide 30: Concrete Spotlight
30 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 sh
Slide 31: Structural Steel
31 Structural Steel RATIONALE KEY GOAL STRATEGY • > $350 M total addressable market • Structural steel construction is roughly half of the construction spend in North America • Field welder shortage: addressed by bolted structural connections • Bolted connections can improve productivity by 25% vs.
Slide 32: Structural Steel Spotlight
32 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
Slide 33: Construction Fasteners
33 Be the global market leader in engineered / load-rated construction fastening solutions. Construction Fasteners 5 STRATEGY • Develop critical mass by expanding our engineered fastener business for DIY/R&R, OEM and Mass Timber markets • Provide innovative products that are preferred by both end-us
Slide 34: Video: Software Solutions from Simpson Strong-Tie
34 Video Terry Hammons Senior Vice President, General Counsel and Corporate Secretary Software Solutions from Simpson Strong-Tie
Slide 35: Customer-Facing Technology Solutions
35 Customer-Facing Technology Solutions • 3D Deck Planner • 3D Pergola Planner • Floor, roof and wall design software • Accurate take-offs • EWP design software • e-commerce • Accurate take-offs • Options management Builders Lumberyards & Distributors Repair & Remodel & DIY Component / Truss Manufac
Slide 36: Video: McCall Homes Builder Solutions Case Study
36 Video Terry Hammons Senior Vice President, General Counsel and Corporate Secretary McCall Homes Builder Solutions Case Study
Slide 37: Commitment to Growth
37 Commitment to Growth OEM R&R / DIY STRUCTURAL STEEL MASS TIMBER KEY GROWTH INITIATIVES FOCUSED ON: CONCRETE LEADER IN CUSTOMER-FACING TECHNOLOGY LEADER IN ENGINEERED LOAD-RATED CONSTRUTION FASTENING SOLUTIONS
Slide 38: Financial Overview
38 Financial Overview Brian Magstadt Chief Financial Officer and Treasurer
Slide 39: Financial Overview: Thoughtful Deployment of Capital
39 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 $119 $160 $206 $208 $58 $29 $38 $38 $28 $2 $3 $3 $37 $40 $40 $40 $70 $111 $61 $76 2017 2018 2019 2020 Cash
Slide 40: Historical Net Sales
40 Historical Net Sales Our investments in adjacent products and markets have helped mitigate our exposure to a cyclical U.S. housing market over time. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 $0 $100 $200 $300 $400 $500 $
Slide 41: Consistently Strong Gross Profit Margins
41 42.1% 39.8% 40.3% 35.1% 44.0% 44.9% 43.0% 44.5% 45.5% 44.9% 47.6% 45.4% 44.5% 43.3% 45.5% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Consistently Strong Gross Profit Margins 15 Year Avg. 43.4%
Slide 42: Operating Income Margin Outperformance
42 19.9% 15.1% 13.2% 6.0% 14.1% 12.3% 9.4% 11.6% 13.3% 13.8% 16.5% 14.2% 16.0% 15.9% 19.9% 16.5% - 18.5% 13.7% 5.9% (7.3%) (2.7%) 3.7% 1.1% 3.8% 5.4% 7.8% 9.9% 12.0% 12.6% 11.5% 9.5% 9.6% (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 43: ROIC Within Top Quartile of Proxy Peers
43 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% ROIC(1) Within Top Quartile of Proxy Peers(2) (1) Return on Invested Capital (ROIC) reflects latest fiscal year reported. See appendix for ROIC definition. (2) Proxy peer average includes: AAON, AMWD, APOG
Slide 44: Capital Deployment History
44 • Tuck-in acquisitions • Strategic asset purchases Acquisitions • Repurchases of common stock • Quarterly cash dividends Shareholder Returns • Organic growth through strategic capital investments in business • Core capex Capital Deployment History $692 Million 2017 – 2020 Cumulative Operating Cas
Slide 45: Use of Cash Priorities
45 Use of Cash Priorities Cash Flow From Operations Share Repurchases Investing in growth initiatives (engineering, people, testing, etc.) Maintenance CapEx Potential M&A Maintain quarterly cash dividends Consistently and moderately raise dividends Opportunistic share repurchases Capital return thre
Slide 46: Acquisition Strategy
46 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 p
Slide 47: Closing Remarks
47 Closing Remarks Karen Colonias President and Chief Executive Officer
Slide 48: Sustainability and Environmental and Social Responsibility
48 Sustainability and Environmental and Social Responsibility “Our people are the most vital part of our business, and providing a safe, healthy, sustainable, and rewarding working environment is of fundamental importance.” – Karen Colonias • Issued 2019 ESG report in March 2020 (Inaugural Report) •
Slide 49: Video: Simpson Strong-Tie & Habitat for Humanity – Phoenix Build
49 Video Terry Hammons Senior Vice President, General Counsel and Corporate Secretary Simpson Strong-Tie & Habitat for Humanity – Phoenix Build
Slide 50: Key Takeaways
50 Key Takeaways Dedication to Growth Commitment to Balanced Capital Allocation & Expense Management Dedication to Corporate Social Responsibility Commitment to Innovation • Continue above market growth rate relative to U.S. housing starts • Be an innovation leader in the markets we operate • Contin
Slide 51: Video: Mexico Beach Hurricane Case Study
51 Video Terry Hammons Senior Vice President, General Counsel and Corporate Secretary Mexico Beach Hurricane Case Study
Slide 52: Q&A Questions?
52 Q&A Questions?
Slide 53: Appendix
53 Appendix
Slide 54: Non-GAAP Reconciliation: Europe Operating Income Margin
54 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%
Slide 55: Return on Invested Capital Definition
55 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 acc
Slide 56: Thank You
Thank You STRONG FOUNDATION. STRONGER FUTURE.