the power to strengthen - simpson manufacturing company · the power to strengthen karen colonias...

PRIVATE & CONFIDENTIAL November 2016

The Power to Strengthen

Karen Colonias CEO

Tom Fitzmyers Vice Chairman

Brian Magstadt CFO

PRIVATE & CONFIDENTIAL

Safe Harbor

This presentation may contain forward-looking statements as defined by the Private

Securities Litigation Reform Act of 1995 and speak only as of their respective dates.

There are a number of factors that could cause actual results or outcomes to differ

materially from those addressed in the forward-looking statements. Such factors are

detailed in the Company’s Registration Statement on Form S-1 filed with the Securities

and Exchange Commission on May 25, 1994, as further amended, and subsequent

reports filed with the Securities and Exchange Commission.

Each forward-looking statement contained in this presentation is specifically qualified in

its entirety by the factors identified in the documents referenced above.

The Company further cautions that the important factors identified in the documents

referenced above are not exclusive. You should not unduly rely on any estimates,

projections or other forward-looking statements or data contained herein to reach

conclusions or make any investment decisions.

This presentation is not intended to serve as an indicator of the Company’s future

operations or financial performance or serve as a guide for investing in the Company.

2


Composed of various materials

including steel, chemicals and

carbon fiber used to repair,

protect and strengthen concrete,

brick or mortar structures

Produce and market over 2,000

products

Typically made of steel and are

used primarily to strengthen,

support and connect wood joints

Produce and market over 13,000

products

Company Overview

Simpson Manufacturing designs, engineers, and manufactures structural connectors, anchors, and

other products for new construction, retro-fitting, and do-it-yourself markets

Simpson Manufacturing

operates across 3 reporting

segments (North America,

Europe and Asia/Pacific)

with 2 primary product lines

Wood Construction Products Concrete Construction Products

Key Facts and Figures (October 2016)

Ticker: NYSE:SSD

Market Cap: $2.14B

2015 Revenue: $794M

Headquarters: Pleasanton, CA

Operations: 23 Locations Globally

Employees: 2,500

Company History

Barclay Simpson (1921-2014), founded Simpson Manufacturing in 1956, and spent

over 50 years building a culture that has been perpetuated for the last 20 years under

the leadership of Thomas Fitzmyers and Karen Colonias. Under Barclay’s leadership,

Simpson became a publicly traded company in 1994 and established itself as one of

the world’s largest suppliers of structural building products. In addition to delivering

exceptional records of performance through strong fiscal management and innovative

approaches to growth, Barclay, Tom and Karen have promoted a culture of employee

ownership focused on the value and contributions of every employee.

3


Global Presence

4

23 Manufacturing

Locations

23 Warehouses &

Sales Offices

Countries of distribution

Our > 24,000 Customers distribute our product through their own distribution channels

Home Office


The Power to Build

5


Products for Wood Construction

Single Family Multi-Family DIY

Sample product lines: screw-delivery systems, holdowns, fasteners, joist hangers, wood & steel shearwalls, moment frames

200 Engineers 55 Engineering & Lab Technicians 312 Patents 132 Patent Pending 177 Code Reports

6


Products for Concrete Construction

Agricultural Silos Bridges Concrete Piers

Sample product lines: powder-actuated tools, mechanical anchors, adhesives, concrete repair systems, carbon fiber

7


Investment in Adjacent End Markets has Decreased

Dependence on U.S. Housing Starts

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ho

usin

g S

tarts

(millio

ns)

($M

)

Sales

Gross Profit

Income from Operations

Housing Starts

Year Gross Margin Year Gross Margin

2006 42.2% 2011 44.9%

2007 39.9% 2012 42.9%

2008 40.4% 2013 44.5%

2009 35.2% 2014 45.5%

2010 44.0% 2015 45.2%

Housing Starts versus Revenue

8


Strategic Growth through Acquisitions

Through acquisitions and product development, Simpson continues to diversify its

product offering to be less dependent on residential housing in the U.S.

complement existing product lines

can be marketed through existing

distribution channels

may benefit from use of our brand

names and engineering expertise

are responsive to customer needs.

expand markets geographically

reduce dependence on the U.S.

residential housing market

Our long-term strategy is to develop, acquire

or invest in product lines or businesses that

have the potential to increase the Company’s

EPS over time and that…

= Concrete Construction

FASTENERS CHEMICAL / MECH. ANCHORING TRUSS

Ackerman

Johnson

Isometric Masterset Automatic Stamping,

Truss Software

Quik

Drive

Swan

Secure

CONNECTORS (Europe) CONCRETE REPAIR & STRENGTHENING

Stokes,

Mighty Metal Furfix BMF,

Bulldog Truline Bellion

Ahorn

Socom S&P

Clever

Fox

Industries Aginco

= Wood Construction

CONNECTORS (North America)

ShearBrace Deck Tools MGA Anchor Tie Down

9

CONNECTORS (EU)

MS Découpe

2013 – 2016 2012 2009 - 2011 2004 - 2008 1999 - 2003 1994 – 1998


Global North America, Europe & Pacific Rim Market Size

$5B

$15B $1.4B

Concrete

Fasteners

Wood

FASTENERS CONCRETE PRODUCTS STRUCTURAL WOOD PRODUCTS

Simpson’s

Addressable

Market

$500 Million

10%

Simpson’s

Addressable

Market

$1.4 Billion

100%

Simpson’s

Addressable

Market

$3.5 Billion

23%

10


$0.58

$1.04

$0.87

$1.05

$1.29 $1.38

2010 2011 2012 2013 2014 2015

Strong Business Drives Shareholder Value

Dividends Per Share1

EPS

A Strong Unique Business Model…

$0.40

$0.50 $0.50 $0.50 $0.55

2010 2011 2012 2013 2014 2015

Enables Us to Deliver Value to Shareholders

The Board employs a balanced capital allocation strategy that

utilizes free cash flow to grow the business through capital

expenditures, acquisitions, and to provide returns to

stockholders through dividends and share repurchases.

Simpson has increased its quarterly dividend by 80% since

2010 and repurchased $166.7M in shares since 2011.

Our Sales by Product…

and Across Operating Segments

North America

$677

Europe $108

Wood

Construction

$675

Concrete

Construction

$119

Simpson is seen as a thought leader in defining

evolving building codes in collaboration with customers

and regulators. Simpson continues to differentiate from

competitors across operating segments by designing

and marketing end-to-end wood and construction

product systems.

($ USD Millions)

($ USD Millions)

$0.70

1 Part of the 2013 dividend was accelerated due to uncertainty of

changes to tax code in 2013. The dividend paid in Dec 2012 is

included in 2013.

1.63%

Yield

Asia/

Pacific

$9

11


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 the high degree of confidence we have in our business,

the Company has established a current target capital return to shareholders of 50% of cash flows from

operations through both dividends and repurchases of the Company’s shares of common stock.

Dividend and Share Repurchase Program

CapEx and Acquisitions

Creating Value for Shareholders

• Use strong cash position to pay dividends and conduct strategic share repurchases

• Grow the business through investment and acquisitions in adjacent end markets which complement Simpson’s core competencies

• Utilize free cash flow to grow the business and maximize long-term shareholder value

• $300M Credit Facility

• Q3 2016 - $218.7M Cash

• No Debt

12

STOCK BUYBACK

• 1.1M shares

• $47M

• $43.13 Avg Share Price


Disciplined Execution Through Downturn

= S&P 500 Index

= Simpson Manufacturing

1 Average performance of Industry Peer companies: American Woodmark, Eagle Materials, Headwaters Incorporated, NCI Building

Systems, Quanex Building Products, Apogee Enterprises, Insteel Industries, Patrick Industries, U.S. Concrete, Builders FirstSource,

Griffon Corporation, Masonite International, Ply Gem Holdings and Gibraltar Industries.

TSR Performance (Jan 1. 2007 – Dec 31. 2015)

Source: S&P CapitalIQ as of December 31, 2015

Simpson

Manufacturing

+27.1%

Industry Peers

+8.6%

Our strategic management of the business enabled us to outperform industry

peers throughout the US housing market crisis

S&P 500 Index -

44.3%

= Industry Peers1

Dow Jones U.S.

Building Materials &

Fixtures Index

+91.5%

= Dow Jones U.S. Building Materials & Fixtures Index

13


The SAP Project

2016 2017 2018 2019

($3,314,000) ($13,948,000) ($9,588,000) ($7,556,000)

TOTAL ($34,406,000)

Notes:

2016 – Pre-implementation project readiness work

$4,970,000 Contingency included - IT Business analysts, full-time Business Process Owners, IT training

No Big Bang!

Reduce risk of business

disruption

No Scope Creep

Contain costs

No Customizing Code

Configuration is ok

Consistency is the key

WAVE I 1/2017 – 2/2018

WAVE 2 3/2018 – 10/2018

WAVE 3 11/2018 – 5/2019

WAVE 4 6/2019 – 11/2019

McKinney

West Chicago

Tamworth

Pleasanton

Stockton

Riverside

St Gemme

Cardet

Canada

branches

Columbus

Gallatin

Edenton

Warsaw

Czech Rep.

Bad Nauheim

Boulstrup

Hong Kong

7 S&P Locations

ZJG (China)

Australia

New Zealand

South Africa

MSDécoupe

Three Year Implementation Strategy

14

Project Costs


SAP-Recommended Integrator: itelligence

Specializing in Discrete (Connector) and Chemical Manufacturing

250+ 50+ Transitions

50+ Managed Cloud

130+ +

SAP S/4HANA Platform/

Software Customers

SAP S/4HANA Projects

40+

SAP HANA Platform

Customers

2016 S/4HANA Adoption Partner of the Year

The SAP Project’s Integrator

15

First BWoH

customer

First ERPoH

customer

First CRMoH

customer

First SCMoH

customer

First S/4HANA

customer

First Native HANA

customer

Journey to S/4HANA

2012 2013 2014 2015

SAP-Certified

Provider of

Hosting Services

for SAP HEC

itelligence

ERP on HANA


Robust Sustainability Programs

We believe in doing what’s right for our people, customers and community

Environmental Efforts

Manufacturing Process Our value engineering process optimizes design while

maximizing performance for construction

Recycling We recycle most key materials to reduce our impact on the

environment

Innovative Product Use Our products strengthen structures they are installed in,

making them more able to resist natural forces

Quality Programs We follow a quality system that manages defined

procedures to ensure consistent product quality

Environmental Health & Safety We conduct safety audits at our manufacturing facilities

around the world

Sustainable Building Practices We support established national and local sustainable

building practices

Energy Efficiencies We strive to increase energy efficiencies at our facilities for

environmentally friendly, cost-effective operations

Social Programs

Employee Involvement Our employees dedicate hundreds of volunteer hours each

year in their local communities

Sponsorships The company sponsors a variety of campaigns to help

support those in our industry

Disaster Relief Simpson-Strong Tie supports disaster relief and recovery

efforts around the globe

Industry Recognition We collaborated with academia on the NEESWood

Capstone project

Careers We value the individuals and the creativity that individuals

can bring to the workplace

Scholarships Our program provides financial assistance to employees’

children, and to engineering and architecture students

All Inclusive Workplace Our Boulstrop, Denmark, branch was named “Inclusive

Workplace of the Year” in 2014

For more information, visit http://www.simpsonmfg.com/social-responsibility

16


Simpson’s People Power

17


REVENUE REVENUE/EMPLOYEE

$771

$527 $556

$604 $657

$706 $752

$794

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical Revenue $000

$360

$294 $300 $306 $300 $307 $309 $318

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical Revenue/Employee $000

SG&A % of SALES GROSS MARGIN %

22.1%

28.7% 29.4% 32.4% 33.4% 32.7% 32.2% 31.5%

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical SG&A % of Sales

42.1%

35.1%

44.0% 44.9% 43.1% 44.5% 45.5% 45.2%

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical Gross Margin

Historical Performance

18

2006 – 2.1M Housing Starts


OPERATING INCOME % of SALES OPERATING INCOME/EMPLOYEE

$72

$18

$43 $38

$28

$35 $41

$44

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical Operating Income/Employee

INVENTORY TURNS RETURN ON INVESTED CAPITAL

2.6

1.8

2.1 2.0

1.9 1.9 2.0

2.1

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical Inventory Turns

19.0%

2.5%

5.8% 6.2% 5.4%

6.2% 7.4% 7.9%

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical ROIC


19

20.0%

6.2%

14.3%

12.3%

9.4%

11.5% 13.2% 13.7%

2006 2009 2010 2011 2012 2013 2014 2015

Simpson Historical Operating Income % of Sales


REVENUE REVENUE/EMPLOYEE

$17,007 $18,579

$20,366 $20,938 $22,644

2012 2013 2014 2015 2016 proj.

S & P Historical Revenue $000

$261,646

$254,507

$267,974

$243,465

$233,443

2012 2013 2014 2015 2016 proj.

S & P Historical Revenue/Employee

SG&A % of SALES GROSS MARGIN %

51.1%

50.2%

52.8% 53.1%

49.3%

2012 2013 2014 2015 2016 proj.

S & P Historical SG&A % of Sales

55.2%

56.0%

53.9%

58.8%

57.6%

2012 2013 2014 2015 2016 proj.

S & P Historical Gross Margin


20


OPERATING INCOME % of SALES OPERATING INCOME/EMPLOYEE

$10.8

$14.8

$3.0

$13.9

$19.4

2012 2013 2014 2015 2016 proj.

S & P Historical Operating Income/Employee


21

4.1%

5.8%

1.1%

5.7%

8.3%

2012 2013 2014 2015 2016 proj.

S & P Historical Operating Income % of Sales


Financial Results

22


Financial Position (unaudited)

23

PRIVATE & CONFIDENTIAL November 2016

Thank You

Washington State University - construction & engineering research in the new Simpson Strong-Tie Research & Testing Lab

the power to strengthen - simpson manufacturing company · the power to strengthen karen colonias...

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