Simpson Manufacturing at Wells Fargo Conference: Strategic Growth Insights

Simpson Manufacturing (NYSE:SSD) delivered a comprehensive overview of its strategic initiatives at the Wells Fargo Industrials & Materials Conference 2025, held on Wednesday, 11 June 2025. CFO Matt Dunn highlighted the company’s robust market position in the building construction industry, emphasizing innovation and customer service as key drivers of growth. While the company showcased strong market performance, it also acknowledged challenges such as tariff exposure and the need for strategic capital allocation.

Key Takeaways

• Simpson Manufacturing consistently outperforms U.S. housing starts, showcasing strong market share growth.
• The company is expanding its domestic production capabilities to mitigate tariff impacts.
• Strategic capital allocation remains a priority, with a focus on organic growth and shareholder returns.
• Simpson’s digital initiatives and product innovation are central to its market strategy.
• The company maintains strong relationships with top U.S. builders, enhancing its market presence.

Financial Results

Simpson Manufacturing aims to continue outperforming U.S. housing starts, with historical outperformance of 300 basis points, recently increasing to 600-700 basis points. The company targets an operating income of 20% or higher, focusing on operational efficiency to boost earnings per share. Capital allocation strategies prioritize organic growth and returning over 35% of free cash flow to shareholders through dividends and share repurchases.

Operational Updates

Recent operational expansions include a new facility in Columbus, Ohio, doubling its capacity to service the Midwest and Northeast, and a fastener facility in Gallatin, Tennessee, set to open in the third quarter. To counter tariff costs, Simpson has implemented a price increase effective in June and is expanding domestic production. The company is also advancing its digital initiatives with software tools for product selection and custom connector design.

Future Outlook

Simpson Manufacturing projects housing starts to remain flat to slightly up for the year, with potential benefits from decreased interest rates. The company plans to maintain its focus on core product categories without major acquisitions. Shareholder returns remain a priority, with $100 million authorized for share repurchases this year, of which $25 million was completed in the first quarter.

Q&A Highlights

During the Q&A, Simpson emphasized its role in value engineering, providing structural support for larger openings and ensuring resilience to seismic and wind conditions. The company is actively involved in off-site construction and expects growth in the repair and remodel market as interest rates decrease. Tariff mitigation strategies include sourcing opportunities and strategic price adjustments.

For a complete understanding of Simpson Manufacturing’s strategic direction, please refer to the full conference call transcript below.

Full transcript - Wells Fargo Industrials & Materials Conference 2025:

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: My name is Sam Reid. I’m the homebuilder building product analyst here at Wells Fargo. I think some of you guys have been in this room already, so you already know me. But for those that don’t, that’s my name. Obviously, I have a great gig here covering housing related stuff, never a dull moment in the space.

With me here today is Matt Dunn, CFO of Simpson Manufacturing. Really excited to have these guys here. It’s a great business, one that I don’t officially cover, but one that I track tangentially because they do give a lot of really good perspective on the broader industry. Matt’s going to have a few slides to kind of kick things off, give you guys the lay of the land. Then we’re going to jump into a little fireside, and then I’m going to flip the script over to you guys at the very end to see if anyone has any questions.

With that, man,

Matt Dunn, CFO, Simpson Manufacturing: Tim. Yes, just a couple of slides for folks that may not be familiar with Simpson. We’re a leading provider of structural solutions to the building construction industry. So think of the structural integral components that are important in construction connectors, fasteners, anchors. We focus on five key end markets in North America, residential construction, pretty self explanatory commercial construction, typically that’s built with wood.

So think hotels, restaurants, dorms, hospitals, things that are built with wood. OEMs, so think things built in a factory that need structural connectors or fasteners, so think sheds, trailers, crates, tiny homes, things like that. National retail, pretty self explanatory and then component manufacturing, so primarily trust, but also software that goes along with it. We have a broad portfolio of solutions, so wood connectors, truss plates, lateral systems, fastening systems, concrete connections, so both adhesives and mechanical anchors. And then steel connections, we have a cold form steel business that kind of replaces welded connections in some structural steel buildings.

Our business model, so we’re an innovation leader. We’ve got over 500 patents worldwide. We’ve got multi decade relationships with code officials. We’re helping deliver our mission of helping people design and build safer stronger structures. We’re focused on customer service.

We’ve got over 700 field sales reps around the country. We do tons of job site visits, long standing relationships. We have contractual relationships with 26 of the top 30 builders where they exclusively use Simpson Connectors in all their new homes, some of which are here today. About two fifty builders in total that which represents about half of The U. S.

Housing starts in our estimate, which exclusively use Simpson Connectors in their construction. It’s a pretty broad product portfolio, about 15,000 standard and custom products that we manufacture. So part of our value equation is providing great service and making it easy to deal with and we carry the inventory. We generally get products to our customers next day. And then in terms of industry outreach, we do a ton of training and education to code officials, engineers, designers helping them build safer design and build safer stronger structures leveraging our products.

We’ve had a pretty good track record of accelerating above market growth. So the metric we like to look at is our volume performance versus U. S. Housing starts. So if you look across roughly the last ten years, we’ve averaged about 300 basis points ahead of U.

S. Housing starts. In the last couple of years, 600 to 700 basis points ahead. So focused on growing share in the market, whatever that market might be and we look at it in market and a product basis. If you think about as a matrix, focus on each one of those and make sure that we’re outperforming the market.

But really want to do this outperformance and drive strong profitability. That’s our those are our external ambitions. And then lastly, just the Simpson value proposition. So like I said, our company was founded about seventy years ago. It’s been a public company for over thirty years.

Our founder, Barkley Simpson, kind of helped set up a pretty unique business model where we have longstanding relationships with code officials. We help them design codes using our products that makes structures stronger and safer. Those products are then specified by engineers and designers. Oftentimes, they’re almost all the time when you look at a set of plans, you’re going to see the Simpson name and specific products called out. We service suppliers and dealers by, like I said, giving them inventory on a very quick turn basis.

They make good margins on our products and we support them well. And then the end user of our products is the builders. And we talked about some of the relationships we have with builders, helping them to build homes efficiently that are going to stand up to tough conditions like seismic and hurricane activities as well. So pretty nice business we have and maybe as widely known outside of the building and products industry, but certainly the Simpson name. If you talk to someone that’s in the space or in construction or building, they definitely know the Simpson name.

So I’ll turn it to you, Sam.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: Awesome. Thanks, man. Helpful overview. And look, I’m going to start with a macro question just because it’s great we’ve got you here, and you probably have, some of the best visibility on starts across the industry just given your connectivity across all of the major homebuilders. So maybe talk through your macro views at a

Matt Dunn, CFO, Simpson Manufacturing: very high level, particularly single family starts, what you’re seeing out there, what might be a little bit different from the market perception, which is love your perspective. Sure. We obviously talk to a lot of our customers, we talk to a lot of the builders, We talk to a lot of the market prognosticators in terms of housing starts. Zonda is one of the key ones that we use. We also look at Dodge.

We started this year expecting housing starts combined single multifamily to be up low single digit versus the prior year. We softened that guidance a little bit to flat to up in our Q1 earnings call. It’s a bit of a mixed bag. I think multifamily kind of bouncing back off the bottom was down quite a bit last year. We’re seeing some pockets of strength particularly in the West from the market standpoint and then Midwest and Northeast.

I think Southeast on multifamily basis still probably declining a little bit versus prior year. And then on single family, I think folks were a little optimistic that the back half was going to be quite a bit better than the front half. I think that’s softening a little bit. You probably met with some of the builders here as well. We talked to them pretty frequently.

But I think we’re focused on outperforming the market. So even if we see a housing starts that’s flat to down, we feel like we’re in a good spot to continue to outperform that and deliver on our guidance. But I think a couple of key factors, we’d love to see interest rates get down to something that starts with a five. I think the latest guidance is probably going to end the year up or six based on something we’ve seen from different partners. And then just the uncertainty around tariffs and affordability certainly has an impact on HomeStar.

So we’d love to get some certainty there and get to a place where we can start closing the gap of what we believe is a shortage of housing units in The U. S. That goes back a number of years and that gap needs to start getting closed at some So maybe talk through how you’ve geared the business to weather through cycle, particularly downturns and maybe some of the advantages that you have in

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: a downturn scenario versus some of

Matt Dunn, CFO, Simpson Manufacturing: the peers. Yes, we’re customer service focused in a big way and I think we proved our value to our partners during the supply chain crisis of kind of 2021 and 2022 when it’s easy to say you’ve got great customer service when times are good, but when the supply chain is chaos and you’re able to maintain your service levels And the building industry is maybe not the best at having forecast and when they’re going need product. And so our ability to perform and deliver that product on a pretty consistent basis allowed us to gain quite a bit of market share as you saw during that time period there. And I think we’ve continued to grow our fastener and anchor business disproportionately fast in our connector business. Our connector business is a very strong business and we’re a pretty we’re the share leader in that space.

So it gets harder and harder to grow share that the bigger you get. But we’ve been leveraging that those relationships and those business and the scale of that business to continue to outperform on fasteners and anchors and then have started to pick up share in the component manufacturing space as well. And again, some supply chain challenges from some competitors that made that door a little bit open for us a couple of years ago.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: So maybe let’s switch gears and talk a little bit about some of

Matt Dunn, CFO, Simpson Manufacturing: your individual product categories. So maybe let’s start

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: with the wood connector business. A lot of builders have talked a lot about value engineering their products and more efficiency. We’d just love to hear kind of how your offerings sort of facilitate that. And then also maybe just talk through just kind of how this segment really, supports your large homebuilding customers? Sure.

Matt Dunn, CFO, Simpson Manufacturing: I mean the traditional connector segment is really the category that Simpson invented seventy years ago. The way that our products play out today with builders and helping them to build amazing homes is you see a lot of homes these days with larger openings, right? Big garages, indooroutdoor spans, large windows. I mean those are the areas that need structural support and our connector play a key role in that. Historically, we’ve had even more content in homes that are built in high seismic or high wind regions.

So making sure that those structures are as safe and as strong as possible. I think that the codes used to be more geared toward allowing that structure to stand long enough that the occupants could get out in case of a hurricane or an earthquake. Today, you see them more focused on resiliency. So not only can the people get out, but can the structure stay and continue to exist. And so a lot of our products going into the design of those homes and making them resilient and you see it over time.

You don’t see code to code change or code changes year to year making a big impact. When you look across decades, see significant changes in how neighborhoods and homes perform that have been built to higher code standards in the last five years and say maybe a couple of decades ago. And Simpson plays a big part in educating those code officials, designing those products, making the ease of install better and then allowing our builders to build these great homes that have big openings and big garage openings that can stand up to the structural needs. There’s been a lot of consolidation in the homebuilding space just in terms of the private or the public, I should say, taking share from the private. How does that consolidation change your go to market approach with builders?

Yes. So the builders are the end users of our product. We don’t sell directly to the builders. We sell to the lumber yards and pro dealers primarily. I think the consolidation on one hand is good because we have great relationships with a lot of the builders.

It gives us additional visibility. It does create a little bit of a small headwind in that the way that we operate with builders is for exclusivity of using Simpson Connectors in their homes. We pay them a rebate on the end for every house that they close. And more of those builders that are part of those contracts then that creates a small headwind. But I think overall, it’s been good for us.

We have great relationships with all the top builders.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: Awesome. And maybe let’s switch gears and talk a little

Matt Dunn, CFO, Simpson Manufacturing: bit about your fastener business. Decking screws, connectors, a lot of different subcategories within that category. Maybe just walk through kind of the broader market, your addressable market, your market share, which is love overview. Sure. So we typically play in the premium kind of structurally low rated fasteners, right?

We’re not playing in sort of the lower end fastener business. We sell premium products that have great load ratings and have lots of engineering data behind them. We’ve got some great competitors in that space. The total addressable market globally is about $5,000,000,000 We’ve got about a $500,000,000 business in that space. So, it’s been a space that’s been growing for us disproportionately.

We’ve been innovating quite a bit, things like mass timber construction that have become even more popular, lots of opportunity for some pretty heavy duty fasteners in that space and really have been able to provide a lot of innovation. I think one the things we’re known for, we have a business called QuickDrive, which is a fastener driving system, but what’s unique is that we have collated fasteners that come on a strip. Our fasteners are not the cheapest fasteners available, but we believe that the total installed cost is advantageous to some of the other options. So from an install standpoint, being able to install faster, safer while you’re standing up, but also if you’re a builder, making sure that if it’s a subfloor, it’s installed with screws, you’re going to get a lot less callbacks for things like squeaky floors and if you’re using nails, although nails might be cheaper. So just trying to create that total value proposition for the builder through the products that we create.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: And then you’ve been investing in some new facilities. I believe you’ve one in Ohio, one in Tennessee. So you’re essentially kind of in growth mode in some ways. Would just love to hear kind of the role those facilities play in terms of building out your footprint, your relationships with your customers, just how they help you grow?

Matt Dunn, CFO, Simpson Manufacturing: Sure. Two slightly different twists on those two facilities. The one, Columbus, Ohio, the grand opening was May 1. So we just opened we doubled the size of our facility there. So we service essentially the Midwest and Northeast.

The main hub for that is in Columbus, Ohio, where we manufacture a lot of the products. It’s also the main hub for our warehouse distribution for that portion of the country, which happens to service a disproportionate portion of national retail given the number of stores that are in that part of the country. And so keeping our customer service levels high is critical to our business model. And we were essentially out of space at our Columbus facility. We were leasing multiple warehouses in the same city.

We were able to have an opportunity to expand our facility there, bring all the warehousing back into one place which provides some efficiency and productivity and then paves the way for what should be the next decade of growth in terms of production capacity to be able to continue to service our customers at a high level and do it out of one site. If we hadn’t taken the opportunity to expand when the property next door became available, we probably would have end up having to move at some point, which would have been kind of a more costly endeavor. Gallatin, Tennessee is a facility we have today where we make fasteners domestically. We’re out of space in that facility as well. So we’ve greenfielded a fastener facility a few miles away in the same town.

One of the unique things about fasteners for us is we make about a of our fasteners today in Gallatin and then we import about two thirds from Taiwan. With the new facility that mix is probably going to go more like fifty-fifty in terms of domestically made. But importantly, we’re going to be able to do some things with fasteners that we weren’t able to do in our current facility. So today, can’t heat treat and coat those in our current facility. We have to send that off to a party.

We’re going to be able to do all that in our new facility. As well, there are some aspects of the market that require some pretty robust fasteners, think like mass timber buildings and it takes a while to procure those fasteners if you’re buying them from Taiwan and sometimes we weren’t able to quote some jobs we wanted to quote because of lead times. We’re going to make those fasteners now in our new Gallatin facility, which unlocks some additional revenue streams that we’re going to be able to quote. So really excited about that facility. It’s going to open in the third quarter and we’re already under contract to sell our old facility.

So going to be a smooth transition there.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: That’s awesome. No conversation here would be complete without discussing tariffs. We’d just love to hear kind of

Matt Dunn, CFO, Simpson Manufacturing: your exposure to tariffs, but also more the mitigation strategies that you’re employing to diminish the effect on the P and L. Sure. So our core connector business is U. S. Produced with U.

S. Steel. So no direct tariff impact, although there’s been some pricing from steel suppliers based on what’s been happening more broadly in the steel market. Two other categories that are affected by tariffs for us, anchor bolts, mechanical anchors we manufacture at a Simpson facility in China. So lots of escalating tariffs there.

And then we talked a little bit about fasteners. So the portion that we buy from Taiwan has been subject to tariffs. I think even before the tariff conversation, we had started this Gallatin facility expansion. We were planning to produce more domestically. I think that gives us more flexibility depending on where the tariffs net out to maybe ramp that percentage up even a little bit more.

There’s a point there in the math equation where it makes sense to make all your fasteners domestically depending on where the tariffs are, but a little bit slow to lay down capital until you kind of see where that’s all going to net out. But in terms of mitigation, just looking at sourcing opportunities, we did announce a price increase related to tariffs in April that went into effect in June. We did say we did not pass through dollar for dollar all the tariff cost increases. We’re eating some of that because we believe that hopefully some of it’s going to be short term and we don’t want to be uncompetitive in the market. But ultimately, think sourcing will be an opportunity and that Gallatin facility is going to give us an unlock to potentially make some choices if we need to.

Awesome. Let’s switch gears a

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: little bit and talk about your channel mix distribution. I think you’ve the presence in national retail. We just love to kind of hear your individual channel exposures and perhaps maybe how your strategy differs channel by channel? Sure.

Matt Dunn, CFO, Simpson Manufacturing: So we have a pretty good sized national retail business. We don’t disclose the exact percentage, but neither one of them is a 10% customer. Otherwise, we’d have to disclose that. So, it kind gives you a little flavor with a great relationship with both of the big national retails and some of the smaller co ops as well. Our connector business in those retail places are the dominant player in that space, exclusive connector business in there.

And really when they when you talk about those customers and the pro contractor that’s coming in and they’re going to buy a lumber package, they’re looking for the connector package. And so we’re a well known brand in that space. We’ve been able to gain some additional placements in fasteners and anchors in national retail, which has helped us to accelerate our business and create opportunities for kind of cross penetration across those categories. The lumberyard and pro dealer channel is some of our largest customers as well ranging from the big names you’ve heard of down all the way to smaller lumber yards and pro dealers. We go direct to 98% of them.

In the past maybe a couple of decades ago Simpson did have some two step distribution. One piece that moved from two step to direct a couple of years ago, which is kind of the last remaining piece. But our motto is we’re going to make it we want to be their best partner easy to do business with, right? So even during the supply chain crisis of twenty twenty one and 2022, we were winning all kinds of supplier awards because we were able to keep our service levels high. Carry the inventory.

We make it easy for them to do business. We’re responsive. If they’ve got a challenge, we’ll get on it. We’ve had instances where sales guys get in a truck and driving a box of connectors to a job site because they need it there right now. The uniqueness of our product is we’re generally less than 1% of the build material of the house, but we’re critical to the structural and the components of the house.

So you build that you can’t frame the house without the connector package on-site. So we do a great job in making sure that’s on-site when they’re ready. And then maybe just talk through the receptivity of pricing by channel, because I know it can definitely vary. Sure. I mean, I think we think long and hard before we take a price increase.

As you said, we didn’t pass through all the tariff increase. We did take some price increase on some other domestic SKUs that we hadn’t priced in over three years. I think for us, it’s we like to think about the total value that we bring to our customers and surround them with support and make their life easy. And to do that, we need to maintain a certain level of service. And to do that, we need to maintain our gross margins.

And in this environment where affordability of homes is certainly a challenge, like it’s definitely a challenge. But I think given our position of relatively small portion of the bill of materials, but a pretty significant share of thought leadership in the space in terms of what we bring to our customers and to the builders. I like to think we punch a little bit above our weight for the company that’s just providing the connector package in terms of how we’re able to help them. In other ways, value engineer solutions, design things that ultimately are more efficient using our products.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: You’re a product manufacturer, but in some ways you’re also an engineering firm too.

Matt Dunn, CFO, Simpson Manufacturing: I mean you provide a suite of solutions to a lot of your customers.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: So just maybe talk through that engineering element and maybe how that distinguishes you from the competition? Sure.

Matt Dunn, CFO, Simpson Manufacturing: I think it starts with the work that we do with code officials to educate them on what kind of products could be used to make safer structures stronger and safer, same thing with engineers and designers. So we have teams of people that are dedicated. We provide continuing education to engineers and code officials. We do custom design some products. If you got a very unique situation you need connector for, we have fab shops in all of our sites and we generally do forty eight to seventy two hour turnaround on any custom product, which is pretty fast.

In terms of engineering services, we have a pretty sizable team in Vietnam that does a lot of engineering services. So some of our customers were able to help them do takeoffs and things more efficiently, quote business, do unique designs for them. So really we try to also get involved if maybe we have a situation where there’s a unique product need or something got maybe misinstalled and they need to fix it in an efficient way. We can maybe design some products that can help them solve that problem. So really a pretty strong contingent of engineers in the company and that’s really the root of where the company’s backbone is in that engineering space.

Absolutely.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: And it segues quite nicely into my next question which is some of your digital initiatives. You’ve got customer portal,

Matt Dunn, CFO, Simpson Manufacturing: you’ve got builder software tools. There’s a lot of

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: cool stuff going on out there on the digital side. We just love to kind of hear a rundown of what you’re doing right now and maybe a little preview in terms of what you might be looking to

Matt Dunn, CFO, Simpson Manufacturing: do in the future. Sure. We have quite a few different software programs from helping people to select the right product out of our 10,000 SKU catalog digitally instead of using a catalog. We have software where they can go online and design a custom connector or piece and visualize it. If you’ve got a number of unique members coming together, unique angles, you need a custom piece, you can design it, visualize it, submit it through our portal, we’ll make it, get it to you in forty eight to seventy two hours.

We’ve got some software tools that we’re using with lumber yards and with builders. Pipeline is a software tool that we have that is focused on helping lumber yards do takeoffs more efficiently. So today, the takeoff process in a lumber yard can be pretty manual and calculators in Excel and leave some room to be more accurate. And so we have software that we use with lumberyards and let them use. And in some cases, there’s a we’re selling that software today.

We don’t disclose how much that is. But I think over time, we believe there’s an opportunity to monetize some of these software solutions because they’re providing great value to the lumber yards. We have software that we use with builders that allows them to manage the options on a home. So if you’ve got a home and you’re switching out a garage for a three car garage or an office or adding a den, that creates a lot of complexity in the CAD system. And we have some tools that minimize that and make it much easier for them to do that in a much more manageable way with some plug ins that go to Revit and things like that.

And maybe talk to how that software might also drive sticky customer behavior. Absolutely. Like I said before, we bring a lot more value to our customer than just providing the product, right? So we help them to find ways to engineer things and make it easier to design. If you’re a lumberyard and you’re doing takeoffs, we also provide takeoff services.

So if you’ve got a team and you don’t want them focused on being in the back doing estimates, like we will do those takeoff services for you with our Vietnam team and help you quote jobs and keep your sales team that’s focused on selling out on the floor in the yard doing the selling. So it just makes this easy to do business with. We’re not monetizing all these today in certain cases. We think there’s an opportunity potentially in the future, but it’s all really part of the Simpson value equation that we bring to customers, which is we’re going to help you be efficient, we’re going to help you have product when you need it, help you get it on time, and there’s lots of software tools that used to do that. A lot of builders are talking more and

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: more these days about off-site construction. Kind of talk through

Matt Dunn, CFO, Simpson Manufacturing: the role you play in the broader off-site construction industry. Sure. So today, there’s off-site construction of trusses, right? And we have business there. We’re investing quite a bit in our software to grow our business there.

But at the same time, we’re plugged into a couple different with a couple different builders and a couple different entities that are doing some pretty cool work in the off-site construction. So think panelization of walls of homes off-site, seen some case studies and we’ve been part of some of them where you can take the framing of a house from a number of weeks down to a week, right? So that certainly addresses some of the things like labor shortage of framing labor, efficiency. And we want to make sure that Simpson is at the forefront on that and making sure that those things are designed in a way that they’re still structurally sound and carry the loads they need to. And so we’re plugged in a number of different areas even through some venturing opportunities that we have with some different companies.

So just trying to figure out where the construction industry is headed. We want to be there and we want to help lead.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: You play I have a large presence in new construction, but you also play

Matt Dunn, CFO, Simpson Manufacturing: on the repair and remodel side too. Maybe just contextualize sort of the role you play on repair and remodel. Sure. I think most of the repair and remodel business that we have probably flows through our national retail accounts, but a pretty sizable business as we talked. And we also offer pergola systems that go into repair and remodel that make it pretty easy DIY pergola systems.

All the fasters that lots of different applications in repair and remodel and then structural connectors when you’re getting the things like additions or business and we support that in different ways through national retail primarily. It’s more on the consumer and maybe pro contractor side than the builder side where Simpson is known, but I think Simpson’s equity with those folks is also very strong.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: And I know I already asked you

Matt Dunn, CFO, Simpson Manufacturing: one macro question, but I’m going throw one more in there and just ask it in

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: the context of repair remodel. A lot of differing views in terms

Matt Dunn, CFO, Simpson Manufacturing: of how that category is tracking.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: Just curious from your vantage point sort of what’s the outlook on the repair remodel side?

Matt Dunn, CFO, Simpson Manufacturing: Yes. I think if you look at the key customers in that space, I think they’ve all kind of guided up low single digits. I think what we expect is that when interest rates come down a little bit, that generates not only new home sales, but also increased sales of existing homes, which tends to drive the repair and remodel market. So expect that to be an uptick when that when the interest rates right size a little bit. But I think in the meantime, I think the repair and remodel business is going to do maybe slightly better than new home starts in the short term.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: And one other area where you play is commercial. We’d just love to hear kind of

Matt Dunn, CFO, Simpson Manufacturing: the role you play on the commercial side. Yes. So commercial for us is primarily things that are built with So think smaller scale commercial, so hotels, restaurants, small office buildings, so all the same products going into commercial, you’re working with a different end customer. And we also have a cold form steel or structural steel business, right?

So think bolted connections instead of welded connections in terms of structural steel. It’s an area that we’ve made a couple of acquisitions to kind of broaden our product portfolio. But certainly, it’s an area that we’re growing. We believe we’re outperforming the market. We look at Dodge as a comparison benchmark and our commercial business has been outperforming that index over the last few years as well.

Awesome. Let’s maybe talk through some of the areas where you’ve expanded or specifically new categories. There’s been some M and

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: A, but there’s also been, I just think, some organic product introductions too, if

Matt Dunn, CFO, Simpson Manufacturing: I’m not mistaken. So maybe just walk through some of the growth initiatives there. Sure. Organically, launched a line a number of years ago called Outdoor Living. So think of it as structural pieces for decks, pergolas, but they’re finished in a very nice matte black finish.

So they also are visually very appealing. That line has been growing very well for us and is performing very strong. We recently launched a line called Sage. You can find it in National Retail and in Lumberyard. So it’s a pergola system that two people can build in a couple of hours of pergola.

You get the wood precut, everything else fits together, fasteners, brackets, looks really good. Organically as well, just trying to focus total installed costs. So we talked a little bit about some of our fasteners and collated fasteners, making it easier to drive fasteners wherever the use might be. On our core connector business, continuing to upgrade our through our innovation, small tweaks here and there, higher loads, easier to install, things like that. From an inorganic standpoint, we’ve made a couple of acquisitions over the last couple of years, a few in the equipment space.

So we have a brand called Esteframe. It’s a saw that also marks the wood. So you load a cut package in, it will optimize the wood, cut the wood and then print on every single piece where the connectors go, where do the pieces attach, a little bit like a paint by numbers, if you will, for framing, which helps address some of the framing labor challenges that we have in the country as well as it can be a value add service that lumber yards and others can sell that cut package as a service to their framers and have it ready to go. We invested in an equipment company last summer called Monetasaw. They’re a large component manufacturing saw company.

So as we get more into the component manufacturing space, need to have that all in solution. Monet is a very respected brand in that space and so kind of rounded out our equipment offering for those big component cells. That’s awesome. We’ve got about four or so minutes left. I just want

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: to do a quick poll of the room, see if anybody has any questions. I’ve got two or three more, but figured I’d turn the floor over to the audience if there’s any interest. All right. You can keep going. Let’s maybe talk through the long term outlook.

Just remind us, do you have any long term growth or, say, market share targets that you’ve articulated? And if not, just kind

Matt Dunn, CFO, Simpson Manufacturing: of more broad, big picture, just so we kind of have some guardrails in terms of how to think

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: about things longer term. Sure.

Matt Dunn, CFO, Simpson Manufacturing: One of the slides we showed earlier talked about our market outperformance on our volume. That’s one of the key metrics for us, right? So over the last ten years, we’ve averaged about 300 basis points ahead of U. S. Housing starts from a growth standpoint.

We want to continue to outperform. We haven’t publicly given a specific target. It’s been higher than that in the last couple of years. We typically talk about trailing twelve months when we do our quarterly earnings updates. I think the trailing twelve months is four twenty basis points ahead U.

S. Housing starts. Focus on outperforming the market there. We have of our financial ambitions we talked about externally, three are financial. One is continue to outperform the market that we just talked about from a volume standpoint.

The is we want to operate at or slightly above 20% operating income. So we’ve been above that. Last year, we’re a little bit below that. As far as you get back to that, that’s in our current guidance range. And then the is to grow our earnings per share faster than our revenue growth.

So making sure we’re getting a little bit of leverage from operating expense and then continuing to return capital to shareholders via share repurchase.

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: Well, that’s actually a nice segue into my next question, which is just talking to your capital allocation strategy in greater detail.

Matt Dunn, CFO, Simpson Manufacturing: Sure. So focused on continuing to support the organic business, we believe we have a long runway of opportunity to continue to outperform the market and grow in the categories that we play today. So nothing significantly planned from an acquisition standpoint that’s far outside of where we are today. From an M and A standpoint, I think a few tuck in opportunities here and there, whether it’s a product that maybe has some IP that we want to or something that would get us to market faster, A tuck in variety, small cash flow, nothing significant. We still have a term loan from our Atanco acquisition.

So we’ve been paying that down some, very low leverage, well less than one time. We’re really focused on returning cash to shareholders. We’ve been in a couple year period of some pretty intense CapEx as we talked about with the facility expansions. Those two facilities in terms of the CapEx spend wrap up this year, We bought back $100,000,000 of shares last year. We’ve got board authorization to buy back $100,000,000 of shares this year.

We’ve already bet back $25,000,000 in the first quarter. So I think as we get into it, just making sure that we’re continuing to deliver more than 35% of our free cash flow back to shareholders in the form of a dividend that we do pay and share repurchase. So we’ve got about one point minutes left. Would love to hear just kind of your perspective on

Sam Reid, Homebuilder Building Product Analyst, Wells Fargo: what do think the market’s missing? And what do you think is most compelling that the equity markets just don’t fully credit you for? Sure.

Matt Dunn, CFO, Simpson Manufacturing: I think the business model that Simpson has is pretty unique. We talked a little bit about how we surround the market from code officials to engineers and designers, contracts with the builders and then service our customers in the middle lumber yards and pro dealers. I think our stock tends to follow builders and other building materials company. I like to separate building materials and building products. I think we’re a building products company.

We’re heavily engineered. We’ve got lots of specifications and codes. And so I think the business model that we have, the share position that we have and then anybody in the industry that recognizes that’s familiar with building products knows the Simpson name. Think it’s one of the probably the top five or top 10 most recognized brands when you walk into a Lowe’s or Home Depot and I think they would tell you that. And I think just for us, we’ve demonstrated a long track record of outperforming the market.

We can’t necessarily control what the housing market does, but we’re focused on outperforming that market and maintaining a strong margin. Think there’s a consensus is there’s a shortage of housing units at some point that that gap is going to need to get closed. We’ve been growing share even in a down market and when we get a little bit of tailwind from the market expect to be in really great shape. I think that’s a good place to wrap up. Thank you so much for giving us the time, and thanks so much for listening.

All right. Thanks, man. Awesome. Appreciate it.

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