What changed in this filing

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Item 1. Financial Statements

2023-08-07 compared with 2023-05-08 · 133 added, 93 removed, 511 unchanged (31% of the section changed)

4 unchanged sentences

(In thousands, unaudited)

March 31, December 31,

June 30, December 31,

2023 2022 2022

35 unchanged sentences

(In thousands except per-share amounts, unaudited)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2023 2022 2023 2022

Net sales $ 597,580 $ 593,232 $ 1,132,010 $ 1,086,802

11 unchanged sentences

Other & foreign exchange loss, net 357 ( 1,890 ) ( 42 ) ( 2,107 )

( 398 ) ( 216 )

Income before taxes 144,673 127,814 262,067 251,822

18 unchanged sentences

(In thousands except per-share data, unaudited)

Three Months Ended March 31, 2023 and 2022

Three Months Ended June 30, 2023 and 2022

Common Stock Additional Paid-in Retained Accumulated Other Comprehensive Treasury

Shares Par Value Capital Earnings Income (Loss) Stock Total

Balance at December 31, 2022 42,560 $ 425 $ 298,983 $ 1,118,030 $ ( 4,059 ) $ — $ 1,413,379

Shares Par Value Capital Earnings Loss Stock Total

Balance at March 31, 2023 42,663 $ 426 $ 295,976 $ 1,194,993 $ ( 3,986 ) $ — $ 1,487,409

Net income — — — 107,211 — — 107,211

6 unchanged sentences

Cash dividends declared on common stock, $0.27 per share — — — ( 11,518 ) — — ( 11,518 )

Balance at June 30, 2023 42,673 $ 426 $ 301,612 $ 1,290,686 $ ( 9,113 ) $ — $ 1,583,611

Balance at March 31, 2022 43,159 $ 433 $ 289,773 $ 990,611 $ ( 27,725 ) $ ( 21,281 ) $ 1,231,811

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

Net income — — — 93,570 — — 93,570

8 unchanged sentences

Cash dividends declared on common stock, $0.26 per share — — — ( 11,222 ) — — ( 11,222 )

Balance at June 30, 2022 42,906 $ 433 $ 293,720 $ 1,072,959 $ ( 36,193 ) $ ( 46,281 ) $ 1,284,638

The accompanying notes are an integral part of these condensed consolidated financial statements

Simpson Manufacturing Co., Inc.

and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands except per-share data, unaudited)

Six Months Ended June 30, 2023 and 2022

Common Stock Additional Paid-in Retained Accumulated Other Comprehensive Treasury

Shares Par Value Capital Earnings Loss Stock Total

Balance at December 31, 2022 42,560 $ 425 $ 298,983 $ 1,118,030 $ ( 4,059 ) $ — $ 1,413,379

Net income — — — 195,164 — — 195,164

Translation adjustment, net of tax — — — — 4,509 — 4,509

Pension adjustment and other,

net of tax — — — — 400 — 400

Cash flow hedges, net of tax — — — — ( 9,963 ) — ( 9,963 )

Stock-based compensation — — 10,027 — — — 10,027

Shares issued from release of Restricted Stock Units 113 1 ( 7,398 ) — — — ( 7,397 )

Cash dividends declared on common stock, $0.53 per share — — — ( 22,508 ) — — ( 22,508 )

Balance at June 30, 2023 42,673 $ 426 $ 301,612 $ 1,290,686 $ ( 9,113 ) $ — $ 1,583,611

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

Net income — — — 188,145 — — 188,145

Translation adjustment, net of tax — — — — ( 27,819 ) — ( 27,819 )

Pension adjustment and other,

net of tax — — — — 689 — 689

Cash flow hedges, net of tax — — — — 8,542 — 8,542

Stock-based compensation — — 7,954 — — — 7,954

Shares issued from release of Restricted Stock Units 137 1 ( 9,524 ) — — — ( 9,523 )

Repurchase of common stock ( 455 ) — — — — ( 46,281 ) ( 46,281 )

Cash dividends declared on common stock, $0.51 per share — — — ( 22,027 ) — — ( 22,027 )

Common stock issued at $139.07 per share for stock bonus 7 — 960 — — — 960

Balance at March 31, 2022 43,159 $ 433 $ 289,773 $ 990,611 $ ( 27,725 ) $ ( 21,281 ) $ 1,231,811

Balance at June 30, 2022 42,906 $ 433 $ 293,720 $ 1,072,959 $ ( 36,193 ) $ ( 46,281 ) $ 1,284,638

The accompanying notes are an integral part of these condensed consolidated financial statements

3 unchanged sentences

(In thousands, unaudited)

Three Months Ended

Six Months Ended

Cash flows from operating activities

22 unchanged sentences

Proceeds from sale of property and equipment 183 1,816

Proceeds from sale of business 8,544 —

Terminated forward contract — 3,535

Net cash used in investing activities ( 48,049 ) ( 833,552 )

Cash flows from financing activities

Termination of cash flow hedge — 21,252

Repurchase of common stock — ( 46,281 )

19 unchanged sentences

and its subsidiaries (collectively, the “Company”).

Investments in 50% or less owned entities are accounted for using either cost or the equity method.

Investments in 50% or less owned entities are accounted for using either the cost or the equity method.

All significant intercompany transactions have been eliminated.

7 unchanged sentences

The unaudited quarterly Condensed Consolidated Financial Statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial information set forth therein in accordance with GAAP.

Certain prior period amounts in the Condensed Consolidated Financial Statements and the accompanying notes have been reclassified to conform to the current period’s presentation.

The year-end Condensed Consolidated Balance Sheet data provided herein were derived from audited consolidated financial statements included in the 2022 Form 10-K, but do not include all disclosures required by GAAP.

The Company’s quarterly results fluctuate.

As a result, the Company believes the results of operations for this interim period presented are not necessarily indicative of the results to be expected for any future periods.

As a result, the Company believes the results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any future periods.

Revenue Recognition

30 unchanged sentences

The fair values of the Company's 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 financial assets and liabilities measured at fair value as of March 31, 2023 and 2022:

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 unobservable inputs developed using management's estimates and entity-specific assumptions, which reflect those that market participants would use, and are evaluated on an ongoing basis.

The following tables summarize financial assets and liabilities measured at fair value as of June 30, 2023 and 2022:

(in millions)

Level 1 Level 2 Level 3 Level 1 Level 2

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Cash equivalents (1)

$ 248.1 $ — $ — $ 42.4 $ — $ —

Term loan due 2027 (2)

— 427.5 — — 450.0

Revolver due 2027 (2)

— 150.0 — — 250.0

Derivative instruments - assets (2)

3 unchanged sentences

Contingent considerations — — 6.5 — — 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 March 31, 2023 and 2022 as a component of "Cash and cash equivalents".

(2) The carrying amounts of the term loan and revolver approximate fair value as of March 31, 2023 based upon the terms and conditions as disclosed in Note 12 in comparison to debt instruments with similar terms and conditions available on the same date.

1) The carrying amounts of cash equivalents, representing United States Treasury securities and money market funds traded in an active market with relatively short maturities, are reported on the consolidated balance sheet as of June 30, 2023 and 2022 as a component of "Cash and cash equivalents".

(2) Derivatives for interest rate, foreign exchange and forward swap contracts are discussed in Note 8.

The carrying amounts of the term loan and revolver approximate fair value as of June 30, 2023 based upon its terms and conditions in comparison to debt instruments with similar terms and conditions available on the same date.

Derivative Instruments

8 unchanged sentences

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 March 31, 2023 and 2022, the values of these investments were $ 120.5 million and $ 32.6 million, respectively, consisting of United States Treasury securities and money market funds.

The value of the investments is based on cost, which approximates fair value based on Level 1 inputs .

Current Estimated Credit Loss - Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts receivable for estimated future expected credit losses resulting from customers' failure to make payments on its accounts receivable.

The Company determines the estimate of the allowance for doubtful accounts receivable by considering several factors, including (1) specific information on the financial condition and the current creditworthiness of customers, (2) credit rating, (3) payment history and historical experience, (4) aging of the accounts receivable, and (5) reasonable and supportable forecasts about collectability.

The Company determines the estimate of the allowance for doubtful accounts receivable by considering several factors, including (1) specific information on the financial condition and the current creditworthiness of customers, (2) credit rating, (3) payment history and historical experience, (4) aging of the accounts receivable, (5) reasonable and supportable forecasts about collectability, and (6) current market and economic conditions, and expectations of the future market and economic conditions.

The Company also reserves 100 % of the amounts deemed uncollectible due to a customer's deteriorating financial condition or bankruptcy.

Every quarter, the Company evaluates the customer group using the accounts receivable aging report and its best judgment when considering changes in customers' credit ratings, level of delinquency, customers' historical payments and loss experience, current market and economic conditions, and expectations of future market and economic conditions.

The changes in the allowance for doubtful accounts receivable for the three months ended March 31, 2023 are outlined in the table below:

Every quarter, the Company evaluates the collectability based on customer group using the accounts receivable aging report and its best judgment when considering changes in customers' credit ratings, level of delinquency, customers' historical payments and loss experience, current market and economic conditions, and expectations of future market and economic conditions.

The changes in the allowance for doubtful accounts receivable for the six months ended June 30, 2023 are outlined in the table below:

(in thousands)

December 31, 2022 Expense (Deductions), net

March 31, 2023

June 30, 2023

Allowance for Doubtful Accounts

12 unchanged sentences

Wood Construction Products Revenue .

Wood construction products represented approximately 85 % and 88 % of total net sales for the three months ended March 31, 2023 and 2022, respectively.

Wood construction products represented approximately 86 % and 87 % of total net sales for the six months ended June 30, 2023 and 2022, respectively.

Concrete Construction Products Revenue.

Concrete construction products represented approximately 14 % and 12 % of total net sales for the three months ended March 31, 2023 and 2022 respectively.

Concrete construction products represented approximately 14 % and 13 % of total net sales for the six months ended June 30, 2023 and 2022 respectively.

Customer Acceptance Criteria.

13 unchanged sentences

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 March 31, 2023, the Company had no contract assets or contract liabilities from contracts with customers .

As of June 30, 2023, the Company had no contract assets or contract liabilities from contracts with customers .

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

4 unchanged sentences

The Acquisition allows 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 Condensed Consolidated Financial Statements from April 1, 2022 the acquisition date, and as such, only includes ETANCO's results of operations for the three months ending March 31, 2023.

ETANCO had net sales of $ 80.0 million and a net income of $ 5.3 million, for the three months ended March 31, 2023, which includes costs related to the amortization of acquired intangible assets, and expenses incurred for integration.

ETANCO’s results of operations were included in the Company's Condensed Consolidated Financial Statements from April 1, 2022 the acquisition date.

ETANCO had net sales of $ 80.3 million and net loss of $ 2.0 million, for the three and six months ended June 30, 2022, which includes costs related to the 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, that 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:

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

(in thousands) Amount

18 unchanged sentences

The Company adjusted acquired finished goods higher by $ 10.9 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.

The fair value adjustment is recognized as a component of cost of sales over the inventory’s expected turnover period, and as a result, $ 9.2 million of the adjustment was recognized during the three and six months ended June 30, 2022.

Property and equipment, net

2 unchanged sentences

The acquired fair value for buildings and site improvements depreciate on a straight-line basis over the estimated useful lives of the assets for a period of up to sixteen years , 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 $ 1.8 million for the three months ended March 31, 2023.

The excess of purchase price over the net assets acquired was 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.

Depreciation expense associated with the acquired property and equipment amounted to $ 1.4 million for the three and six months ended June 30, 2022.

The excess of the purchase price over the net assets acquired was 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.

9 unchanged sentences

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

The Company recognized $ 4.4 million of amortization expense on these assets during the three months ended March 31, 2023.

The Company recognized $ 4.2 million, of amortization expense on these assets during the three and six months ended June 30, 2022.

Deferred taxes

1 unchanged sentence

Acquisition and integration related costs

During the three months ended March 31, 2023, the Company incurred integration related expenses of $ 1.4 million.

During the three months ended March 31, 2022, the Company incurred acquisition related costs of $ 7.0 million for investment banking, legal, accounting, advisory, and consulting fees.

Acquisition and integration related costs have been included in the Company’s income from operations.

During the three and six months ended June 30, 2022, the Company incurred acquisition and integration related expenses of $ 5.9 million and $ 12.8 million, respectively, for investment banking, legal, accounting, advisory, and consulting fees.

These costs were included in the Company’s income from operations.

Unaudited pro forma results

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2022 2022

8 unchanged sentences

The unaudited pro forma results above includes the following adjustments to net income:

1) Integration related costs of $ 1.4 million and acquisition related costs $ 7.0 million, which were incurred during the three months ended March 31, 2023 and March 31, 2022, respectively, were adjusted as if such costs were incurred during the twelve months ended December 31, 2021.

1) Acquisition and integration related costs of $ 5.9 million which were incurred during the three and six months ended June 30, 2022, were adjusted as if such costs were incurred during the twelve months ended December 31, 2021.

2) The $ 9.2 million of amortization related to the fair value adjustment for inventory and recognized during the three and six months ended June 30, 2022 was adjusted as if incurred during the three months ended March 31, 2021.

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

GAAP for the three months ended March 31, 2022.

GAAP for the three and six months ended June 30, 2022.

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.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2023 2022 2023 2022

9 unchanged sentences

Stock-based compensation capitalized in inventory was immaterial for all periods presented.

The Company recognized stock-based compensation expense related to its equity plans for employees of $ 4.6 million and $ 4.9 million for the three months ended March 31, 2023 and 2022, respectively.

During the three months ended March 31, 2023, the Company granted 261,760 restricted stock units (RSUs) and performance stock units (PSUs) to the Company's employees, including officers at an estimated weighted average fair value of $ 98.49 per share based on the closing price (adjusted for the present value of dividends) of the Company's common stock on the grant date.

The Company recognized stock-based compensation expense related to its equity plans for employees of $ 6.5 million and $ 4.7 million for the three months ended June 30, 2023 and 2022, respectively, and $ 11.2 million and $ 9.5 million for the six months ended June 30, 2023 and 2022, respectively.

During the six months ended June 30, 2023, the Company granted 277,793 restricted stock units (RSUs) and performance stock units (PSUs) to the Company's employees, including officers at an estimated weighted average fair value of $ 99.66 per share based on the closing price (adjusted for 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 or time and performance-based.

2 unchanged sentences

Time-based RSUs that are granted to the Company's employees excluding officers and certain key employees, vest ratably over the four year vesting-term of the award.

As of March 31, 2023, the Company's aggregate unamortized stock compensation expense was approximately $ 32.2 million which is expected to be recognized in expense over a weighted-average period of 2.7 years.

The Company’s nine non-employee directors are entitled to receive an aggregate of approximately $ 1.1 million 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 April 2023 and June 2023, the Company granted 9,776 shares of the Company's common stock to the non-employee directors, based on the average closing price of $ 122.50 per share and recognized $ 1.2 million of expense.

As of June 30, 2023, the Company's aggregate unamortized stock compensation expense was approximately $ 29.2 million which is expected to be recognized in expense over a weighted-average period of 2.5 years.

Trade Accounts Receivable, net

Trade accounts receivable consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(in thousands)

8 unchanged sentences

The components of inventories are as follows:

As of March 31, As of December 31,

As of June 30, As of December 31,

(in thousands)

11 unchanged sentences

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

As of March 31, 2023, the aggregate notional amount of the Company's outstanding interest rate contracts, cross currency swap contracts, EUR forward contract and CNY forward contracts were $ 577.5 million, $ 448.2 million, $321.7 million and $ 9.9 million, respectively.

As of March 31, 2022, the aggregate notional amount of the Company's outstanding forward contracts used to hedge variability in cash flows on its Chinese Yuan denominated purchases were CNY 68.3 million, all of which expired by December 31, 2022.

As of June 30, 2023, the aggregate notional amount of the Company's outstanding interest rate contracts, cross currency swap contracts, EUR forward contract and CNY forward contracts were $ 571.9 million, $ 442.3 million, $ 321.7 million and $ 5.9 million (CNY 40.4 million), respectively.

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 three-months ended March 31, 2023.

The effects of fair value and cash flow hedge accounting on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the periods ended March 31, were as follows:

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

There were no amounts recognized due to ineffectiveness during the three and six months ended June 30, 2023 and June 30, 2022.

The effects of fair value and cash flow hedge accounting on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the six months ended June 30, were as follows:

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

Total amounts of income and expense line items presented in the Condensed Consolidated Statement of Earnings in which the effects of fair value or cash flow hedges are recorded $ 591,669 ( 1,274 ) $ ( 42 ) 590,688 ( 3,585 ) ( 2,107 )

6 unchanged sentences

Forward contract

Amount of gain or (loss) reclassified from OCI to earnings — — 163 — —

The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the three months ended March 31, 2023 and 2022 were as follows:

Amount of gain reclassified from OCI to earnings 80 — — 163 — —

The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the three months ended June 30, 2023 and 2022 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

3 unchanged sentences

Forward contracts ( 413 ) — FX gain (loss) ( 3,429 ) 32,091

FX gain (loss) $ — $ — Cost of goods sold — 163

Cost of goods sold 80 —

Total $ 4,437 $ 38,944 $ 1,828 $ 31,080

For the three months ending March 31, 2023 losses on the net investment hedge and March 31, 2022 gains on net investment hedge of $ 0.2 million and $ 6.8 million were included in OCI, respectively.

For the three months ending March 31, 2023, excluded gains of $ 1.2 million were reclassified from OCI to interest expense, while none were reported for the three months ended March 31, 2022.

As of March 31, 2023, the aggregate fair values of the Company’s derivative instruments on the Condensed Consolidated Balance Sheet were comprised of an asset of $ 35.6 million, of which $ 18.0 million is included in other current assets, and the balance, or $ 17.7 million as other non-current assets, and a non-current liability of $ 11.5 million.

The effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Comprehensive Income for the six months ended June 30, 2023 and 2022 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

(in thousands) 2023 2022 2023 2022

Interest rate contracts $ 6,546 $ 6,876 Interest expense $ 7,107 $ ( 2,978 )

Cross currency contracts ( 8,019 ) 22,715 Interest expense 2,605 1,959

Forward contracts ( 448 ) $ — FX gain (loss) ( 5,244 ) 29,124

Cost of goods sold 80 163

Total $ ( 1,921 ) $ 29,591 $ 4,548 $ 28,268

For the three months ending June 30, 2023 losses on the net investment hedge, and June 30, 2022 gains on net investment hedge of $ 4.1 million and $ 18.1 million were included in OCI, respectively.

For the three months ending June 30, 2023 and June 30, 2022, excluded gains of $ 1.3 million and $ 1.1 million were reclassified from OCI to interest expense, respectively.

For the six months ending June 30, 2023 losses on the net investment hedge, and June 30, 2022 gains on net investment hedge of $ 4.4 million and $ 11.3 million were included in OCI, respectively.

For the six months ending June 30, 2023 and June 30, 2022, excluded gains of $ 2.5 million and $ 1.1 million were reclassified from OCI to interest expense, respectively.

As of June 30, 2023, the aggregate fair values of the Company’s derivative instruments on the Condensed Consolidated Balance Sheet were comprised of an asset of $ 37.9 million, of which $ 19.5 million is included in other current assets, and the balance of $ 18.4 million as other non-current assets, and of a liability of $ 18.9 million, of which $ 0.3 million is included in accrued liabilities and other current liabilities, and the balance of $ 18.6 million as deferred income tax and other long-term liabilities.

Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(in thousands) 2023 2022 2022

15 unchanged sentences

Goodwill consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(in thousands) 2023 2022 2022

3 unchanged sentences

Total $ 495,065 $ 492,338 $ 495,672

Goodwill totaled $ 500.7 million as of March 31, 2023, including $ 360.0 million attributable to the Acquisition.

I ntangible assets, net, consisted of the following:

As of March 31, 2023

As of June 30, 2023

Carrying Accumulated Carrying

6 unchanged sentences

$ 445,359 $ ( 75,710 ) $ 369,649

As of March 31, 2022

As of June 30, 2022

(in thousands)

15 unchanged sentences

Definite-lived intangible assets include customer relationships, patents, unpatented technology, and non-compete agreements.

Amortization of definite-lived intangible assets was $ 5.7 million and $ 1.1 million for the three months ended March 31, 2023 and 2022, respectively.

Amortization of definite-lived intangible assets was $ 6.0 million and $ 5.3 million for the three months ended June 30, 2023 and 2022, respectively, and was $ 11.6 million and $ 6.4 million for the six months ended June 30, 2023 and 2022, respectively.

The weighted-average amortization period for all amortizable intangibles on a combined basis is 8.8 years.

Indefinite-lived intangible assets totaled $ 93.0 million as of March 31, 2023, including $ 92.3 million attributable to trade names acquired in the Acquisition.

At March 31, 2023, the estimated future amortization of definite-lived intangible assets was as follows:

Indefinite-lived intangible assets totaled $ 92.8 million, $ 88.9 million, and $ 91.7 million as of June 30, 2023, and 2022 and December 31, 2022, respectively.

At June 30, 2023, the estimated future amortization of definite-lived intangible assets was as follows:

(in thousands)

Remaining nine months of 2023 $ 15,748

Remaining six months of 2023 $ 11,225

Thereafter 157,380

The changes in the carrying amount of goodwill and intangible assets for the three months ended March 31, 2023, were as follows:

The changes in the carrying amount of goodwill and intangible assets for the six months ended June 30, 2023, were as follows:

(in thousands) Goodwill Assets

1 unchanged sentence

Acquisition — 13,996

Disposal ( 5,678 ) —

Reclassifications — 46

1 unchanged sentence

Foreign exchange 5,071 4,328

Balance at March 31, 2023 $ 500,749 $ 366,122

Balance at June 30, 2023 $ 495,065 $ 369,649

The Company has operating leases for certain facilities, equipment and automobiles.

2 unchanged sentences

The lease payments are discounted using the Company's incremental borrowing rate.

The Company measured the right-of-use ("ROU") assets at the amount at which the lease liability is recognized plus initial direct costs incurred or prepayment amounts.

The Company measured the ROU assets at the amount at which the lease liability is recognized plus initial direct costs incurred or prepayment amounts.

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 Condensed Consolidated Balance Sheets as of March 31, 2023 and 2022 and December 31, 2022, Condensed Consolidated Statements Of Earnings and Comprehensive Income, and Condensed Consolidated Statements Of Cash Flows for the three months ended March 31, 2023 and 2022:

Condensed Consolidated Balance Sheets Line Item March 31, December 31,

The following table provides a summary of leases included on the Condensed Consolidated Balance Sheets as of June 30, 2023 and 2022 and December 31, 2022, Condensed Consolidated Statements of Earnings and Comprehensive Income, and Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022:

Condensed Consolidated Balance Sheets Line Item June 30, December 31,

(in thousands) 2023 2022 2022

9 unchanged sentences

The components of lease expense were as follows:

Condensed Consolidated Statements of Earnings and Comprehensive Income Line Item Three Months Ended March 31,

Condensed Consolidated Statements of Earnings and Comprehensive Income Line Item Three Months Ended June 30,

(in thousands) 2023 2022

3 unchanged sentences

Supplemental cash flow information related to leases is as follows:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2023 2022

3 unchanged sentences

obligations during the current period 8,423 2,936

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2023:

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2023:

(in thousands) Operating Leases

Remaining nine months of 2023 $ 10,840

Remaining six months of 2023 $ 7,986

Thereafter 20,107

2 unchanged sentences

Total lease liabilities $ 64,369

The following table summarizes the Company's lease terms and discount rates as of March 31, 2023 and 2022:

The following table summarizes the Company's lease terms and discount rates as of June 30, 2023 and 2022:

Weighted-average remaining lease terms (in years):

2 unchanged sentences

Operating leases 4.7 % 4.8 %

As of March 31, 2023, the Company has $ 577.5 million, excluding deferred financing costs, outstanding under its Amended and Restated Credit Facility, which is the estimated fair value as of March 31, 2023.

The Company had outstanding balances of $ 700.0 million and $ 583.2 million under the Amended and Restated Credit Facility as of March 31, 2022, and December 31, 2022, respectively.

The following is a schedule, by years, of maturities for the remaining term loan facility as of March 31, 2023:

As of June 30, 2023, the Company has $ 571.9 million, excluding deferred financing costs, outstanding under its Amended and Restated Credit Facility.

The Company had outstanding balances of $ 694.4 million and $ 583.2 million under the Amended and Restated Credit Facility as of June 30, 2022, and December 31, 2022, respectively.

The following is a schedule, by years, of maturities for the remaining term loan facility as of June 30, 2023:

(in thousands) 5-Year Term Loan

Remaining nine months of 2023 $ 16,875

Remaining six months of 2023 $ 11,250

Total loan outstanding $ 421,875

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

The Company was in compliance with its financial covenants under the Amended and Restated Credit Facility as of March 31, 2023.

As of March 31, 2023, 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 of its credit facilities provide the Company with a total of $ 305.7 million in available borrowing capacity and an irrevocable standby letter of credit in support of various insurance deductibles.

The Company was in compliance with its financial covenants under the Amended and Restated Credit Facility as of June 30, 2023.

Certain of the Company's domestic subsidiaries are guarantors for a credit agreement between certain of its foreign subsidiaries and institutional lenders that is in addition to the Amended and Restated Credit Facility.

As of June 30, 2023, all of the Company's credit facilities provide a total of $ 306.1 million in available borrowing capacity and an irrevocable standby letter of credit in support of various insurance deductibles.

Commitments and Contingencies

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The following tables illustrate certain measurements used by management to assess the performance of its reportable segments as of or the following periods:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

15 unchanged sentences

* Sales to other segments are eliminated in consolidation.

As of March 31, December 31,

As of June 30, December 31,

(in thousands) 2023 2022 2022

5 unchanged sentences

Cash collected by the Company’s U.S.

subsidiaries is routinely transferred into the Company’s cash management accounts and, therefore is in the total assets of “Administrative and all other.” Cash and cash equivalent balances in the “Administrative and all other” segment were $ 189.8 million, $ 96.1 million, and $ 222.5 million, as of March 31, 2023 and 2022, and December 31, 2022, respectively.

Also included in the total assets of "Administrative and all other" are intercompany borrowings due from the Europe segment, which were used by the Europe segment in the acquisition of ETANCO.

subsidiaries is routinely transferred into the Company’s cash management accounts and, therefore is in the total assets of “Administrative and all other.” Cash and cash equivalent balances in the “Administrative and all other” segment were $ 326.5 million, $ 167.4 million, and $ 222.5 million, as of June 30, 2023 and 2022, and December 31, 2022, respectively.

Also included in the total assets of "Administrative and all other" are intercompany borrowings due from the Europe segment.

Included in the total assets of each segment are net intercompany borrowings due to and from the other segments.

The Company’s wood construction products include connectors, truss plates, fastening systems, fasteners and pre-fabricated shearwalls and are used for connecting and strengthening wood-based construction primarily in residential and commercial construction.

Its concrete construction products include adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools and reinforcing fiber materials and are used for restoration, protection or strengthening concrete, masonry and steel construction in residential, industrial, commercial and infrastructure construction.

The Company’s wood construction products include connectors, truss plates, fastening systems, fasteners and pre-fabricated shearwalls that are used for connecting and strengthening wood-based construction primarily in residential and commercial construction.

Its concrete construction products include adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools and reinforcing fiber materials that are used for restoration, protection or strengthening concrete, masonry and steel construction in residential, industrial, commercial and infrastructure construction.

The table below illustrates the distribution of the Company’s sales by product group as additional information for the following periods:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2023 2022 2023 2022

5 unchanged sentences

Dividend Declared

On April 26, 2023, the Company’s Board of Directors (the "Board") declared a quarterly cash dividend of $ 0.27 per share, estimated to be $ 11.5 million in total.

The dividend will be payable on July 27, 2023, to the Company's stockholders of record on July 6, 2023.

On July 28, 2023, the Company’s Board of Directors (the "Board") declared a quarterly cash dividend of $ 0.27 per share, estimated to be $ 11.5 million in total.

The dividend will be payable on October 26, 2023, to the Company's stockholders of record on October 5, 2023.

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-Q

Item 1. Financial Statements