What changed in this filing

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Item 1. Business

2023-02-28 compared with 2022-02-28 · 62 added, 57 removed, 179 unchanged (40% of the section changed)

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Simpson Manufacturing Co., Inc.

("Simpson," the "Company," "we," "us," or "our,") through our wholly-owned subsidiary, Simpson Strong-Tie Company Inc.

("Simpson," the "Company," "we," "us," or "our,") through its subsidiaries, including, Simpson Strong-Tie Company Inc.

("SST"), designs, engineers and is a leading manufacturer of high quality wood and concrete construction products designed to make structures safer and more secure.

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Our concrete construction products are used in concrete, masonry and steel construction and include adhesives, chemicals, mechanical anchors, carbide drill bits, powder actuated tools, fiber reinforced materials and other repair products used for protection and strengthening.

We market our products to the residential construction, light industrial and commercial construction, remodeling and do-it-yourself (“DIY”) markets.

We market our products to the residential construction, light industrial and commercial construction, remodeling and do-it-yourself (“DIY”) markets domestically in North America, primarily in the United States, and Europe internationally.

We also provide engineering services in support of some of our products and increasingly offer design and other software that facilitates the specification, selection and use of our products.

The Company has continuously manufactured structural connectors since 1956 and believes that the Simpson Strong-Tie® brand benefits from strong brand name recognition in residential, light industrial and commercial applications among architects and engineers who frequently request the use of our products.

Recent Acquisition

As previously disclosed, on April 1, 2022, the Company successfully completed the acquisition of ETANCO.

ETANCO is a leading designer, manufacturer and distributor of fixing and fastening solutions for the European building and construction market.

ETANCO's primary product applications directly align with the addressable markets in which the Company operates, expands our portfolio of solutions, including mechanical anchors, fasteners and commercial building envelope solutions, and significantly increase our market presence across Europe.

We continue to believe that the acquisition of ETANCO will support continued growth in our European business, including expansion into new geographies, sales channels and commercial building offerings.

For more information, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The Company attracts and retains customers by designing, manufacturing and selling high quality products that perform well, are easy to use and cost-effective for customers.

The Company manufactures and warehouses its products in geographic proximity to its markets to help ensure availability and facilitate rapid delivery to customers, which enables us to promptly respond to customer requests for specially designed products and services.

The Company manufactures and warehouses its products in geographic proximity to its markets to help ensure availability and facilitate timely delivery to customers, which enables us to promptly respond to customer requests for specially designed products and services.

The Company maintains levels of inventory intended to operate with minimum backlog and fill most customer orders within a few days.

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Historically, the Company’s product lines have encompassed connectors, anchors, fasteners, lateral resistive systems, and truss plates, as well as repair and strengthening product lines for the industrial and transportation markets.

See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note 18 — Segment Information” to the Company’s Consolidated Financial Statements for financial information regarding revenues by product category.

See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note 19 — Segment Information” to the Company’s consolidated financial statements for financial information regarding revenues by product

Through, the acquisition of ETANCO, the Company expanded its product portfolio to include commercial building envelope solutions and significantly increased its market presence across Europe.

Many of the Company’s products are approved by building code evaluation agencies.

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The Company produces and markets over 15,000 standard and custom wood construction products.

These products are used primarily to strengthen, support and connect wood applications in residential and commercial

construction and DIY projects.

These products are used primarily to strengthen, support and connect wood applications in residential and commercial construction and DIY projects.

The Company’s wood construction products contribute to structural integrity and resistance to seismic, wind and gravitational forces.

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Included in this category are connectors, holddowns, and truss connector plates.

• Fasteners - The fastening line includes various nails, screws and staples, which are complemented by the Company's Quik Drive auto-feed screw driving system, which is used in numerous applications such as decking, subfloors, drywall and roofing;

• Lateral Resistive Systems - Lateral resistive systems are assemblies used to resist earthquake or wind forces and include steel and wood shearwalls, Anchor Tiedown Systems (ATS), and steel moment frames.

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The Company’s sales force maintains ongoing contact with home centers to work with them in a broad range of areas, including inventory levels, retail display maintenance and product knowledge training.

The Company’s strategy is to ensure that the home center retail stores are fully stocked with adequate supplies of the Company’s products carried by those stores.

The Company’s strategy is to ensure that the home center retail stores are fully stocked with adequate supplies of the

Company’s products carried by those stores.

The Company has further developed extensive bar coding and merchandising aids and has devoted a portion of its research and development efforts to DIY products.

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In some markets, the Company sells its products directly to lumber dealers and cooperatives.

• Contractors .

In some markets, the Company sells to a wide-range of end-customers mainly through direct sales.

• Wood Component Manufacturers.

The company works directly with wood component manufacturer customers.

We continue to develop our software solutions and provide better technology solutions increasing our truss connector plate sales as well as other Simpson Strong-Tie core products sales within the component industry.

• OEM Relationships.

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The North America segment includes operations primarily in the U.S.

The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, The Netherlands, Belgium, Spain, Sweden and Norway.

The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, The Netherlands, Belgium, Spain, Sweden, Norway, Italy and Romania.

The Asia/Pacific segment includes operations primarily in Australia, New Zealand, China, Taiwan, and Vietnam.

These segments are similar in several ways, including similarities in the products manufactured and distributed, the types of materials used, the production processes, the distribution channels and the product applications.

As previously disclosed, on January 26, 2022, the Company, via its wholly-owned subsidiary Simpson Strong-Tie Europe, entered into a securities purchase agreement providing for the Company’s acquisition of the Etanco Group ( “Etanco”).

Etanco is a leading designer, manufacturer and distributor of fixing and fastening solutions for the European building and construction market.

Etanco’s business model and core product offerings align with the Company, and we anticipate that the acquisition of Etanco will support continued growth in our European business, including expansion into new geographies, sales channels and commercial building offerings.

For more information about the pending acquisition, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

In order to innovate, advance and diversify our product offerings, the Company commits substantial resources to new product development.

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The Company’s strategy is to develop new products on a proprietary basis, to seek patents when appropriate and to rely on trade secret protection for others or depending on availability and circumstances, the Company will acquire products or solutions meeting our strategic initiatives.

Since at least 2006, the Company has developed 15 to 25 new products each year.

In 2021, through our research and development efforts, the Company expanded its product offerings by adding:

Since at least 2006, the Company generally develops 15 to 35 new products each year.

In 2022, through our research and development efforts, the Company, including ETANCO, developed over 40 new products expanding its product offerings by adding:

• new connectors and lateral products for wood framing applications;

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The Company provides expertise and resources to offer software solutions and services to builders and lumber building material dealers, and supports efforts to further develop integrated software component solutions for the building industry.

The Company also has ongoing development of truss software for the design, modeling and truss plate selection for its integrated component manufacturing customers.

Company also has ongoing development of truss software for the design, modeling and truss plate selection for its integrated component manufacturing customers.

Simpson is a category creator in the building products space.

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Our products improve the performance and integrity of the structures they are installed in, helping to make those structures more sustainable, and often helping to save lives in times of natural disasters and catastrophe.

Today, we offer over 14,000 wood construction products, and over 1,000 concrete construction products for the residential construction, light industrial and commercial construction, remodeling, and repair & remodel markets.

We sell our products through multiple channels including contractor distributors, home centers and co-ops, lumber dealers and OEMs.

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builders (based on number of housing starts per year) are engaged in our builder program.

In terms of home centers, we were pleased to welcome back Lowe’s as a home center customer in the second quarter of 2020.

By the end of the fiscal year 2020, we had successfully completed the rollout of our product sets in over 1,700 Lowe’s stores.

In terms of home centers, we were pleased to welcome back Lowe’s as a home center customer in 2020, where we had successfully completed the rollout of our product sets in over 1,700 Lowe’s stores.

We encounter a variety of competitors that vary by product line, end market and geographic area.

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While we do not believe that any single company competes with us across all of our product lines and distribution channels, certain companies compete in one or more product categories and/or distribution channels.

For over 65 years, through our wholly-owned subsidiary, Simpson Strong-Tie Company Inc., we have led the industry with a majority market share in the wood connectors products space and a growing presence in both the concrete and fastener markets in the U.S.

For over 65 years, through SST, we have led the industry with a majority market share in the wood connectors products space and a growing presence in both the concrete and fastener markets in the U.S.

We’ve successfully increased our market share over the years through:

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We are also investing in software technology, such as 3D visualization software tools, truss design and specification software and BIM software, in order to drive increased specification and use of our building material products with homeowners, truss component manufacturers, builders and distributors as well as to support our customers with additional solutions and services.

housing starts are a leading indicator for a significant portion of our business.

In an effort to help mitigate our exposure to the cyclicality of the U.S.

housing market, as well as to respond to the needs of our customers, we’ve made investments over the years in adjacent products such as anchors, fasteners and software solutions and expanded operations into Europe through acquisitions.

As a result, the Company is less dependent on U.S.

housing starts, though they are still a leading indicator for a portion of our business.

Raw Materials

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The Company’s practice is to seek cost savings and enhanced quality by developing business relationships with and purchasing from a limited number of suppliers.

The steel industry is highly cyclical and prices for the Company’s raw materials are influenced by numerous factors beyond the Company’s control.

We purchase steel at market prices, which fluctuate as a result of supply and demand driven by economic conditions in the marketplace.

The steel industry is highly cyclical and prices for the Company’s raw materials are influenced by numerous factors beyond the Company’s control including geopolitical and macroeconomic factors, supply constraints and supply chain disruptions, foreign currency fluctuations, import tariffs and duties, and unsettled international trade disputes.

The steel market continues to be dynamic, with a high degree of uncertainty about future pricing trends.

Given current conditions, including significant import tariffs and duties, and unsettled international trade disputes, the Company currently expects that the high degree of uncertainty regarding steel prices will continue.

Given current conditions, the Company currently expects that raw material costs may continue to increase.

Numerous factors may cause steel prices to remain high in the future.

In addition to increases in steel prices, steel mills may add surcharges for zinc, energy and freight in response to increases in their costs.

See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company historically has not attempted to hedge against changes in prices of steel or other raw materials.

See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial

Condition and Results of Operations.” The Company historically has not attempted to hedge against changes in prices of steel or other raw materials.

However, the Company may purchase and carry more steel or other raw materials in inventory to meet projected sales demand in a tight raw materials market.

Pa tents, Trademarks and Intellectual Property

Patents, Trademarks and Intellectual Property

Generally, the Company seeks statutory protection for strategic or financially important intellectual property developed in connection with its business.

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countries where products and services of the Company are sold.

The Company, from time to time, becomes involved in trademark licensing transactions.

The Company may, from time to time, becomes involved in trademark licensing transactions.

Most works of authorship produced for the Company, such as computer programs, catalogs and sales literature, carry appropriate notices indicating the Company's claim to copyright protection under U.S.

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Seasonality and Cyclicality

The Company’s sales are seasonal and cyclical, with operating results varying from quarter to quarter.

The Company’s sales have been seasonal and cyclical, with operating results varying from quarter to quarter.

With some exceptions, our sales and income have historically been lower in the first and fourth quarters than in the second and third quarters of a fiscal year, as the Company's customers tend to purchase construction materials in the late spring and summer months for the construction season.

Weather conditions, such as extended cold or wet weather, which affect and sometimes delay installation of some of our products, could negatively affect our results of operations.

Weather conditions, such as extended cold or wet weather, which affected and sometimes delayed installation of some of our products, would negatively affect our results of operations.

Operating results vary from quarter to quarter and with economic cycles.

The Company’s sales are also dependent, to a large degree, on the North American residential home construction industry.

The Company’s sales are also dependent, to a degree, on the North American residential home construction industry.

As noted above, the same efforts to mitigate the Company's reliance on housing starts have also softened the effects of seasons and adverse weather on the Company's quarterly results.

See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Human Capital Resources

Successful execution of our strategy is largely dependent on attracting, developing and retaining key employees and members of our management team.

The skills, experience and industry knowledge of our employees significantly benefit our operations and performance.

We continuously evaluate, modify, and enhance our internal processes and technologies to increase employee engagement, productivity, and efficiency and provide the opportunities, skills, and resources they need to be successful.

At December 31, 2021, our employees, including those employed by consolidated subsidiaries, by region were approximately:

Successful execution of our strategy is largely dependent on attracting, developing and retaining key employees and leaders.

The skills, experience, industry knowledge, and contributions of our employees significantly benefit our operations and performance.

We continuously evaluate, modify, and enhance our internal programs, processes and technologies to increase employee engagement, productivity, and efficiency and provide the opportunities, skills, and resources they need to be successful.

As of December 31, 2022, our employees, including those employed by consolidated subsidiaries, by region were approximately:

North America

Inclusion & Diversity

We strive to have a diverse culture of employees representing different genders, ages, ethnicities and abilities.

Our commitment to diversity and inclusion starts at the top with a highly skilled and diverse board.

At December 31, 2021, we had the following global gender demographics:

We strive to have a diverse culture of employees representing different genders, ages, ethnicities and abilities by implementing thoughtful, customized solutions and programs.

As of December 31, 2022, we had the following global gender demographics:

Not Disclosed

All employees

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Senior Leadership

At December 31, 2021, our U.S.

As of December 31, 2022, our U.S.

employees had the following race and ethnicity demographics:

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The opportunity to grow and develop skills and abilities, regardless of job role, division, or geographical location is critical to the success of the Company as a global organization and we continually invest in our employees’ career growth and provide employees access to a wide variety of learning and development resources, including a suite of online courses for developing both soft and technical skills.

These resources are designed to encourage a growth mindset and continuous learning.

Accordingly, we also have leadership development programs that provide employees with training, tools and experiences that are targeted to develop their full leadership potential.

Our extraordinary leadership development programs provide employees with training, tools and experiences that are targeted to develop their full leadership potential.

The Company’s compensation philosophy is to attract, retain, motivate, and differentiate employees through its rewards programs.

We believe people should be paid for what they do and how they do it, regardless of their gender, race, or other personal characteristics and are committed to internal pay equity.

Our Board of Directors, through its Compensation and Leadership Development Committee, monitors the relationship between the pay received by our executive officers and non-managerial employees.

Our Board of Directors, through its Compensation and Leadership Development Committee, monitors the relationship between the pay received by our executive officers, and Human Resources monitors the relationship of pay received by all other employees.

We believe our compensation philosophy and strategy are strongly aligned with our corporate strategic priorities and our vision for stockholder value creation.

In addition to our financial compensation we offer a health and wellness package to our employees, which is designed to provide employees with a range of options that are customizable to suit their individual and/or family needs.

In addition to financial compensation we offer a health and wellness package to our employees, which is designed to provide a range of options that are customizable to suit their individual and/or family needs.

In addition, in an effort to continue to attract, retain, and motivate our workforce, in the U.S., we offer remote and flexible work packages for positions which allow for remote work.

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A vital part of our business is providing our workforce with a safe, healthy and sustainable working environment.

Our Environmental, Health and Safety program focuses on implementing change through our employee observation feedback channels to recognize risk and continuously improve our processes, as well as conducting regular risk reviews and self-audits at our manufacturing facilities around the world to explore new opportunities to reduce potential employee exposure to occupational injuries.

Importantly during 2021, our experience and continuing focus on workplace safety have enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe during the COVID-19 pandemic.

In response to the COVID-19 pandemic, we have implemented various measures in an effort to better protect our employees.

At the onset of the pandemic we established a Crisis Management Team (the "CMT") to monitor new COVID-19 related developments and support our operations to respond to the ever-changing landscape:

• The CMT consists of senior members of management including our CEO, CFO, President of Sales, General Counsel, and Heads of HR, Manufacturing, IT, Internal Communications, and Safety.

• Currently the CMT meets approximately every other week and at onset of the pandemic met daily.

• The CMT provides updates to the Board of Directors on a regular basis.

• Our goals are to:

◦ Support safe working environments in our operations,

◦ Regularly communicate to inform and update employees, and

◦ Provide oversight of training on COVID-19 safety practices.

The Company took immediate action at the onset of this crisis to enact rigorous safety protocols in all of our facilities by improving sanitation measures, implementing mandatory social distancing, temperature screening, use of facing coverings, reducing on-site staff through staggered shifts and schedules, remote working where possible, and restricting visitor access to our locations.

These actions, in addition to generally being deemed an essential business, have enabled us to continue operating our business with minimal disruptions during the pandemic.

We continue to monitor the ongoing impacts of the COVID-19 pandemic and remain committed to the health, safety and well-being of our employees.

Our Environmental, Health and Safety program focuses on implementing change through employee observation feedback channels to recognize risk and continuously improve our processes, as well as conducting regular risk reviews and self-audits at our

manufacturing facilities around the world to explore new opportunities to reduce potential employee exposure to occupational injuries.

Our continuous focus on workplace safety has enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe since the COVID-19 outbreak.

Labor Relations

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In Stockton, California, two union contracts will expire in June 2023 and September 2023, respectively.

Also, we have two union contracts in San Bernardino County, California that will expire in June 2022 and in February 2025.

Also, we have two union contracts in San Bernardino County, California that will expire in February 2025 and in June 2026.

Based on current information and subject to future events and circumstances, we believe that, even if new agreements are not reached before the existing labor union contracts expire, it is not expected to have a material adverse effect on the Company’s ability to provide products to customers or on the Company’s profitability.

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We file or furnish annual, quarterly and current reports, proxy statements and other information with the SEC.

You may obtain a copy of any of these reports, free of charge, on the "Investor Relations" page our website, as soon as reasonably practicable after we file such material with, or furnish it to the SEC.

You may obtain a copy of any of these reports, free of charge, on the "Financials - SEC Filling" page of our website, as soon as reasonably practicable after we file such material with, or furnish it to the SEC.

Printed copies of any of these materials will also be provided free of charge on request.

The SEC maintains an Internet site that also contains these reports at www.sec.gov.

Through the "Governance" page of our website, it is also possible to access copies of the charters for our Audit and Finance Committee, Compensation and Leadership Development Committee, Corporate Strategy and Acquisitions Committee and Nominating and ESG Committee, Sustainability Reports, as well as our Corporate Governance Guidelines and Code of Business Conduct and Ethics.

Each of these documents is made available free of charge.

We intend to disclose on our website any amendment to, or waiver of, any provisions of our Code of Business Conduct and Ethics that apply to any of our directors, executive officers or senior financial officers that would otherwise be required to be disclosed under the rules of the SEC or the NYSE.

The foregoing information regarding our website and its content is for your convenience only.

The information contained in or connected to our website is not deemed to be incorporated by reference in this Annual Report or filed with the SEC.

In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, where you may obtain a copy of all information we file publicly with the SEC.

The SEC website address is www.sec.gov.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business