What changed in this filing

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2023-02-28 compared with 2022-02-28 · 359 added, 249 removed, 843 unchanged (42% of the section changed)

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We may manage our exposure to transactional exposures by entering into foreign currency forward contracts for forecasted transactions and projected cash flows for foreign currencies in future periods.

In 2020 and 2021, we entered into financial contracts to hedge the risk of fluctuations associated with the Chinese Yuan.

Foreign currency translation adjustments on our underlying assets and liabilities resulted in an accumulated other comprehensive loss of $7.3 million for the year ended December 31, 2021, due to the effects of the strengthening United States Dollar in relation to almost all other countries.

In 2021 and 2022, we entered into financial

contracts at various times to hedge the risk of fluctuations associated with the Euro and the Chinese Yuan.

Refer to “Note 9 — Derivative Instruments” to the Company’s consolidated financial statements.

Foreign currency translation adjustments on our underlying assets and liabilities resulted in an accumulated other comprehensive loss of $20.7 million for the year ended December 31, 2022, due to the effects of the strengthening United States Dollar in relation to almost all other countries, The loss was offset by $32.3 million in accumulated other comprehensive gains from foreign currency forward contracts.

Refer to “Note 5 — Stockholders Equity” to the Company’s consolidated financial statements.

Interest Rate Risk

Our primary exposure to interest rate risk results from outstanding borrowings under our $300 million revolving line of credit facility (the "Credit Facility") with Wells Fargo Bank, which bears interest at variable rates.

The variable interest rates on the Credit Facility fluctuate and expose us to short-term changes in market interest rates as our interest obligation on this instrument is based on prevailing market interest rates.

Our primary exposure to interest rate risk results from outstanding borrowings under the Amended and Restated Credit Agreement, which bears interest at variable rates.

As of December 31, 2022, the outstanding debt under the Amended and Restated Credit Agreement subject to interest rate fluctuations was $583.2 million.

The variable interest rates on the Credit Agreement fluctuate and expose us to short-term changes in market interest rates as our interest obligation on this instrument is based on prevailing market interest rates.

Interest rates fluctuate as a result of many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control.

As of December 31, 2021, the total outstanding debt subject to interest rate fluctuations was zero.

We have entered into an interest rate swap agreement to convert the variable interest rate on our revolver and term loan to fixed interest rates.

The objective of the interest rate swap agreement is to eliminate the variability of the interest payment cash flows associated with the variable interest rate outstanding under the borrowings.

We designated the interest rate swaps as cash flow hedges.

Refer to Note 9, "Derivatives Instruments" to the Company’s consolidated financial statements, for further information on our interest rate swap contracts in effect as of December 31, 2022.

Commodity Price Risk

In the normal course of business, we are exposed to market risk related to our purchase of steel, a significant raw material upon which our manufacturing depends.

Steel cost increased in 2021 when compared to 2020 and historical levels due to the worldwide raw material shortage stemming from the COVID-19 pandemic .

Steel cost started decreasing at the end of 2022 relative to the significant increases experienced in 2021 and 2020 due to the worldwide raw material shortage stemming from the COVID-19 pandemic .

While steel is typically available from numerous suppliers, the price of steel is a commodity subject to fluctuations that apply across broad spectrums of the steel market.

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While historically we have successfully mitigated these increased costs through the implementation of price increases, in the future we may not be able to successfully mitigate these costs, which could cause our operating margins to decline.

As noted above, higher steel prices not mitigated by price increases will likely result in a 500 basis point decline in operating margins for the full year of 2022 compared to operating margins for the full year of 2021.

Consolidated Financial Statements and Supplementary Data.

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Simpson Manufacturing Co., Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Simpson Manufacturing Co.

Inc., (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule (collectively referred to as the “financial statements”).

Opinion on the financial statement s

We have audited the accompanying consolidated balance sheets of Simpson Manufacturing Co., Inc., (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 28, 2023 expressed an unqualified opinion.

Basis for opinion

Basis for opinio n

These financial statements are the responsibility of the Company’s management.

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Critical audit matter

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Inventory valuation

As described further in Note 1 to the financial statements, the Company accounts for inventory at the lower of cost or net realizable value.

The Company impairs slow-moving products by comparing inventories on hand to projected demand.

Unexpected changes in market demand, building codes or buyer preferences could reduce the rate of inventory turn and require the Company to recognize an impairment.

We identified the net realizable value of inventory as a critical audit matter.

The principal considerations for our determination that the net realizable value of inventory is a critical audit matter is that the evaluation of slow moving and obsolete inventory relies on the use of management judgment to forecast future demand and assess market conditions, resulting in estimation uncertainty.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of acquired customer relationships intangible asset – ETANCO acquisition

As described further in Note 3 to the financial statements, the Company completed the acquisition of Fixco Invest S.A.S (“ETANCO”) for $805.4 million in cash consideration, which resulted in $225.0 million of customer relationships being recorded.

The transaction was accounted for as a business combination using the acquisition method of accounting.

We identified the valuation of the acquired customer relationships intangible asset as a critical audit matter.

The principal considerations for our determination that the Company’s assessment of the fair value of the customer relationships intangible asset represents a critical audit matter are that the judgments and key assumptions made in assessing the fair value of customer relationships are complex and subjective, resulting in estimation uncertainty.

The significant assumptions utilized to determine the fair value included prospective financial information, long-term growth, discount and customer attrition rates.

Auditor subjectivity and effort was required to evaluate management’s judgments and assumptions.

Our audit procedures related to net realizable value of inventory included the following, among others.

• We tested the design and operating effectiveness of controls related to the calculation of the net realizable value of inventory, including controls over the review of the demand forecast.

• We tested the completeness and accuracy of the underlying data used in the calculation of net realizable value.

• We evaluated the reasonableness of management’s demand forecasts by performing the following:

◦ Compared prior year forecasts with actual results to evaluate management’s ability to estimate future demand.

◦ Assessed forecasted demand for consistency with evidence obtained in other areas of the audit.

◦ Performed a sensitivity analysis on demand assumptions to determine the impact on the net realizable value.

• We recalculated and assessed the appropriateness of the formulaic calculation and management adjustments by making inquiries of management and various individuals outside of the accounting team to obtain support for selected adjustments and obtain supporting documentation when applicable.

S&P Clever reporting unit goodwill impairment assessment

As described further in Note 10 to the consolidated financial statements, the company’s goodwill balance as of December 31, 2021 was $134.0 million, of which $23.1 million related to the S&P Clever reporting unit.

The company performs goodwill impairment testing at the reporting unit level on an annual basis.

The company uses a combination of the income approach (discounted cash flow method) and the market approach, equally weighted in its annual goodwill impairment assessment.

We identified the assessment of the carrying value of goodwill for the S&P Clever reporting unit as a critical audit matter.

The principal considerations for our determination that the assessment of the carrying value of goodwill for the S&P Clever reporting unit is a critical audit matter are that significant auditor judgement, including the need to involve our valuation specialists, was required to evaluate the Company’s estimate of fair value of the S&P Clever reporting unit, which was developed, in part, using a discounted cash flow model.

Specifically, auditing the key assumptions used in the reporting unit’s discounted cash flow model which are forecasted financial information, the discount rate, and multiple rates.

Changes to those assumption could have a significant effect on the Company’s assessment of the impairment of the goodwill.

Our audit procedures related to the assessment of the carrying value of goodwill for the S&P Clever reporting unit included the following, among others.

• We tested the effectiveness of controls within the goodwill impairment analysis, including those over forecasted financial information, the discount rate and multiple rates.

• We evaluated management’s historical ability to accurately forecast by comparing actual results to management’s previously forecasted financial information for the same period.

• We evaluated the reasonableness of management’s forecasted financial information by comparing the forecasted financial information to historical results, including considering any circumstances affecting the current macroeconomic environment.

• With the assistance of our valuation specialists, we evaluated the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing an independent estimate of the discount rate and comparing that to the discount rate selected by management.

• With the assistance of our valuation specialists, we evaluated the industry-comparable multiples, including testing the underlying source information and mathematical accuracy of the calculations, the acceptability of the selected companies within the Company’s peer group, and comparing the multiples selected by management to companies in the same industry.

Our audit procedures related to the valuation of the customer relationships intangible asset included the following, among others.

• We inspected the purchase agreement and evaluated management’s process for identifying and estimating the fair value of the customer relationships intangible asset.

• We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over its valuation of the customer relationships intangible asset and the determination of the significant assumptions.

• We evaluated the Company's selection of the valuation methodology and the significant assumptions for reasonableness.

Evaluating the reasonableness of the significant assumptions involved consideration of industry data, historical results and evidence obtained in other areas of the audit.

• We evaluated the qualifications of the external third-party valuation specialist engaged by management in the fair value determination.

/s/ Grant Thornton LLP

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Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financing Reporting (“Management’s Report”).

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of FIXCO Invest S.A.S.

(“ETANCO”), a wholly owned subsidiary, whose financial statements reflect total assets and revenues constituting 26 percent and 10 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.

As indicated in Management’s Report, ETANCO was acquired during 2022.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of ETANCO.

Definition and limitations of internal control over financial reporting

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Accrued liabilities and other current liabilities 228,222 187,387

Long-term debt, current portion 22,500 —

Total current liabilities 348,563 244,602

Long-term debt, net of current portion and issuance costs 554,539 —

Operating lease liabilities 46,882 37,091

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Retained earnings 1,118,030 906,841

Treasury stock — ( 13,510 )

Accumulated other comprehensive loss ( 4,059 ) ( 17,605 )

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Total operating expenses 466,200 387,561 324,353

Acquisition and integration related costs 17,343 — —

Net gain on disposal of assets

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Interest expense, net and other ( 7,594 ) ( 1,386 ) ( 2,012 )

Foreign exchange gain (loss), net and other ( 5,582 ) ( 787 ) ( 1,167 )

Other & foreign exchange loss, net ( 3,408 ) ( 7,858 ) ( 787 )

Income before taxes 448,065 358,549 249,564

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Shares Par Value Total

Balance at January 1, 2019 44,998 $ 453 $ 276,504 $ 628,207 $ ( 24,650 ) $ ( 25,000 ) $ 855,514

Balance as of January 1, 2020 44,209 $ 442 $ 280,216 $ 645,507 $ ( 24,829 ) $ ( 9,379 ) $ 891,957

Net income — — — 187,000 — — 187,000

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Pension adjustment, net of tax — — — — ( 161 ) — ( 161 )

Adoption of new accounting standards — — — — 390 — 390

Stock-based compensation expense — — 11,410 — — — 11,410

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Common stock issued at $88.31 per share 4 — 341 — — — 341

Balance at December 31, 2019 44,209 442 280,216 645,507 ( 24,829 ) ( 9,379 ) 891,957

Balance as of December 31, 2020 43,326 433 284,007 720,441 ( 10,428 ) ( 13,510 ) 980,943

Net income — — — 266,447 — — 266,447

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Pension adjustment, net of tax — — — — 404 — 404

Cash flow hedge adjustment, net of tax — — — — 390 — 390

Derivative instrument adjustment, net of tax — — — — ( 268 ) — ( 268 )

Stock-based compensation expense — — 15,029 — — — 15,029

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Common stock issued at $93.45 per share 7 — 691 — — — 691

Balance at December 31, 2020 43,326 433 284,007 720,441 ( 10,428 ) ( 13,510 ) 980,943

Balance as of December 31, 2021 43,217 432 294,330 906,841 ( 17,605 ) — 1,183,998

Net income — — — 333,995 — 333,995

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Pension adjustment, net of tax — — — — 2,065 — 2,065

Cash flow hedge adjustment, net of tax — — — — ( 268 ) — ( 268 )

Derivative instrument adjustments, net of tax — — — — 32,214 — 32,214

Stock-based compensation expense — — 12,422 — — — 12,422

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Adjustments to reconcile net income to net cash provided by operating activities:

Loss (gain) on sale of assets and other 2,116 ( 318 ) ( 6,023 )

Gain on sale of assets and other ( 1,317 ) ( 160 ) ( 332 )

Depreciation and amortization 60,890 42,477 38,767

Noncash lease expense 11,327 9,562 6,984

Inventory step-up expense 13,572 — —

Loss (income) in equity method investment, before tax ( 914 ) 2,276 14

Deferred income taxes ( 13,156 ) ( 915 ) 3,179

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Provision for (benefit from ) doubtful accounts 1,146 393 ( 98 )

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:

Deferred hedge gain ( 2,690 ) — —

Changes in operating assets and liabilities, (net of amounts acquired from ETANCO see Note 3)

Trade accounts receivable 19,763 ( 67,993 ) ( 22,107 )

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Capital expenditures ( 62,362 ) ( 43,738 ) ( 32,579 )

Acquisitions, net of cash acquired ( 218 ) ( 2,797 ) ( 2,650 )

Acquisitions, net of cash acquired (See Note 3) ( 805,904 ) ( 218 ) ( 2,797 )

Purchases of intangible assets ( 4,861 ) ( 5,856 ) ( 5,330 )

Purchases of Equity investments ( 3,178 ) ( 9,829 ) —

Termination forward contracts 3,535 — —

Proceeds from sale of property and equipment 2,526 836 853

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Repayments of line of credit and capital leases ( 134,120 ) ( 16,408 ) ( 170,680 )

Termination of cash flow hedge 21,252 — —

Debt issuance costs ( 6,804 ) ( 819 ) ( 712 )

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Cash paid on behalf of employees for shares withheld ( 9,553 ) ( 5,397 ) ( 7,960 )

Net cash used in financing activities ( 71,616 ) ( 126,777 ) ( 108,154 )

Net cash provided by (used in) financing activities 465,526 ( 71,616 ) ( 126,777 )

Effect of exchange rate changes on cash 4,484 5,642 3,487

Net increase in cash and cash equivalents 26,516 44,429 70,030

Net increase (decrease) in cash and cash equivalents ( 413 ) 26,516 44,429

Cash and cash equivalents at beginning of year 301,155 274,639 230,210

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Noncash capital expenditures $ 1,671 $ 99 $ 3,719

Contingent consideration for acquisition — 547 —

Contingent consideration for intangible acquisition 6,500 — 547

Issuance of Company’s common stock for compensation 960 691 341

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Management believes that these consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation under GAAP.

The Company assessed certain accounting matters that require the use of estimates and assumptions in context with the known and projected future impacts of COVID-19.

The Company's actual results could differ materially from those estimates.

Cash Equivalents

The Company classifies investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents.

As of December 31, 2021 and 2020, the value of these investments were $ 26.4 million and $ 45.4 million, respectively, consisting of U.S.

As of December 31, 2022, and 2021, the value of these investments was $ 125.1 million and $ 26.4 million, respectively, consisting of U.S.

Treasury securities and money market funds.

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The changes in the allowance for doubtful accounts receivable for the year ended December 31, 2022 are outlined in the table below:

as of Balance

(in thousands) December 31, 2021 Expense (Deductions), net

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Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash in banks, short-term investments in money market funds and trade accounts receivable.

The Company maintains its cash in demand deposit and money market accounts held in 17 banks, and at times these cash and investments may be in excess of amounts insured by the Federal Deposit Insurance Corporation (FDIC).

The Company maintains its cash on demand deposit and in money market accounts held in 31 banks, and at times these cash and investments may be in excess of amounts insured by the Federal Deposit Insurance Corporation (FDIC).

However, we have not experienced any losses on these accounts.

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The Company revalues obsolete inventory to its net realizable value and has consistently applied this methodology.

When impairments are established, a new cost basis of the inventory is created.

When impairments are established, a new cost basis for the inventory is created.

An unexpected change in market demand, building codes or buyer preferences could reduce the rate of inventory turnover and require the recognition of more obsolete inventory.

Other Current Assets

Other current assets, which are less than 5% of current assets, consist primarily of prepaid expenses, derivative assets-current, and other miscellaneous assets.

Warranties and recalls

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In a limited number of circumstances, the Company may also agree to indemnify customers against legal claims made against those customers by the end users of the Company’s products.

Historically, payments made by the Company, if any, under such agreements have not had a material effect on its consolidated results of operations, cash flows or financial position .

Historically, payments made by the Company, if any, under such agreements have not had a material effect on its consolidated statement of operations, cash flows or financial position .

Equity Investments

The Company accounts for investments and ownership interests under equity method accounting when it has the ability to exercise significant influence but does not have a controlling financial interest.

The Company records its interest in the net earnings of its equity method investees, along with adjustments for unrealized profits or losses within earnings or loss from equity interests in the consolidated statements of operations.

The investment is reviewed for impairment whenever factors indicate that its carrying amount might not be recoverable and the decrease in value, if any, is recognized in the period the impairment occurs in the consolidated statement of operations.

The investment is reviewed for impairment whenever factors indicate the carrying amount might not be recoverable and the decrease in value, if any, is recognized in the period the impairment occurs in the consolidated statement of operations.

Fair Value of Financial Instruments

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The carrying amounts of trade accounts receivable, accounts payable, accrued liabilities and other current liabilities approximate fair value due to the short-term nature of these instruments.

The fair value of the Company’s contingent consideration related to acquisitions and equity investment are classified as Level 3 within the fair value hierarchy as it is based on unobserved inputs such as management estimates and entity-specific assumptions and is evaluated on an ongoing basis.

The fair value of foreign currency forward contracts, calculated based on Level 1 inputs, was not material as of December 31, 2021.

Derivative Instruments - Foreign Currency Contracts

The fair values of the interest rate and foreign currency contracts are classified as Level 2 within the fair value hierarchy.

The fair values of the Company’s contingent consideration related to acquisitions and equity investments are classified as Level 3 within the fair value hierarchy, as these amounts are based on unobserved inputs such as management estimates and entity-specific assumptions and are evaluated on an

ongoing basis.

The following tables summarize the financial assets and financial liabilities measured at fair value for the Company as of December 31, 2022 and 2021:

(in millions)

Level 1 Level 2 Level 3 Level 1

Cash equivalents (1)

$ 125.1 $ — $ — $ 26.4

Term loan due 2027 (2)

Revolver due 2027 (2)

Derivative instruments - assets (3)

Derivative instruments - liabilities (3)

Contingent considerations — — 6.5 —

(1) The carrying amounts of cash equivalents, representing government and other money market funds traded in an active market with relatively short maturities, are reported on the consolidated balance sheet as of December 31, 2022 and 2021 as a component of "Cash and cash equivalents".

(2) The carrying amounts of our term loan and revolver approximate fair value as of December 31, 2022 based upon their terms and conditions as disclosed in Note 14 in comparison to debt instruments with similar terms and conditions available on the same date.

(3) Derivatives for interest rate, foreign exchange and forward swap contracts are discussed in Note 9.

Derivative Instruments

The Company uses derivative instruments as a risk management tool to mitigate the potential impact of certain market risks.

Foreign currency exchange rate risk is the primary market risk the Company manages through the use of derivative instruments, which are accounted for as cash flow hedges under the accounting standards and carried at fair value as other current assets or other current liabilities in the consolidated balance sheets.

Net deferred gains and losses related to changes in fair value are included in accumulated other comprehensive loss, a component of shareholders' equity in the consolidated balance sheets, and are reclassified into the line item in the consolidated statement of income in which the hedged items are recorded in the same period the hedged item affects earnings.

Changes in fair value of any derivatives that are determined to be ineffective are immediately reclassified from other comprehensive income into earnings.

The cash flow impact of the Company's derivative instruments is primarily included in the consolidated statement of cash flows in net cash provided by operating activities.

Refer to Note 8.

Foreign currency and interest rate risk are the primary market risks the Company manages through the use of derivative instruments, which are accounted for as cash flow hedges or net investment hedges under the accounting standards and carried at fair value as other current or noncurrent assets or as other current or other long-term liabilities in the consolidated balance sheets.

Assets and liabilities with the legal right of offset are not offset in the consolidated balance sheets.

Net deferred gains and losses related to changes in fair value of cash flow hedges are included in accumulated other comprehensive income/loss ("OCI"), a component of stockholders' equity in the consolidated balance sheets;

and are reclassified into the line item in the consolidated statement of operations in which the hedged items are recorded in the same period the hedged item affects earnings.

The effective portion of gains and losses attributable to net investment hedges is recorded net of tax to OCI to offset the change in the carrying value of the net investment being hedged.

Recognition in earnings of amounts previously recorded to OCI are limited to circumstances such as complete or substantially complete liquidation of the net investment in the hedged

foreign operation.

Changes in fair value of any derivatives that are determined to be ineffective are immediately reclassified from OCI into earnings.

Business Combinations and Asset Acquisitions

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Software, including amounts capitalized for internally developed software is amortized on a straight-line basis over an estimated useful life of three to five years .

Machinery and equipment is depreciated using accelerated methods over an

estimated useful life of three to ten years .

Machinery and equipment is depreciated using accelerated methods over an estimated useful life of three to ten years .

Buildings and site improvements are depreciated using the straight-line method over their estimated useful lives, which range from 15 to 45 years.

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Generally, the Company's revenue contract with a customer exists when (1) the goods are shipped, services are rendered, and the related invoice is generated, (2) the duration of the contract does not extend beyond the promised goods or services already transferred and (3) the transaction price of each distinct promised product or service specified in the invoice is based on its relative stated standalone selling price.

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer at a point in time.

The Company recognizes revenue when it satisfies a performance obligation by transferring control of a product to a customer at a point in time.

Our shipping terms provide the primary indicator of the transfer of control.

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Accounting for Stock-Based Compensation

The Company recognizes stock-based compensation expense related to the estimated fair value of restricted stock awards on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years .

Stock-based expense related to performance share grants are measured based on grant date fair value and expensed on a graded basis over the service period of the awards, which is generally a performance period of three years .

The performance conditions are based on the Company's achievement of revenue growth and return on invested capital over the performance period, and are evaluated for the probability of vesting at the end of each reporting period with changes in

expected results recognized as an adjustment to expense.

Stock-based compensation related to performance share grants are measured based on grant date fair value and expensed on a graded basis over the service period of the awards, which is generally a performance period of three years .

The performance conditions are based on the Company's achievement of revenue growth and return on invested capital over the performance period and are evaluated for the probability of vesting at the end of each reporting period with changes in expected results recognized as an adjustment to expense.

The assumptions used to calculate the fair value of restricted stock grants are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience.

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Accounting Standards Not Yet Adopted

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848).

ASU 2020-04 provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting in response to the risk of cessation of the London Interbank Offered Rate (“LIBOR”) on December 31, 2021.

This ASU allows the option to account for and present a modification that meets the scope of the standard as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination required under the relevant topic or subtopic.

Entities are permitted to apply the amendments to all contracts, cash flow and net investment hedge relationships that exist as of March 12, 2020.

The relief provided in this ASU is only available for a limited time, generally through December 31, 2022.

The Company's primary credit facility is the $ 300 million revolving line of credit (the "Credit Facility") with Wells Fargo Bank, which matures on July 12, 2026.

Borrowings under the Credit Facility bear interest using LIBOR plus an applicable margin.

The Credit Facility currently includes a provision for the determination of a successor LIBOR rate or an alternative rate of interest.

On March 5, 2021, ICE Benchmark Administration, the administrator of the LIBOR and the Financial Conduct Authority, announced that some United States Dollar LIBOR tenors (overnight, 1 month, 3 month, and 12 month) will continue to be published until June 30, 2023.

The Company does not expect a material impact to its consolidated operating results, financial position or cash flow from the transition from LIBOR to alternative reference interest rates, but the Company will continue to monitor the impact of the transition until it is completed.

All other newly issued and effective accounting standards during 2021 were determined to be not relevant or material to the Company.

Newly issued and effective accounting standards during 2022 were determined to be not relevant or material to the Company.

Revenue from Contracts with Customers

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Wood Construction Products Revenue .

Wood construction products represented approximately 87 %, 85 %, 84 % and of total net sales in the year ended December 31, 2021, 2020, and 2019 respectively.

Wood construction products represented approximately 87 %, 87 %, and 85 % of total net sales in the years ended December 31, 2022, 2021, and 2020 respectively.

Concrete Construction Products Revenue.

Concrete construction products represented approximately 13 %, 15 %, 16 % of total net sales in the year ended December 31, 2021, 2020 and 2019, respectively.

Concrete construction products represented approximately 13 %, 13 %, and 15 % of total net sales in the years ended December 31, 2022, 2021 and 2020, respectively.

Customer acceptance criteria.

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Services may be sold separately or in bundled packages.

The typical contract length for service is generally less than one year.

The typical contract length for services is generally less than one year.

For bundled packages, the Company accounts for individual services separately when they are distinct within the context of the contract.

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Reconciliation of contract balances

Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time.

Contract assets are the right to receive consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time.

Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing.

As of December 31, 2021 and 2020, the Company had no contract assets or contract liabilities from contracts with customers .

As of December 31, 2022 and 2021, the Company had no material contract assets or contract liabilities from contracts with customers .

Other accounting considerations

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Volume discounts are accounted for as variable consideration because the transaction price is uncertain until the customer completes or fails to purchase the specified volume of purchases (consideration is contingent on a future outcome - occurrence or nonoccurrence).

In addition, the Company applies the volume rebate or discount retrospectively, because the final price of each products or services sold depends on the customer's total purchases subject to the rebate program.

In addition, the Company applies the volume rebate or discount retrospectively, because the final price of each product or services sold depends on the customer's total purchases subject to the rebate program.

Estimated rebates are deducted from revenues based on the gross transaction price and historical experience with the customer.

Rights of return and other allowances.

Rights of return creates variability in the transaction price.

Rights of return create variability in the transaction price.

The Company accounts for returned product during the return period as a refund to customer and not a performance obligation.

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The Company considered the principal versus agent guidance of the new revenue recognition standard and concluded that the Company is the principal in a third-party transaction.

The Company manufactures its products and has control over transfer of its products to Dealer Distributors, Contract Distributors, and end customers.

The Company manufactures its products and has control over the transfer of its products to Dealer Distributors, Contract Distributors, and end customers.

Costs to obtain or fulfill a contract.

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Advertising costs.

Cooperative advertising and partnership discounts are consideration payable to a customer and not a payment in exchange for a distinct product or service at fair value.

Estimated cooperative advertising and partnership discounts are reductions to the transaction price.

Cooperative advertising and partnership discounts are consideration payable to a customer and not payment in exchange for a distinct product or service at fair value.

Estimated cooperative advertising and partnership discounts are reductions of the transaction price.

On April 1, 2022, the Company completed its acquisition of 100 % of the outstanding equity interest of FIXCO Invest S.A.S.

(together with its subsidiaries, "ETANCO") for total purchase consideration of $ 805.4 million, net of cash acquired (the "Acquisition").

The Acquisition was completed pursuant to the securities purchase agreement dated January 26, 2022, as amended (the “SPA”), by and among the Company, Fastco Investment, Fastco Financing, LRLUX and certain other security holders.

The purchase price for the Acquisition was paid using cash on hand and borrowings in the amount of $ 250.0 million under the revolving credit facility and $ 450.0 million under the term loan facility.

See Note 14 for further information on the Amended and Restated Credit Facility.

ETANCO is a manufacturer and distributor of fastener and fixing products headquartered in France and its primary product applications directly align with the addressable markets in which the Company operates.

The Acquisition will allow the Company to enter into new commercial building markets such as façades, waterproofing, safety and solar, as well as grow its share of direct business sales in Europe.

ETANCO’s results of operations were included in the Company's consolidated financial statements from the April 1, 2022 acquisition date, and as such, only includes ETANCO's results of operations for the nine months ending December 31, 2022.

ETANCO had net sales of $ 212.6 million and a net loss of $ 5.9 million for the nine months ended December 31, 2022, which includes costs related to fair-value adjustments for acquired inventory, amortization of acquired intangible assets, and expenses incurred for integration.

Purchase price allocation

The Acquisition was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”) which requires, among other things, assets acquired and liabilities assumed in a business combination be recorded at fair value as of the acquisition date with limited exceptions.

The allocation of the $ 824.4 million purchase price, including cash, to the estimated fair values of the tangible and intangible assets acquired and liabilities assumed is as follows:

(in thousands) Amount

Cash and cash equivalents $ 19,010

Trade accounts receivable, net 63,607

Inventory 107,185

Other current assets 4,491

Property and equipment, net 89,695

Operating lease right-of-use assets 5,361

Goodwill 365,591

Intangible assets, net 357,327

Other noncurrent assets 2,881

Total assets 1,015,148

Trade accounts payable 46,457

Accrued liabilities and other current liabilities 22,079

Operating lease liabilities 5,176

Deferred income tax and other long-term liabilities 117,031

Total purchase price $ 824,405

Trade accounts receivable, net

The gross amount of trade receivables acquired was approximately $ 67.4 million, of which $ 63.6 million is estimated to be recoverable based on ETANCO's historical trend for collections.

Acquired inventory primarily consists of raw materials and finished goods consisting of building and construction materials products.

The Company adjusted acquired finished goods higher by $ 14.3 million to estimated fair value based on expected selling prices less a reasonable amount for selling efforts.

The fair value adjustment was fully recognized as a component of cost of sales over the inventory’s estimated turnover period during the nine months ended December 31, 2022.

Property and equipment, net

Acquired property and equipment includes land of $ 16.1 million, buildings and site improvements of $ 32.5 million, and machinery, equipment, and software of $ 41.1 million.

The estimated fair value of property and equipment was determined primarily using market and/or or cost approach methodologies.

The acquired fair value for buildings and site improvements will depreciate on a straight-line basis over the estimated useful lives of the assets for a period of up to sixteen years , and machinery, equipment and software will depreciate on an accelerated basis over an estimated useful life of three to ten years .

Depreciation expense associated with the acquired property and equipment amounted to $ 5.4 million for the nine months ended December 31, 2022.

The excess of purchase price over the net assets acquired is recognized as goodwill and relates to the value that is expected from the acquired assembled workforce as well as the increased scale and synergies resulting from the integration of both businesses.

The goodwill recognized from the Acquisition is not deductible for local income tax purposes.

Goodwill has been allocated to components within the ETANCO reporting unit.

Intangible assets, net

The estimated fair value of intangible assets acquired was determined primarily using income approach methodologies.

The preliminary values allocated to intangible assets and the useful lives are as follows:

(in thousands except useful lives) Weighted-average useful life (in years) Amount

Customer relationships 15 $ 248,398

Trade names Indefinite 93,811

Developed technology 10 11,256

Patents 8 3,862

The acquired definite-lived intangible assets will be amortized on a straight-line basis over estimated useful lives, which approximates the pattern in which these assets are utilized.

The Company recognized $ 13.0 million of amortization expense on these assets during the nine months ended December 31, 2022.

Deferred taxes

As a result of the increase in fair value of inventory, property and equipment, and intangible assets, deferred tax liabilities of $ 105.9 million were recognized, primarily due to intangible assets.

Acquisition and integration related costs

During the twelve months ended December 31, 2022, and December 31, 2021, the Company incurred acquisition and/or integration related expenses of $ 17.3 million, and $ 2.3 million, respectively.

The fiscal 2022 amounts have been included in acquisition and integration related costs in the Company’s income from operations, while the 2021 amounts were included in

interest expense, net and other.

These acquisition and integration related costs consisted of investment banking, legal, accounting, advisory, and consulting fees.

Unaudited pro forma results

The following unaudited pro forma combined financial information presents estimated results as if the Company acquired ETANCO on January 1, 2021.

The unaudited pro forma financial information as presented below is for informational purposes only and does not purport to actually represent what the Company’s combined results of operations would have been had the Acquisition occurred on January 1, 2021, or what those results will be for any future periods.

The following unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting in accordance with U.S.

Years Ended December 31,

(in thousands) 2022 2021

Net sales $ 2,195,271 $ 1,884,654

Net income $ 363,527 $ 261,389

Pro forma earnings per common share:

Basic $ 8.47 $ 6.03

Diluted $ 8.44 $ 6.00

Weighted average shares outstanding:

Basic 42,925 43,325

Diluted 43,047 43,532

The unaudited pro forma results above includes the following non-recurring charges to net income:

1) Acquisition and integration related costs of $ 17.3 million which were incurred during the twelve months ended December 31, 2022 were adjusted as if such costs were incurred during the twelve months ended December 31, 2021.

2) The $ 14.3 million amortization related to the fair value adjustment for inventory and recognized during the twelve months ended December 31, 2022, were adjusted as if incurred during the twelve months ended December 31, 2021.

3) Net income for ETANCO includes adjustments of $ 0.4 million and $ 3.2 million to conform ETANCO’s historical financial results prepared under French GAAP to U.S.

GAAP for the twelve months ended December 31, 2022, and December 31, 2021, respectively.

GAAP adjustments are primarily related to share-based payments expense on awards that were settled prior to the Acquisition, and costs incurred and capitalized by ETANCO on its historical acquisitions.

Net Income per Share

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Stock Repurchases

For the fiscal year ended December 31, 2021, the Company repurchased 222,060 shares of the Company’s common stock in the open market at an average price of $ 108.64 per share, for a total of $ 24.1 million.

As of December 31, 2021, approximately $ 75.9 million was not used for repurchase under the previously announced $ 100.0 million share repurchase authorization (which expired at the end of 2021).

On November 18, 2021, the Company’s Board of Directors authorized the Company to repurchase up to $ 100.0 million of the Company’s common stock from January 1, 2022 through December 31, 2022.

As of December 31, 2021, the Company held zero shares of its common stock as treasury shares and in 2021, retired a total

of 373,034 of its common stock.

For the fiscal year ended December 31, 2022, the Company repurchased 811,330 shares of the Company’s common stock in the open market at an average price of $ 96.91 per share, for a total of $ 78.6 million under the previously announced $ 100.0 million share repurchase authorization (which expired at the end of 2022).

On December 15, 2022, the Company’s Board of Directors authorized the Company to repurchase up to $ 100.0 million of the Company’s common stock from January 1, 2023 through December 31, 2023.

As of December 31, 2022, the Company retired a total of 811,330 of its common stock and therefore had zero shares of its common stock as treasury shares.

Comprehensive Income or Loss

The following shows the components of accumulated other comprehensive income or loss as of December 31, 2022, 2021, and 2020 respectively:

Foreign Currency Translation Pension Benefit Cash Flow Hedge Total

Foreign Currency Translation Pension Benefit Cash Flow Hedge Forward Foreign Currency Total

(in thousands)

Balance at January 1, 2019 $ ( 22,965 ) $ ( 1,685 ) $ — $ ( 24,650 )

Balance as of January 1, 2020 $ ( 22,080 ) $ ( 2,749 ) $ — $ — $ ( 24,829 )

Other comprehensive gain/(loss), net of tax effect 14,172 ( 161 ) — 390 14,401

Balance at December 31, 2019 ( 22,080 ) ( 2,749 ) — ( 24,829 )

Balance as of December 31, 2020 ( 7,908 ) ( 2,910 ) — 390 ( 10,428 )

Other comprehensive gain/(loss), net of tax effect ( 7,313 ) 404 — 204 ( 6,705 )

Amounts reclassified from accumulative other comprehensive income, net of $0 tax — — — ( 472 ) ( 472 )

Balance at December 31, 2021 ( 15,221 ) ( 2,506 ) — 122 ( 17,605 )

Other comprehensive gain/(loss), net of tax effect ( 20,942 ) 2,065 42,740 11,898 35,761

Amounts reclassified from accumulative other comprehensive income, net of $0 tax 209 — ( 18,987 ) ( 3,437 ) ( 22,215 )

Balance at December 31, 2022 $ ( 35,954 ) $ ( 441 ) $ 23,753 $ 8,583 $ ( 4,059 )

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Unvested Restricted Stock Units (RSUs)

Outstanding at January 1, 2021 351 $ 66.13 $ 33,188

Outstanding as of January 1, 2022 344 $ 81.33 $ 47,721

Awarded 186 119.60

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Forfeited ( 9 ) 99.29

Outstanding at December 31, 2021 344 $ 81.33 $ 47,721

Outstanding as of December 31, 2022 302 $ 102.10 $ 26,745

Outstanding and expected to vest at December 31, 2022 351 $ 97.86 $ 31,107

* The intrinsic value for outstanding and expected to vest is calculated using the closing price per share of $ 88.66 , as reported by the New York Stock Exchange on December 31, 2022.

During the year ended December 31, 2021, the Company granted 161,643 RSUs and PSUs to the Company’s employees, including officers at an estimated weighted average fair value of $ 100.93 per share, based on the closing price (adjusted for certain market factors primarily the present value of dividends) of the Company’s common stock on the grant date.

During the year ended December 31, 2022, the Company granted 180 thousand RSUs and PSUs to the Company’s employees, including officers at an estimated weighted average fair value of $ 120.09 per share, based on the closing price (adjusted for certain market factors primarily the present value of dividends) of the Company’s common stock on the grant date.

The RSUs and PSUs granted to the Company’s employees may be time-based, performance-based or time- and performance-based.

Certain of the PSUs are granted to officers and key employees, where the number of performance-based awards to be issued is based on the achievement of certain Company performance criteria established in the award agreement over a cumulative three year period.

These awards cliff vest after three years .

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The Company’s seven non-employee directors are entitled to receive approximately $ 704 thousand in equity compensation annually.

The number of shares ultimately granted are based on the average closing share price for the Company over the 60 day period prior to approval of the award in the second quarter of each year.

In May and June 2021, the Company granted 6,601 shares of the Company's common stock to the non-employee directors, based on the average closing price of $ 100.33 per share and recognized total expense of $ 756 thousand.

The total intrinsic value of RSUs vested during the years ended December 31, 2021, 2020 and 2019 was $ 15.7 million, $ 21.9 million and $ 16.7 million, respectively, based on the market value on the vest date.

As of December 31, 2021, the Company’s aggregate unamortized stock compensation expense was approximately $ 17.3 million, which is expected to be recognized in expense over a weighted-average period of approximately 2.2 years.

The number of shares ultimately granted is based on the average closing share price for the Company over the 60 days period prior to approval of the award in the second quarter of each year.

In May and June 2022, the Company granted 6 thousand shares of the Company's common stock to the non-employee directors, based on the average closing price of $ 105.50 per share and recognized total expense of $ 655 thousand.

The total intrinsic value of RSUs and PSUs vested during the years ended December 31, 2022, 2021 and 2020 was $ 25.6 million, $ 15.7 million and $ 21.9 million, respectively, based on the market value on the vest date.

As of December 31, 2022, the Company’s aggregate unamortized stock compensation expense was approximately $ 16.1 million, which is expected to be recognized over a weighted-average period of approximately 2.1 years.

Stock Bonus Plan

The Company also maintains a stock bonus plan, the Simpson Manufacturing Co., Inc.

The Company also maintains the Simpson Manufacturing Co., Inc.

1994 Employee Stock Bonus Plan (the “Stock Bonus Plan”), whereby it awards shares of the Company’s common stock to employees, who do not otherwise participate in any of the Company’s equity-based incentive plans and meet minimum service requirements.

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Trade accounts receivable consisted of the following:

As of December 31,

(in thousands)

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The components of inventories are as follows:

As of December 31,

(in thousands)

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Derivative Instruments

The Company transacts business in various foreign countries and may therefore be exposed to foreign currency exchange rate risk.

The Company has established risk management programs to protect against volatility in the value of non-functional future cash flows caused by changes in foreign currency exchange rates and tries to maintain a partial or fully hedged position for certain transaction exposures when management considers appropriate.

The Company enters into short-term foreign currency derivatives contracts, namely forward contracts, to hedge only those currency exposures associated with cash flows denominated in non-functional currencies.

Gains and losses on the Company's derivative contracts are designed to offset losses and gains on the transactions hedged, and accordingly, generally do not subject the Company to risk of significant accounting losses.

The Company enters into derivative instrument agreements, including forward foreign currency exchange contracts, interest rate swaps, and cross currency swaps to manage risk in connection with changes in foreign currency and interest rates.

The Company hedges committed exposures and does not engage in speculative transactions.

The credit risk of these

derivative contracts is minimized since the contracts are with a large financial institution, and accordingly, fair value adjustments related to the credit risk of the counterparty financial institution are not material.

The Company sources certain materials for its concrete products from a wholly owned subsidiary in China, and as a result is exposed to variability in cash outflows associated with changes in the foreign exchange rate between the U.S.

The Company only enters into derivative instrument agreements with counterparties who have highly rated credit.

The Company produces certain of its concrete products from a wholly owned subsidiary in China, and as a result is exposed to variability in cash outflows associated with changes in the foreign exchange rate between the U.S.

Dollar and the Chinese Yuan (CNY).

As of December 31, 2021, the Company had no outstanding foreign currency derivative contracts.

Net deferred gains and losses on these contracts relating to changes in fair value are included in accumulated other comprehensive income or loss ("OCI"), a component of shareholders' equity in the consolidated balance sheets, and are reclassified into the line item in the consolidated statement of income in which the hedged items are recorded in the same period the hedged item affects earnings.

For the year ended December 31, 2021, the Company recognized gains of $ 0.6 million, as a reduction of cost of sales.

In November 2022, the Company entered into a series of foreign currency derivative contracts that mature monthly between January 2023 and, December 2023 to buy CNY 102.4 million in the aggregate by selling a total of $ 14.8 million .

These forward contracts are accounted for as cash flow hedges under the accounting standards, and fair value is included in other current assets or other current liabilities, as applicable, in the consolidated balance sheet.

Net deferred gains and losses on these contracts relating to changes in fair value are included in accumulated other OCI and are reclassified into cost of sales in the consolidated statements of operations in the which the hedged items are recorded in the same period the hedged item affects earnings.

There were no amounts recognized for gains or losses on these contracts during the year ended December 31, 2022.

Changes in fair value of any forward contracts that are determined to be ineffective are immediately reclassified from OCI into earnings.

The amounts deferred in OCI are expected to be recognized as a component of cost of sales in the consolidated statement of operations during 2022.

There were no amounts recognized due to ineffectiveness during the year ended December 31, 2021.

The amounts deferred in OCI are expected to be recognized as a component of cost of sales in the consolidated statements of operations during 2023 and 2024.

Beginning in March 2022, the Company entered into a forward foreign currency contract expiring in March 2029 to hedge its exposure to adverse foreign currency exchange rate movements for its operations in Europe and elected the spot method for designating this contract as a net investment hedge with the excluded forward point amortized to interest expense.

During May 2022, the Company settled the March 2022 forward foreign currency contract for $ 3.9 million in cash, which included $ 0.4 million in recognized forward points, terminated the hedge accounting treatment and simultaneously entered into a new forward foreign currency contract expiring in March 2029 with the same notional amount at a new forward rate.

The Company also elected the spot method for designating the May 2022 contract as a net investment hedge.

The $ 3.5 million gain recognized on the March 2022 contract excluding recognized forward points is deferred in OCI and will remain in OCI until either the sale or substantially complete liquidation of the hedged subsidiaries.

Beginning in March 2022, the Company also converted a Euro-denominated ("EUR"), fixed rate obligation into a U.S.

Dollar fixed rate obligation using a receive fixed, pay fixed cross currency swap, which was designated as a cash flow hedge.

During May 2022, the Company settled the March 2022 cross currency swap for $ 22.4 million in cash, which was comprised of $ 21.3 million gain on the swap excluding accrued interest and $ 1.1 million of net interest income accrued according to the terms of the swap.

The Company terminated the hedge accounting treatment and simultaneously entered into a new cross currency swap expiring in March 2029 with a lower notional amount for the US dollar denominated leg at a new US dollar interest rate.

An amount of $ 28.3 million was reclassified out of OCI into earnings to offset the currency loss on the underlying security being hedged resulting in a net $ 7.0 million hedge accounting reserve balance within OCI, which is being amortized to interest expense in the consolidated statements of operations through the termination of the underlying hedged intercompany debt in March 2029.

In addition, the Company converted its domestic U.S.

variable rate debt to fixed rate debt using a receive variable, pay fixed interest rate swap expiring March 2027.

The interest rate swap contract is also designated as a cash flow hedge.

As of December 31, 2022, the aggregate notional amount of the Company's outstanding interest rate contracts, cross currency swap contracts, EUR forward contract and CNY forward contracts were $ 583.2 million, $ 454.1 million, $ 321.7 million and $ 14.8 million, respectively.

As of December 31, 2021, there were no outstanding forward contracts on its Chinese Yuan denominated purchases.

Changes in fair value of any forward contracts that are determined to be ineffective are immediately reclassified from OCI into earnings.

There were no amounts recognized due to ineffectiveness during the twelve months ended December 31, 2022.

The effects of fair value and cash flow hedge accounting on the consolidated statements of operations for the periods ended December 31, were as follows:

(in thousands) Cost of sales Interest expense, net Other & foreign exchange loss, net Cost of sales

Total amounts of income and expense line items presented in the Consolidated Statements of Operations in which the effects of fair value or cash flow hedges are recorded $ 1,174,794 $ ( 7,594 ) $ ( 3,408 ) $ 818,187

The effects of fair value and cash flow hedging

Gain or (loss) on cash flow hedging relationships

Interest contracts:

Amount of gain or (loss) reclassified from OCI to earnings ( 1,012 )

Cross currency swap contract

Amount of gain or (loss) reclassified from OCI to earnings 5,650 14,349

Forward contract

Amount of gain or (loss) reclassified from OCI to earnings 122 472

The effects of derivative instruments on the consolidated statements of operations for the twelve months ended December 31, 2022 and December 31, 2021 were as follows:

Cash Flow Hedging Relationships Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from OCI into Earnings Gain (Loss) Reclassified from OCI into Earnings

2022 2021 2022 2021

Interest rate contracts $ 26,830 $ — Interest expense $ ( 1,012 ) $ —

Cross currency contracts 26,174 — Interest expense 5,650 —

FX gain (loss) 14,349 —

Forward contracts 231 163 Cost of goods sold — 472

Total $ 53,235 $ 163 $ 18,987 $ 472

For the twelve months ended December 31, 2022, gains on the net investment hedge of $ 13.0 million were included in OCI.

For the twelve months ended December 31, 2022, gains excluded of $ 3.3 million, were reclassified from OCI to interest expense.

As of December 31, 2022, the aggregate fair values of the Company’s derivative instruments were comprised of assets totaling $ 43.9 million, and liabilities of $ 8.0 million on the consolidated balance sheets.

As of December 31, 2022, the Company expects it will reclassify net gains of approximately $ 20.2 million, currently recorded in AOCI, into interest expense in earnings within the next twelve months.

However, the actual amount reclassified could vary due to future changes in the fair value of these derivatives.

Property, Plant and Equipment, net

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$ 361,555 $ 259,869

Property, plant and equipment as of December 31, 2021 and 2020, includes fully depreciated assets with an original cost of $ 234.0 million and $ 200.5 million, respectively, which are still in use in the Company’s operations.

Property, plant and equipment as of December 31, 2022, and 2021, includes fully depreciated assets with an original cost of $ 253.5 million and $ 234.0 million, respectively, which are still in use.

The Company capitalizes certain development costs associated with internal use software, including the direct costs of services provided by third-party consultants and payroll for internal employees, both of which are performing development and implementation activities on a software project.

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Balance as of January 1, 2021 $ 96,311 $ 38,059 $ 1,474 $ 135,844

Goodwill acquired — 106 — 106

Foreign exchange ( 4 ) ( 1,622 ) ( 90 ) ( 1,716 )

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Balance as of December 31, 2021 96,307 36,331 1,384 134,022

Goodwill acquired 7,444 365,591 — 373,035

Foreign exchange ( 179 ) ( 11,123 ) ( 83 ) ( 11,385 )

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The Company tests goodwill for impairment at the reporting unit level on an annual basis (in the fourth quarter).

Our goodwill balance is not amortized to expense, and we may assess qualitative factors and quantitative factors to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to complete quantitative impairment assessments.

The reporting unit level is generally one level below the operating segment, which is at the country level, except for the U.S., Australia and S&P Clever reporting units.

We assessed the qualitative factors related to the goodwill of the reporting units to determine whether it is necessary to perform an impairment test.

During fiscal year 2022, we revised our European reporting units due to the acquisition of ETANCO and changes to the management, product distribution and operations structure of our legacy European operations.

Subsequent to this change, all European reporting units, including the S&P Clever reporting unit, but excluding ETANCO, were consolidated for reporting purposes into one overall Europe reporting unit.

ETANCO will remain as its own reporting unit until it is fully integrated into our other European operations, and there are sufficient economic similarities between the ETANCO and European reporting units.

A qualitative assessment was performed immediately preceding the reporting unit change and determined that it was not more likely than not that any impairment existed prior to the reporting unit change.

For the Company’s remaining reporting units, the reporting unit level is generally one level below the operating segment, which is at the country level, except for the United States and Australia.

The Company determined that the U.S.

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Australia and New Zealand.

The S&P Clever reporting unit includes multiple European countries that are evaluated as one reporting unit.

For each of these reporting units, the Company aggregated the components because management concluded that they are economically similar and that the goodwill is recoverable from these components working in concert.

We evaluate the recoverability of goodwill in accordance with Accounting Standard Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other.

In addition, the Company prospectively adopted as part of its review in 2018 the Financial Accounting Standard Board (FASB) issued ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

We assessed the qualitative factors related to the goodwill of the reporting units to determine whether it is necessary to perform an impairment test.

We also considered quantitative factors due to the effects of the COVID-19 pandemic.

If the Company judges that it is more likely than not that the fair value of the reporting unit is greater than the carrying amount, including goodwill, no further testing is required.

This assessment method was utilized in our 2020 annual goodwill impairment test.

In 2021, the Company applied the ("Step 1") approach where the Company compares the fair value of the reporting unit to its carrying value.

The fair value calculation uses both the income approach (discounted cash flow method) and the market approach, equally weighted.

If the Company determines that the carrying value of the net assets assigned to the reporting unit, including goodwill, exceeds the fair value of the reporting unit, no further action taken.

If the Company determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company would record an impairment charge equal to the difference between the implied fair value of the goodwill and the carrying value.

If the Company determines that the carrying value of the net assets assigned to the reporting unit, including goodwill, exceeds the fair value of the reporting unit, no further action is taken.

If the Company determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company will record an impairment charge equal to the difference between the implied fair value of the goodwill and the carrying value.

In 2022, we completed our annual impairment assessment by performing a qualitative assessment.

For this qualitative assessment, we assessed various assumptions, events and circumstances that would have affected the estimated fair value of the reporting units as compared to the quantitative fair value measurement determined in the fourth quarter of 2021.

Based on the qualitative assessment performed, the Company concluded that there was no evidence of events or circumstances that would indicate a material change from the Company’s prior year quantitative assessment by reporting unit and therefore, it was more likely than not that the estimated fair value of reporting units exceeded their respective carrying values.

The 2022 and 2021 annual testing of goodwill for impairment did not result in impairment charges.

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The Company performs an impairment test of finite-lived intangibles whenever events or changes in circumstances indicate their carrying value may be impaired.

The total gross carrying amount and accumulated amortization of definite-lived intangible assets at December 31, 2021 was $ 73.0 million and $ 46.7 million, respectively.

The total gross carrying amount and accumulated amortization of definite-lived intangible assets as of December 31, 2022, was $ 427.0 million and $ 64.1 million, respectively.

The aggregate amount of amortization expense of intangible assets for the years ended December 31, 2022, 2021 and 2020 was $ 17.4 million, $ 6.4 million and $ 6.1 million, respectively.

The weighted-average remaining amortization period for all amortizable intangibles on a combined basis is 8.0 years.

The weighted-average remaining amortization period for all amortizable intangibles on a combined basis is 9.1 years as of December 31, 2022.

The annual changes in the carrying amounts of patents, unpatented technologies, customer relationships and non-compete agreements and other intangible assets subject to amortization for the years ended December 31, 2022 and 2021 were as follows:

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Amortization Net

Balance at January 1, 2020 $ 4,659 $ ( 561 ) $ 4,098

Balance as of January 1, 2021 $ 4,699 $ ( 934 ) $ 3,765

Purchases 6,074 — 6,074

Amortization — ( 428 ) ( 428 )

Balance at December 31, 2020 4,699 ( 934 ) 3,765

Balance as of December 31, 2021 10,773 ( 1,362 ) 9,411

Purchases 13,775 ( 670 ) 13,105

Amortization — ( 771 ) ( 771 )

Balance at December 31, 2021 $ 10,773 $ ( 1,362 ) $ 9,411

Foreign exchange ( 376 ) — ( 376 )

Balance as of December 31, 2022 $ 24,172 $ ( 2,803 ) $ 21,369

(in thousands) Gross

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Unpatented Technology

Balance at January 1, 2020 $ 21,616 $ ( 14,361 ) $ 7,255

Balance as of January 1, 2021 $ 22,104 $ ( 16,492 ) $ 5,612

Amortization — ( 2,174 ) ( 2,174 )

Reclassifications

Foreign exchange ( 49 ) — ( 49 )

Balance at December 31, 2020 22,104 ( 16,492 ) 5,612

Balance as of December 31, 2021 22,403 ( 18,666 ) 3,737

Amortization — ( 793 ) ( 793 )

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Foreign exchange 56 — 56

Balance at December 31, 2021 $ 22,403 $ ( 18,666 ) $ 3,737

Balance as of December 31, 2022 $ 22,410 $ ( 19,459 ) $ 2,951

(in thousands) Gross

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Trademarks and Other

Balance at January 1, 2020 $ 14,703 $ ( 5,529 ) $ 9,174

Purchases 6,700 6,700

Balance as of January 1, 2021 $ 21,582 $ ( 7,724 ) $ 13,858

Amortization — ( 2,631 ) ( 2,631 )

Foreign exchange ( 148 ) — ( 148 )

Balance at December 31, 2020 21,582 ( 7,724 ) 13,858

Balance as of December 31, 2021 21,434 ( 10,355 ) 11,079

Purchases of intangible assets 6,880 ( 5 ) 6,875

Amortization — ( 2,572 ) ( 2,572 )

Reclassifications 149 — 149

Foreign exchange ( 162 ) — ( 162 )

Balance at December 31, 2021 $ 21,434 $ ( 10,355 ) $ 11,079

Balance as of December 31, 2022 $ 28,301 $ ( 12,932 ) $ 15,369

(in thousands) Gross

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Customer Relationships

Balance at January 1, 2020 $ 17,660 $ ( 13,732 ) $ 3,928

Acquisition 290 — 290

Balance as of January 1, 2021 $ 18,123 $ ( 15,175 ) $ 2,948

Disposal ( 217 ) — ( 217 )

Amortization — ( 1,186 ) ( 1,186 )

Foreign exchange ( 117 ) — ( 117 )

Balance at December 31, 2020 18,123 ( 15,175 ) 2,948

Disposal ( 217 ) — ( 217 )

Balance as of December 31, 2021 17,789 ( 16,361 ) 1,428

Purchases of intangible assets 249,767 ( 12,223 ) 237,544

Amortization — ( 386 ) ( 386 )

Reclassifications ( 151 ) — ( 151 )

Foreign exchange ( 6,946 ) — ( 6,946 )

Balance at December 31, 2021 $ 17,789 $ ( 16,361 ) $ 1,428

Balance as of December 31, 2022 $ 260,459 $ ( 28,970 ) $ 231,489

As of December 31, 2022, estimated future amortization of intangible assets was as follows:

(in thousands)

2023 $ 20,957

Thereafter 172,215

Indefinite-Lived Intangible Assets

As of December 31, 2021, the only indefinite-lived intangible asset was a trade name in the amount of $ 0.6 million.

Indefinite-lived intangible assets totaled $ 91.7 million as of December 31, 2022, including $ 91.1 million, net of an unfavorable foreign exchange impact of $ 2.7 million, attributable to trade names acquired in the ETANCO acquisition.

Definite-lived and indefinite-lived assets, net, by segment as of December 31, 2022, and 2021 were as follows:

December 31, 2020

As of December 31, 2021

Amount Accumulated

5 unchanged sentences

Total $ 73,014 $ ( 46,745 ) $ 26,269

At December 31, 2021

As of December 31, 2022

Amount Accumulated

11 unchanged sentences

The ROU assets are amortized on a straight-line basis over the lease term.

The following table provides a summary of leases included on the consolidated balance sheets as of December 31, 2021 and 2020, and consolidated statements of earnings and comprehensive income, and consolidated statements of cash flows for the year ended December 31, 2021 and 2020:

Consolidated Balance Sheets Line Item At December 31,

The following table provides a summary of leases included on the consolidated balance sheets as of December 31, 2022, and 2021, and consolidated statements of operations, and consolidated statements of cash flows for the year ended December 31, 2022 and 2021:

Consolidated Balance Sheets Line Item As of December 31,

(in thousands)

8 unchanged sentences

Property and equipment, net Property, plant and equipment, net $ — $ 153

Other current liabilities Accrued expenses and other current liabilities 0 $ 384

Total finance lease liabilities $ 0 $ 384

The components of lease expense were as follows:

25 unchanged sentences

Operating leases 6.10 6.88

Finance leases 0.00 0.42

Weighted-average discount rate:

Operating leases 4.68 % 5.22 %

Finance leases — % 3.3 %

Accrued Liabilities and Other Current Liabilities

Accrued liabilities and other current liabilities consisted of the following:

As of December 31,

(in thousands) 2022 2021

7 unchanged sentences

$ 228,222 $ 187,387

In July 2021, the Company entered into a fourth amendment to the unsecured credit agreement dated July 27, 2012 with Wells Fargo Bank, National Association, and certain other institutional lenders that provides for a $ 300.0 million unsecured revolving credit facility (“Credit Facility”).

The Amendment extends the term of the Credit Agreement from July 23, 2022, to July 12, 2026.

The Company is required to pay an annual facility fee of 0.10 to 0.25 percent on the available commitments under the Credit Agreement, regardless of usage, with the applicable fee determined on a quarterly basis based on the Company’s leverage ratio.

The fee is included within other expense in the Company's condensed consolidated statement of operations.

Amounts borrowed under the Credit Agreement bear interest at an annual rate equal to either, at the Company’s option, (a) the rate for Eurocurrency deposits for the corresponding deposits of U.S.

dollars as published by the ICE Benchmark

Administration Limited, a United Kingdom company, or a comparable or successor quoting service approved by the Administrative Agent (the “LIBOR Rate”), adjusted for any reserve requirement in effect, plus a spread of from 0.65 to 1.50 percent, as determined on a quarterly basis based on the Company’s leverage ratio, or (b) a base rate, plus a spread of 0.00 to 0.50 percent, as determined on a quarterly basis based on the Company’s leverage ratio.

In no event shall the LIBOR Rate be less than 0.50 percent.

The base rate is defined in a manner such that it will not be less than the LIBOR Rate.

The Company will pay fees for standby letters of credit at an annual rate equal to the LIBOR Rate plus the applicable spread described in the preceding clause (a), and will pay market-based fees for commercial letters of credit.

The spread applicable to a particular LIBOR Rate loan or base rate loan depends on the consolidated leverage ratio of the Company and its subsidiaries at the time the loan is made.

Loans outstanding under the Credit Agreement may be prepaid at any time without penalty except for LIBOR Rate breakage costs and expenses.

As of December 31, 2021, in addition to the Credit Facility, certain of the Company’s domestic subsidiaries are guarantors for a credit agreement between certain of its foreign subsidiaries and institutional lenders.

Together, all of its credit facilities provide the Company with a total of $ 304.4 million in revolving credit lines and an irrevocable standby letter of credit in support of various insurance deductibles.

The Company and its subsidiaries are required to comply with various affirmative and negative covenants.

The covenants include provisions that would limit the availability of funds as a result of a material adverse change to the Company’s financial position or results of operations.

The Company was in compliance with its financial covenants under the loan agreement as of December 31, 2021.

The Company incurs interest costs, which include interest, maintenance fees and bank charges.

On March 30, 2022, the Company entered into the Amended and Restated Credit Facility, which amends and restates the Company's previous Credit Agreement, dated July 27, 2012.

The Amended and Restated Credit Facility provides for a 5-year $ 450.0 million revolving line of credit, which includes a letter of credit-sub-facility up to $ 50.0 million, and a 5-year term loan facility of $ 450.0 million.

The Company borrowed $ 250.0 million, under the revolving credit facility and $ 450.0 million under the term loan facility to finance a portion of the purchase price for the acquisition of ETANCO.

In addition, the Company incurred $ 6.8 million of debt issuance costs, which are classified in long-term debt on the consolidating balance sheet, that have been deferred and will amortize over the 5-year terms of the Amended and Restated Credit Facility.

During 2022, the Company made principal payments of $ 100.0 million and $ 16.9 million of the Company's outstanding Revolving and Term Credit Facility, respectively.

The Company is required to pay an annual revolving credit facility fee of 0.10 % to 0.25 % per annum on the available commitments under the terms of the Amended and Restated Revolving Credit Facility, regardless of usage, with the applicable fee determined on a quarterly basis based on the Company’s net leverage ratio.

The fee is included within Interest expense, net and other in the Company's consolidated statements of operations.

Amounts borrowed under the Amended and Restated Credit Facility will bear interest from time to time at either the Base Rate, Spread Adjusted Daily Simple SOFR, Spread Adjusted Term SOFR, Adjusted Eurocurrency Rate or Daily Simple RFR, in each case, as calculated under and as in effect from time to time under the Amended and Restated Credit Facility, plus the Applicable Margin, as defined in the Amended and Restated Credit Facility.

The Applicable Margin is determined based on the Company’s net leverage ratio, and ranges (i) from 0.00 % to 0.75 % per annum for amounts borrowed under the term loan facility that bear interest at Base Rate, (ii) from 0.75 % to 1.75 % per annum for amounts borrowed under the term loan facility that bear interest at Adjusted Eurocurrency Rate, Spread Adjusted Daily Simple SOFR or Spread Adjusted Term SOFR, (iii) from 0.00 % to 0.50 % per annum for amounts borrowed under the revolving credit facility that bear interest at Base Rate, (iv) from 0.68 % to 1.53 % per annum for amounts borrowed under the revolving credit facility that bear interest at Daily Simple RFR (solely to the extent denominated in pound sterling) and (v) from 0.65 % to 1.50 % per annum for amounts borrowed under the revolving credit facility that bear interest at Daily Simple RFR (other than loans denominated in pound sterling) or Adjusted Eurocurrency Rate.

Loans outstanding under the Amended and Restated Credit Facility may be prepaid at any time without penalty except for customary breakage costs and expenses.

Based on current principal payment expectations, the annual interest rate on the outstanding debt will be approximately 2.00 % over the life of the debt including the effects of the interest rate swap and other derivatives noted above.

As of December 31, 2022, in addition to the Amended and Restated Credit Facility, certain of the Company’s domestic subsidiaries are guarantors for a credit agreement between certain of its foreign subsidiaries and institutional lenders.

Together, all credit facilities provide the Company with a total of $ 304.4 million in available revolving credit lines and an irrevocable standby letter of credit in support of various insurance deductibles.

The Company has $ 583.2 million, excluding deferred financing costs, outstanding under the Amended and Restated Credit Facility, which is the estimated fair value as of December 31, 2022.

There were no outstanding balances under the Amended and Restated Credit Facility as of December 31, 2021.

The following is a schedule, by years, of maturities for the remaining term loan facility as of December 31, 2022:

(in thousands) 5-Year Term Loan

Total loan outstanding $ 433,125

The $ 150.0 million borrowed under the revolving credit facility is due on March 31, 2027.

The Company complied with its financial covenants under the Amended and Related Credit Facility as of December 31, 2022.

The Company incurs interest costs, which include interest net of the effect of cash flow hedges, maintenance fees and bank charges.

The amount of costs incurred, capitalized, and expensed for the years ended December 31, 2022, 2021 and 2020, consisted of the following:

Years Ended December 31,

2021 2020 2019

Interest costs incurred $ 1,424 $ 2,796 $ 2,172

(in thousands) 2022 2021 2020

Interest costs, including benefits from cash flow and net investment hedges $ 9,685 $ 1,424 $ 2,796

Interest capitalized ( 1,658 ) ( 574 ) ( 512 )

Interest expense $ 850 $ 2,284 $ 2,028

Interest expense, including benefits from cash flow and net investment hedges $ 8,027 $ 850 $ 2,284

Commitments and Contingencies

12 unchanged sentences

Environmental

The Company’s policy with regard to environmental liabilities is to accrue for future environmental assessments and remediation costs when information becomes available that indicates that it is probable that the Company is liable for any

related claims and assessments and the amount of the liability is reasonably estimable.

The Company does not believe that any such matters will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

4 unchanged sentences

The resolution of any claim or litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

Gentry Homes, Ltd.

Simpson Strong-Tie Company Inc., et al.

17-cv-00566, was filed in a federal district court in Hawaii against Simpson Strong-Tie Company Inc.

and the Company on November 20, 2017.

The Gentry Case is a product of a previous state court class action, Nishimura v.

Gentry Homes, Ltd., et al.

11-1-1522-07, which is now closed.

The Nishimura case concerned alleged corrosion of the Company’s galvanized “hurricane straps” and mudsill anchor products used in a residential project in the Ewa District of Honolulu, Hawaii by Gentry Homes, Ltd.

In the Gentry Case , Gentry alleges breach of warranty and negligent misrepresentation by the Company related to its “hurricane strap” and mudsill anchor products.

The Gentry Case was resolved pursuant to a written settlement agreement ("Settlement") without adjudication or any admission of liability by the Company.

The Settlement may not be used as evidence of liability against the party.

The case was dismissed with prejudice on January 4, 2022.

The Company incurred no uninsured liability to the plaintiff in connection with the Gentry Case , or the Settlement.

The provision for income taxes from operations consisted of the following:

16 unchanged sentences

$ 448,065 $ 358,549 $ 249,564

At December 31, 2021, the Company had $ 41.4 million of pre-tax loss carryforwards in various foreign taxing jurisdictions.

All of the tax losses can be carried forward indefinitely.

At December 31, 2021, and 2020, the Company has valuation allowances of $ 12.0 million and $ 11.3 million, respectively.

The valuation allowance increased $ 0.7 million and decreased $ 0.3 million for the years ended December 31, 2021, and December 31, 2020, respectively.

As of December 31, 2022, the Company had $ 36.1 million of net operating loss carryforwards in various foreign taxing jurisdictions.

Most of the tax losses can be carried forward indefinitely.

As of December 31, 2022, and 2021, the Company has valuation allowances of $ 11.2 million and $ 12.0 million, respectively.

The valuation allowance decreased by $ 0.8 million and increased by $ 0.7 million for the years ended December 31, 2022, and December 31, 2021, respectively.

The decrease in the 2022 valuation allowances was primarily a result of exchange rate fluctuation.

The increase in the 2021 valuation allowances was primarily the result of an impairment on a foreign equity investment.

The decrease in the 2020 valuation allowances was primarily a result of the release of valuation allowance for foreign losses in Simpson Strong-Tie A/S, a subsidiary in Denmark.

As of December 31, 2022, the Company asserts that its accumulated undistributed earnings generated by our foreign subsidiaries are permanently reinvested and as such, has not recognized a US deferred tax liability on its investment in foreign subsidiaries.

13 unchanged sentences

Effective income tax rate 25.5 % 25.7 % 25.1 %

The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities at December 31, 2021 and 2020, respectively, were as follows:

The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities as of December 31, 2022, and 2021, respectively, were as follows:

As of December 31,

(in thousands)

1 unchanged sentence

State tax $ 1,857 $ 1,490

Workers’ compensation 892 883

Health claims 2,877 1,351

Vacation liability 376 374

Allowance for doubtful accounts 344 384

Inventories 7,902 7,497

2 unchanged sentences

Stock-based compensation 2,251 2,612

Unrealized foreign exchange gain or loss 378 344

Foreign tax credit carryforwards 4,961 4,983

Uncertain tax positions’ unrecognized tax benefits 72 77

Non-United States tax loss carry forward 6,557 7,824

$ 42,098 $ 37,779

Acquisition expense 2,409 609

Capitalized research & development expenditures 6,671 —

Other 2,533 1,889

Total deferred tax assets $ 55,036 $ 41,594

Less valuation allowances ( 11,180 ) ( 11,992 )

3 unchanged sentences

Goodwill and other intangibles amortization ( 102,998 ) ( 16,682 )

Tax effect on cumulative translation adjustment ( 504 ) ( 568 )

Right of use assets ( 14,635 ) ( 11,453 )

Other — ( 247 )

Hedging OCI ( 10,284 ) —

Total deferred tax liabilities ( 156,188 ) ( 43,134 )

2 unchanged sentences

Reconciliation of Unrecognized Tax Benefits 2022 2021 2020

Balance at January 1 $ 1,168 $ 1,706 $ 1,757

Balance as of January 1 $ 944 $ 1,168 $ 1,706

Additions based on tax positions related to prior years 6,528 9 78

2 unchanged sentences

Lapse of statute of limitations ( 275 ) ( 189 ) ( 657 )

Balance at December 31 $ 944 $ 1,168 $ 1,706

Tax positions of $ 0.3 , $ 0.3 , and $ 0.2 million are included in the balance of unrecognized tax benefits at December 31, 2021, 2020, and 2019, respectively, which if recognized, would reduce the effective tax rate.

Balance as of December 31 $ 7,232 $ 944 $ 1,168

During 2022, the Company’s uncertain tax positions increased by $ 6.5 million, primarily due to positions for open years of which were assumed in the Company’s acquisition of ETANCO.

Tax positions of $ 0.2 , $ 0.3 , and $ 0.3 million are included in the balance of unrecognized tax benefits as of December 31, 2022, 2021, and 2020, respectively, which if recognized, would reduce the effective tax rate.

The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in accordance with the Company’s historical accounting policy.

During the year ended December 31, 2021, 2020 and 2019, accrued interest decreased by $ 39 thousand and $ 108 thousand and $ 20 thousand, respectively.

The Company had accrued $ 0.2 million for fiscal year ended 2021, $ 0.3 million for fiscal year ended 2020 and $ 0.4 million for fiscal year ended 2019, for the potential payment of interest before income tax benefits.

During the years ended December 31, 2022, 2021 and 2020, accrued interest increased by $ 673 thousand, and decreased by $ 39 thousand and $ 108 thousand, respectively.

The Company had accrued $ 0.9 million, $ 0.2 million and $ 0.3 million as of December 31, 2022, 2021 and 2020, respectively for the potential payment of interest and penalties before income tax benefits.

The Company does not expect any material changes in unrecognized tax benefits within the next 12 months.

At December 31, 2021, the Company remained subject to federal income tax examinations in the U.S.

As of December 31, 2022, the Company remained subject to federal income tax examinations in the U.S.

for the tax years 2019 through 2022.

In addition, tax years 2017 through 2022 remain open to examination in states, local and foreign jurisdictions.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act “IRA”.

The provisions include the new Corporate Alternative Minimum Tax "CAMT", an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, all effective for tax year 2023.

The Company is not subject to the provisions of CAMT but will evaluate the impact, if any, of the other provisions under the IRA when they become effective in tax year 2023.

Retirement Plans

12 unchanged sentences

Our total contribution to various industry-wide, union-sponsored pension funds and a statutorily required pension fund for employees in the U.S.

and Europe were $ 5.0 million for the year ended December 31, 2021 and $ 5.1 million, $ 4.5 million for the years ended 2020 and 2019, respectively.

and Europe were $ 5.4 million, $ 5.0 million and $ 5.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Related Party Transactions

During 2021, the Company identified certain purchases of goods and services from companies where the Chief Executive Officer of the Company serves as a director on the respective company's board providing the goods or services.

The amount of goods and services purchased by the Company pursuant to these arrangements was not material to the Company’s consolidated statement of income and cash flows for the year ended December 31, 2021.

During 2022, the Company identified certain purchases of goods and services from companies where the current and former Chief Executive Officers of the Company serves as a director on the respective company's board providing the goods or services.

The amount of goods and services purchased by the Company pursuant to these arrangements was not material to the Company’s consolidated statements of operations and cash flows for the year ended December 31, 2022.

Segment Information

15 unchanged sentences

Provision for income taxes 112,537 1,193 1,091 ( 751 ) 114,070

Capital expenditures, asset acquisition, and equity

investments, net of cash acquired 45,817 2,403 603 988 49,811

Business acquisitions, net of cash acquired, capital expenditures, asset acquisition, and equity

investments 54,594 817,163 1,173 2,871 875,801

Total assets 1,393,968 675,634 34,599 399,770 2,503,971

5 unchanged sentences

Sales to other segments * 2,237 5,696 27,109 — 35,042

Income (loss) from operations 249,252 8,396 308 ( 5,593 ) 252,363

Income from operations** 359,140 14,160 1,193 ( 6,700 ) 367,793

Depreciation and amortization 33,950 6,172 1,844 511 42,477

2 unchanged sentences

Capital expenditures, including purchases of

intangible assets, and business combination, net of

cash acquired 29,937 4,248 705 5,816 40,706

intangible assets, 45,817 2,403 603 988 49,811

Total assets 1,352,988 202,631 31,832 ( 103,326 ) 1,484,125

5 unchanged sentences

Sales to other segments * 2,554 5,576 25,320 — 33,450

Income (loss) from operations 176,329 6,817 ( 731 ) ( 1,161 ) 181,254

Income from operations** 265,541 8,396 308 ( 21,882 ) 252,363

Depreciation and amortization 30,218 5,856 1,709 984 38,767

1 unchanged sentence

Provision for income taxes 58,201 3,817 613 ( 67 ) 62,564

Capital expenditures and business acquisitions, net of

cash acquired 31,695 8,245 236 — 40,176

Capital expenditures, including purchases of

intangible assets, 29,937 4,248 705 5,816 40,706

Total assets 1,001,168 198,647 32,754 — 1,232,569

* Sales to other segments are eliminated in consolidation.

** Beginning in 2022, the Company changed its presentation of its North America and Administrative and all other segment's statement of operations to display allocated expenses and management fees as a separate item below income from operations.

During 2021 and 2020, allocated expenses and management fees between the two segments were previously included in gross profit, operating expenses and in income from operations and been adjusted herein to conform to 2022 presentation.

consolidated statements of operations, income before tax and net income for all periods presented below are not affected by the change of operations.

Cash collected by the Company’s U.S.

5 unchanged sentences

The Company’s measure of profit or loss for its reportable segments is income (loss) from operations.

The reconciling amounts between consolidated income before tax and consolidated income from operations are net interest income (expense), net and other, foreign exchange gain (loss), certain legal and professional fees associated with the acquisition of the Etanco Group, refer to Note 19 " Subsequent Events," and loss on disposal of a business.

The reconciling amounts between consolidated income before tax and consolidated income from operations are net interest income (expense), net and other, foreign exchange gain (loss), certain legal and professional fees associated with the acquisition of ETANCO, refer to Note 3 "Acquisitions," and loss on disposal of a business.

Interest income (expense) is primarily attributed to “Administrative & All Other.”

6 unchanged sentences

United States $ 1,615,728 $ 273,407 $ 1,287,085 $ 228,623 $ 1,045,509 $ 215,082

France 170,904 90,296 50,445 5,988 40,672 7,095

Canada 81,036 2,571 70,401 2,861 52,889 3,059

1 unchanged sentence

Germany 42,954 11,507 29,970 9,999 24,069 11,163

France 50,445 5,988 40,672 7,095 39,969 7,010

Italy 47,294 4,342 — — — —

Poland 27,803 2,721 13,909 2,496 11,648 2,779

2 unchanged sentences

Norway 12,241 — 12,736 — 11,138 —

Switzerland 5,928 6,784 5,246 8,172 5,600 7,781

Australia 9,468 245 8,120 201 5,749 134

Belgium 15,032 2,182 6,818 2,349 5,311 2,268

The Netherlands 4,834 39 4,526 61 4,019 93

New Zealand 5,160 160 3,593 167 3,606 166

Chile 5,455 31 3,493 49 3,198 28

Other countries 27,512 11,496 25,358 15,249 19,498 18,246

12 unchanged sentences

Subsequent Events

On January 20, 2022, the Company's Board of Directors declared a cash dividend of $ 0.25 per share of our common stock, estimated to be $ 10.8 million in total.

Effective January 1, 2023, Mike Olosky, the Company’s President and Chief Operating Officer ("COO") was promoted as the Company’s President and Chief Executive Officer ("CEO").

On January 24, 2023, the Company's Board of Directors (the (Board") declared a quarterly cash dividend of $ 0.26 per share of the Company's common stock, estimated to be $ 11.1 million in total.

The record date for the dividend will be April 6, 2023, and will be paid on April 27, 2023.

Effective January 20, 2022, Mike Olosky, the Company’s Chief Operating Officer ("COO") was promoted to President and COO.

Karen Colonias, who previously served as the Company’s President and Chief Executive Officer ("CEO") will continue to serve as CEO.

On January 26, 2022, the Company signed a securities purchase agreement to acquire Etanco Group for a purchase price of $ 818 million (1) (€ 725 million).

The acquisition is expected to close on April 1, 2022.

(1) Reflects EUR to USD exchange rate based on binding offer agreed upon as of December 22, 2021.

Simpson Manufacturing Co., Inc.

20 unchanged sentences

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 7A. Quantitative and Qualitative Disclosures About Market Risk