Simpson Manufacturing (SSD) 8 Feb 222021 Q4 Earnings call transcript

Greetings. Welcome to the Simpson Manufacturing Company's Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the Investor to Relations. turn Orlando host now ADDO with will conference your over Kim I Thank you.

begin. may You

of webcast today, at the Company's press undertake we may Today's also Eastern approximately X:XX any page the earnings at website. the securities that of The release Good website implied afternoon, statements are forward-looking call. Company's be ladies from Company's extent available and and Investor are by and expectations being are statements gentlemen, and welcome and publicly historical earnings otherwise. of risks on Actual and on the a of results Please events, those no today uncertainties. or encourage expressed Except call on corporate note or was materially obligation here as facts applicable on XXXX required to are described certain not or made we replay and the forward-looking and Investor statements revise call to Company's available Relations Time. a the fourth number of website. statements. to SEC's update or which you full-year is earnings new is ir.simpsonmfg.com. the the based statements page may the future issued on We subject public conference information, statements. Such press of whether PM risks to vary Company's the laws, Any forward-looking this the reports, that that are quarter Company's available read future Simpson release Manufacturing will in a result by filings Relations to the make estimates

Simpson's to over turn I Chief the Colonias, conference Now, Officer. would Executive Karen to like

joining chain as will macroeconomic with and walk I'll year detail. as financials and price a drivers, fourth before and to a sales steel Brian needs costs continue and XXXX material us key discussion pleased supply XXXX Thanks, in performance by good then priorities. of momentum with our for business growth we to landscape constraints, summary our of financial business thank a by deliver to initiatives burdened the year solutions. with labor the full-year turning model business market, we customers you supported ongoing ensure our increasing on key our in quarter In products increases afternoon, our offset challenging everyone, our experienced begin due well growth throughout operational fiscal help to our providing capital allocation elements performance extremely availability results tight our greater to four outlook a and of today. am by met through of I Kim, a XXXX. you and and implementation with them solid rising trusted We the costs. the of

we $X.XX net full-year strong earnings $X.XX As share. sales of a result, generated per and diluted billion of

and with create which stakeholders. unveiled In addition, will promote growth for business in Simpson growth we key we XXXX, of continued believe new incremental strategic ambitions in company for along Simpson, initiatives our five-year value all March

achieve environment. have not to as valued commitment operating like our their them well hard work their of as Our performance a been would strive thank and to possible employees. all I they would for to in as five-year safe without dedication ambitions our

concrete the wood mix fasteners of August on connectors, June, and April, in U.S. and depending in implementation price of were of again products XX.X% once These price four to product the increased of strong to range by Sales increases the primarily growth XXXX. fourth from October and year mid-teens the prior quarter. digits $XXX.X Net mid-single increases was driven our million very Turning the sales over market. period.

sales higher further various throughout were sales our and volumes weather conditions distribution mild Our supported by channels. winter

return Specifically, as as quarter year-over-year center we with in lapped associated the with our home the in a to sales difficult home fourth comparison load-in. channel began the in Lowe's which high volumes of product volumes normalize XXXX, customer drove our center

the home center channels our center and and we is remodel include repair DIY of and a reminder, our co-op much As business. both and home where customers, see

also We growth experienced volume channels in our and distribution other contractors solid lumberyards. to

fourth our increases, another XXX net basis Europe consolidated sales consolidated year-over-year, points quarter gross our We margins. currency margin to experienced XX.X% of in ago period. in primarily by the due year slightly strong Our the XX.X% translation. product for price quarter foreign to gross increased to compared decreased Supported

a income we per earnings innovative our margin our company and to unveiled $X.XX. culture, in, an in resulting values-based within the U.S. the in our we our strong return five-year our Simpson for are to targets operating proxy our to remain income the After of for within top through to foundation plan, the from invested quartile new we continue strong relative partner our last leader growth help choice, expand proxy capital Strengthen remain top As starts, ambitions our maximize on expand operations above-market March, of the comprised operating peers. grew follows. as aggressive a be operate diluted quartile be peers housing of share of markets of quarter million, XXXX efficiencies, execution was $XX.X of which financial to three-year result, our which fourth company building

We our will combination through of to starts, also key above-market announced markets, relative housing and ambition of help which organic growth us track number inorganic record a U.S. continuing five four, believe opportunities. achieve we

fastening mass these markets opportunity within a as be in We that timber growing to engineered on load-rated product leader each of solutions. are markets, solutions, have a we focused where R&R DIY given construction in broader as OEM, fastening the and striving are well

as finally, all market remains in key of key working of concrete are steel. And leader out technology focused different Simpson. We in That's growth implementation. growth building a space, initiatives. which upon of initiatives hits become phases well each a are building on new structural our our also our presence construction for we as to our in Today,

have While and distribution taking core been we manufacturing of and testing as as It wood opportunities have of expansion licensing, multi-year initiatives, competencies our products, organic IP inorganic be traditional for new these in have advantage opportunities in all product within existing to place. place a purchasing well M&A. into we proper ensure validation endeavor we all results, markets concrete capabilities will through of lines through and and products the testing,

notably, acquisition expand which products in functions initiatives growth developments to promote JEDGE, are expansion channels. our will line, distribution progress with in in pleased business. users promote a end our product structural marketing sales steel XXXX, Recent our to to and our our We and efforts our of include the different

For securing additional business mass opportunities. timber, we are

we For warehouse design formed fastener strategic example, structural utilize technologies, And a in a products. our shipping installation a concrete, alliance Simpson's and company that with that will products. will utilize

continued on quarters. initiatives to to Today, pleased growth I'm our for of on continue distributor we updates announced commercial we in by driver offering offerings. building company agreement late construction the of million. progress we Etanco's aligned solutions market fastening very will December, XXXX. week, acquisition US$XXX our support growth into European Simpson, provide throughout model in product track manufacturer Last and remain geographies, was announced for strategic a our including and leading note approximately Group, will designer, and core achieve business, and In growth business securities perfectly and signed. building another to channels for future We with ambitions and purchase expansion Simpson Etanco the Europe fixing the sales

already on and underway. expect our We activities integration X, this April are acquisition to XXXX, close

acquisition, XXXX, available on of which Etanco on and the regarding I held to X, Investor Tuesday, the we Relations on details the company XX, well of call additional listen issued to December the as XXXX, read are press as January release conference For encourage website. that all page our presentation you we supplemental

Turning now to capital allocation.

well cash repurchase plan XX% our and flow. us common flows generating and $XX.X our capital once earnings in capital management target closed. reevaluate to priorities. to our dividends In of payment is We stockholders million and return enabled returned cash we to continue cash of Etanco return XX% has the million $XX.X working the strong growth fuel of acquisition of free of the Our flow XXXX, of target stock, to XX% effective to free stockholder strong exceeding

priorities selectively and To repurchasing and testing areas of returning growth, value debt focus dual capabilities opportunities. we to such personnel all will remain focused engineering, form In dividends, in we organic on leverage XXXX areas shares. growth, and conservative stockholders facilitate as quarterly growth in allocation across to growth the profile business. on investing our sales marketing, in our capital organic our repayment of are M&A both Our regard to maintain organically,

to for regard invest on that to noted year, M&A, support originally expansions broadly we may to the most operate. support on we last are to areas markets our As growth. solution Etanco. which and our growth integrating product Investor initiatives, our on also order in In so stay plan expansion hyper-focused Analyst key we in facility we in line focused develop in Day include also will complete opportunities This

will CEO take Chief portfolio true promotion market Operating both continue COO as as his in segment since presence brand and conclude, I results, asset serve of congratulate His our operationally. our lead I recent growth with of to globally. to summary, to are same Officer, I'd a the product to Simpson joining XXXX company. like the Olosky, he Before to company and been late to Mike we helping strategies. in financially moment very a on has remain XXXX Simpson. our strong shape our the our expand pleased to Mike initiatives and to In responsibilities continues President

customer we housing our like result Strong-Tie conditions, highest set labor supply ensure underlying suppliers to to Aside starts, supported also commitment stronger U.S. we from the like safer, should to all thank stockholders the and recognize I'd strong and strong demand for Simpson. continued quality structures. by first XXXX, which in service employees to for may outstanding with the to support I'd and build of customers XXXX. of customers, headwinds half increased solution safety remain their in our your believe that health, from year-over-year provide Simpson chain XX% tightening

to quarter in turn our Brian, results and financial over like discuss the I'd Now outlook fourth call to detail. greater who'll XXXX

pleased quarter results financial with Thank afternoon, our I'm good fourth discuss today. you everyone. you, to Karen, and

remarks of today of in all fourth versus prepared to Before like to otherwise the and refer comparisons the measures I be XXXX. will quarter year-over-year begin, mention discussed all fourth XXXX, that I'd comparisons stated, my unless quarter financial

to results. our quarter turning Now fourth

to highlighted, As XX.X% consolidated $XXX.X net our million. increased Karen sales

of Within sales to million, compared to that higher lower gross compared increased offset the due more of which currency compared effect our consolidated Canada's net basis products increased price four costs. offset to affected translation. gross to sales and On segment and quarter margin increases, due by North primarily took million, cost accurately by primarily to XX.X% points another of rising raw million, XXX million overhead $X resulted were increases When America Wood approximately net in approximately by sales XXX United profit as primarily margin due to the at by higher higher of $XXX.X $XX.X are Consolidated XX.X% margin to XX%. in negatively impacted to partially XX% volumes translation XXXX, in foreign increased to well total XX%, price material gross against increased to points, costs. sales sales costs XX% declined beginning the reflect were X% sales third Europe's total foreign were to positively segment, currency volumes decreased compared also sales the In increased average volumes. in along margin with related material America States material concrete net XX.X%. XX.X% primarily by increased $XXX.X due XXXX a to North as construction quarter to to to aforementioned products sales XX.X%. and gross basis construction our basis, as the Gross which represented labor higher-priced Europe, by weakening inventory costs currencies strong our represented dollar. and

year and quarter higher material, However, margin in to year our in XX.X% to fourth and XX.X% factory largely for declined compared prior XX.X% tooling to perspective, products quarter margin was was product labor prior compared our the gross costs. XX.X% XX.X%, to wood From a concrete compared to XX.X% and Europe, on products quarter. in due gross the

to our quarter expenses. costs operating turning and Now fourth

impact were million year, we expenses and other pandemic. light savings reminder, various last $XXX.X an of the $XX.X XX.X%. a cost in Total surrounding As million, the or measures of COVID-XX approximately implemented increase the uncertainty of operating

due XXX price approximately improvement percentage were increased XX.X%, sales, a to operating to compared As the primarily net to of of the increased expenses basis relative XX.X%, revenues. total points an spend

expenses improved net a XXXX over percent of approximately of operating XX.X%. sales to basis full-year as points by XXX the For total XXXX,

expenses. research personnel to XX% to primarily bad increased segment they and Selling Our basis, North administrative selling and XX% personnel higher sharing, expenses consultants increased XX.X% On development fourth in million, profit expense increased to higher commissions, to due expenses and due were on travel General America $XX.X up up costs cash a fees, million on professional headcounts. $XX other and expenses expenses Europe, and XX.X% costs. to support quarter $XX.X million, primarily engineering in expenses due were and entertainment and incentives IT debt and headcounts reserve and to X.X%.

with pending associated the million for Our of quarter interest of Etanco. other and approximately included million $X.X fees of acquisition $X professional expense our expenses

Europe with XXX% resulting to combined million, gross XX.X% by expense On lower income $XX.X million increase from operations operations operating fourth compensation favorable primarily in cash And million. due performance to the primarily expenses, basis consolidated consolidated $X.X $XX.X of million loss profit. quarter. our XXX QX increase from stock-based by increased operating compared due to the operations to operating a from from from million offset $XX.X our a of in reported approximately and the commissions income higher was sales $X.X XXX.X% basis, gross income topline performance, drive margin Our profit, points increase including XX.X%. gross sharing, stronger of margin in profit compared the America, North partly a to helped to solid in

diluted due Our rate from XXXX. XX.X% compared in $XX.X to tax release share. fully XX% share valuation totaled effective allowances income or net the to $XX.X million of to decreased $X.XX per foreign million fully Accordingly, or $X.XX diluted per

our Now and balance sheet flow. cash turning to

cash $XXX.X million balance At December XX, $XX.X an and December increase XXXX. compared totaled million, sheet to Our XX, equivalents healthy. cash of remained

Etanco million to $XXX As unsecured million we with in and our a facility a $XXX for new term of fund intend combination to reminder, a by increasing to million cash a debt loan. $XXX acquisition existing credit revolving $XXX the of existing of million commitment from addition

all for line million borrowing. As available primary on of December XX, XXXX, our was credit $XXX

XX Our increased inventory vast from of position $XXX.X December the was balance higher pricing. of million $XX.X majority to million XX, September at which at our related

to of we practices, same service purchases the management through be and availability in regard key maintain order high to levels customer selective value delivery product provide to ample proposition. which continued continue We inventory at careful our purchasing while time, cornerstones standards, of our customers ensuring in and on-time are

XXXX. result As the million a flow profitability from quarter management, cash effective of and our generated we strong of of for operations improved fourth $XX.X capital working

new a of growth stockholders Turning capital $XXX authorization the make opportunistic stock We million the XXXX, as cash quarter will during our We stockholders repurchases XXXX, million per XXXX. quarterly repurchase The common share. Board to January $XX.X our for the Board a of at of our XXXX, not strong during well to $XX.X in did XXXX. allocation. expenditures of the April We X, as XXXX. providing share as prior Directors as We of share authorization, shares as capital April On dividends. of be share repurchase XX, capital dividend well in of payable $X.XX the dividends repurchases. our of declared which the million through replacing end paid may supporting quarter. expired end XX, remain to returns The and through record on both business authorized dedicated invested to dividend

expected are December estimated as today, ending of rate estimated estimated initiating is effective excludes Please to as XX, assuming February of this are XXXX, in on changes expenditures April XX.X% Based discuss range follows. income currently of for guidance pressure X, to XX%. raw the in XX.X% of we be XXXX. to to $XX material throughout acquisition completed which XXXX million. be and law guidance the enacted. the tax X, XXXX to financial like federal to on tax anticipating continued of be are Etanco, and margin capital that business I'd the conditions regard margin to goods no outlook. operating we and both full-year XX.X%, note range outlook, on our trends sold cost In $XX be state escalating The is Finally, million is our range to the the tax cost year. And including rates our are to of and Operating in

work we material significantly through the year, even the our expected costs We during second affect adversely by enacted our our averages, increase are for lags of as QX especially sold materials impact than declining the on-hand because increases, will anticipated we to to buy This As our prices margin quarter and began to our our which raw gross to half historical fourth inventory occur XXX the which sequential of price continue see cost higher points QX. begin the decline, prices in raw goods material roughly margins. from averaging basis is XXXX. deceleration with margin typically throughout raw to

As objective in points throughout operating this such, decline and short-term margin acquisition, to XXXX the XXXX. annually five-year high of can ambitions. believe the costs our we those macroeconomic XXXX. range we operating will continue to incur long-term, we will expect Etanco approximately the for headwind, of maintain industry-leading teens by with an Further, associated is we XXX Despite full-year key company which a to continue report expect we basis from margin our

fund roughly maintenance the XX% our expenditures the capital costs expenditures. our expense we reported other with acquisition. dedicated associated be financing along estimate to capital and In line, will in outlook, to those be interest of XXXX to and will regard expenses Some borrowings interest with costs

of on will to customer and to manufacturing support equipment investments our primarily increasing key in well We purchases new adjacencies XXXX footprint efficiencies, additional despite details focused our growth as and as be very our existing the progresses. facilities performance line enhancements year the initiatives. needs as to to operational in financial increased pleased with landscape. with productivity we for expand growth providing were In turbulent investments summary, look forward macroeconomic and Our

of XXXX remains which to Europe, exceeding and and tremendous look through strong breadth our the our by in the customers' unveiling plan of Q&A to ambition helped product and industry-leading to begin We like our our expanding call to that, for proper Etanco the XXXX the the product to our continued pending service position growth and offerings we needs success, growth meeting sheet. and the forward With in our possible balance for the believe key five-year lay maintain our acquisition initiatives and efforts in the our success and us As foundation to building turn position in were the executing made operator business enhance session. over paramount I'd space. well

be At time, Our a first Moore Please CJS Securities. you. of session. will proceed we question. this Thank question-and-answer with question Daniel Instructions] is conducting your from [Operator

afternoon, volume, congratulations Any on, it like Thank you're specificity as obviously, volume with, as in sounds of well. America in up you more tremendous if start North Maybe with you. in Karen, really growth Good QX? terms well. but Mike, and versus Brian, specifically price significant pricing, picked saw

Sure, price. the XX% the about was Thanks. that about growth Dan. – And total, of was for

so about so volume, And less the attributed $XXX quarter. growth. was of FX million X.X% impact, little volume there volume attributed – about in a little a So – bit X.X% than

North total That's company America? or

the and company is Total that, North America. of course, of bulk

Karen, each the correct? for digits increases, cumulative a year, And number not That's price mid-teens. Yes, the for referenced for mid-single of think, increases, absolutely. I to you've of each price those

of Yes, of really products, of that increase the which right. price a is the correct. is our size And function

impacted obviously, So were price the increases. more steel, by raw involving material more

it So depending line. on the product varies type of

pressure it very volume, And But sounds a margin on understood. you've XXXX, for the outlook Yes, like still healthy. about talked the sounds lot.

starts and noisy bit beyond impact year growth or been in years Obviously, comp about entering last the XXXX. You the and of factors to your two XXXX market have should be this year. thinking Lowe's full-year referenced the tough that growth in better might than last with a housing overall then that little sort that, sell-in Any HX the either XXXX? we hopefully strong

into think very high from Well, first still it the some I comes and interest of what certainly that spike get the we'll anticipation certainly feeling when we hearing little there's little into to run of year half. supply our up. obviously, headwinds know, cloudy promising. affordability Certainly, first labor. to of standpoint, customers, from think we're pretty But a we see to demand. looks you as chain half a we the And rates We comfortable run half as bit the start about headwinds customer year, the the second as some

seeing, got in full of last are so If increase, I some January that volume increase quarter, this impact year early but seeing numbers January still there. some can to add the to but January, trends the there looking the January Obviously, we're again, January. we've versus price we're as good well relative the of

do for color. Thanks gradual again me, guess, course good you color lastly margins gave obviously of COGS step as you. might cadence of And year? the the great function for a kind just HX of of specifically the to HX and and about impact down the compression a I see that how a over of more or – lot then Perfect. it you

more of bit a step the probably former down. there, It's the

will prices, as are the which they at X.Xx of up in we of margin Of bring today's and were that Xx, But the pressure. at more we'll use back experience steel course, year XXXX, there. we about steel half it trend the of feel end where

Very good. follow-ups. jump I'll for back any Thanks.

Dan. Thanks,

question. your from Robert next proceed Josh of Our question Baird. Please is with W. Chan

on Mike, the Karen, year. quarter strong and Good Hi. Brian, the afternoon. congrats

Thanks, Josh.

you. thank Josh,

to your its kind on cost sense that's is how you how year it up question. long next if kind just my Could gross a come margin the last through maybe where the because following could takes of talk could you this of inventory? way trough P&L? long it I margin just through give in guess takes the of way the a on comment through for the question from so, basis work year? And second to average gross or Is so the ballpark of us half it to – all

to order our the of inventory steel question needs amount so meet of provide Josh, in a a exceptional the take in the first purchases to customer answer average because long service, Hey, does customer to we inventory. large of our and for part carry that time current up cost fairly it

out as all tell Although a – our last so COGS, – to QX it we don't can break steel as and percent QX, of than much of our a I at a higher percent revenues percentage a that was QX higher of higher year of revenue. you bit

we So – prior question a XXXX. to would half expect that starting the I impact – in mentioned But to as ago, through. moment of to Dan's flow seeing be to more are that impact on we really second

I could of for All about could from you is how then an like And impact bit? color perspective, the And customers, kind also that operational your or Omicron an then big there. fair. operations in of your little in the Thanks right. for us ask a impact was about That's talk of factory?

COVID of revolving how of have if you Omicron, a obviously place. factories factories there's this our door, safety have, has Simpson. Omicron on job but impacted will, all We most our running mentioned of pandemic. shifts mean sort of else, But impacted as precautions currently and as I just really filled, I we've everybody Sure. in on nice think all a it's putting

problems had some we needs, certainly So but as employees difficult been sick customer it have meeting has out have who we with our are this. not

But operation noted, headwind, being in of believe we back necessarily the did the Karen But within of departments, will. its impact a for as bit see part, creating shipping our you normal. bit passed an into operations. to areas certain if we're most our example, don't For and we a that

for and your time. for Thanks Great. the color thanks

Josh. Thanks,

Thanks, Josh.

question question. next from Yinger proceed D.A. of Our Please with Davidson. is Kurt your

good Great. Thanks, everyone. and afternoon,

Kurt. Hi,

Good To start off. morning.

might are to within your steel out I times of there about projects building then, budget, mean, out impact chain, overall the volume CapEx call some supply notable you trends? and outsourced own I the availability of products feeling how capacity on lead And guess, in that guys and the On system? your any terms in any on have

the then take a first question, I'll From CapEx to me are the some of supply chain, turn let constraints. Brian. Well, half still there over

we're But want we as think what at we of meet seeing easing slightly, needs. is I we steel constraints. about standpoint customer we've ensure want can the from of raw material, don't that it's our ensure but Simpson our also run to we that still talked to do out certainly and we

then steel have It's we for a of some little constraints is see when And easing far product pretty out as in bit our a that a seeing our it a raw have of bit. still office, slow coming easing So it adhesives. good We're comes still our Taiwan, we're a little shape as our it in. but from offices, sourcing It's supply far our being we products still particular needs. that of of bit. we to used some in as problem, particularly from customer chain daily not materials the to and meet having produced some slowness coming sourcing Taiwan products our

supply issues Taiwan fasteners. chain And out primarily is those was of Karen mentioning

Looking at impacting to that longer there, chain part get CapEx, CapEx projects. your we so the supply much so second of takes – for items well. It are as our question is

equipments other lead and to be forklifts example, few time. For months used

XX in to we're Now, here months. XX

last this what lower we So planned was than spend CapEx time for in originally our year. XXXX

plan to $XX The about original $XX CapEx, $XX XXXX, million So million. million. was

bit of a carryover So there into XXXX.

improvements is Some of that in for of capacity, the just equipment CapEx is and or a CapEx equipment. replacing lot then –

last the volumes investment to focus sites manufacturing in order over needs been few has us. our and an have increased our as ensuring those equipment have area of So years, customer meet for that

Got it.

just then have guys kind been XXXX. on And outlook margin the consistently of helpful. the super you outpacing mean, I all in That's Okay. side, here

the So kind you would And potential XX% of maybe congrats steel out what on first, of terms kind might exiting look what of on the biggest side, side. outlook, drivers in the we excluding well on that. in But as surprised the I you? has last think or year margin ahead see variables Or XXXX ahead you upside I the the biggest mean of quarters? of as you guess, what as to upside then the operating what couple here of there risk still kind even of of do call downside

you it big Kurt, Yes, steel, a in driver. to that be there, is big hit there, going

as operating increases, we've leverage – on One but expense certainly a things not the margin. noticed, well, of line of price operating spend noticed benefited top that the has result the

operating dollars what at but the be XXXX, in will increase about initiatives in the increase those little revenue spend spend. of percent price OpEx and that that investing as in key revenue we year is of XXXX perspective of to in and from there versus to relative the those key because So a an market projects just OpEx a look out areas a areas we expenses that help expected down those laid And drive are dynamic bit ago.

will be through dynamics. that's point been going think sales the it I one dynamic forward. big beginning how So steel that cost that there, our But of the of driver rolls to and

Got it.

good and Year. color the all appreciate the New in luck Well, Okay. here

Kurt. Thanks,

question. Our from Company. Julio with Romero & of your next Please proceed Sidoti question is

Hey, good for afternoon, Karen and taking Thanks questions. Brian. the

Julio. Afternoon,

Hi, Julio.

you lumberyard that things. these go guess, weather, other mild contractor those you are mentioned XXXX? go momentum better minus the of drivers? volumes center and home North sustainable each just those American for and discuss benefit from we sales, and you Can how as maybe I through the weather, of better So sales each among And saw into your

home – but the are then to third back quarter out again, in normal coming there in of in price other steel the costs in of end talking Talking experienced that the to in experiencing We based, centers, input – centers, home a the centers had a higher due price-based we some run was growth more from that certainly rate. there were we QX, about volume that there, paused QX some channels. of significantly mostly the bit they home September that early that. QX about got we Well, the noted towards about and sorry quarter

Yes.

certainly, because housing OEM half us also pretty we think adjacency some kind fairly certainly talk when back mild. the starts see of in about think some as like there. had I That some we we're strong of housing our was we helps the the weather about starting year inroads And some growing. We're specifically nice inroads basis. to markets, how nice making of that's in starts,

those I Europe, business. of coming then of for or most of as obviously, starts, out quarter and was so So the North just DIY Fairly that Brian of a think type flat the America. U.S. growth combination mentioned,

is question second that my eventually guess I the steel And it. should the through on Got headwind P&L. flow Okay.

that the see should, mentioned half when extent headwind that You COGS P&L? how really period, through that do And should last that Do the really period? expect those it long that an six help how you does from should through month in XXXX. month of nine don't long hit work you steel the to second the you earlier to I question, elevated expect to a you elevated know, P&L hit a those expect, COGS? like on Any

really, answer XXXX. in it's longer little that steel to Europe here steady, bit. a that the a tough a help additional answer. just now, on there and production one head But a expecting right should Julio. now. with to good and the of come – really volume highs that one – is we're we'll of up tariff Right online in bit moderating just holding And question, what It's tough taken see direction. a That's changes Part little is steel off have really to prices their

think for steel long you to hold today, right were that don't just we is now. where it we'll steady obviously, answer a for If continue remain really I period. flat have good So

for depends. just had wish I you better I a there. answer really it So

No, even me, how long to that's guess helpful, helpful. as I think. Etanco. even I mean it the one one even last should the uncertainty just one fact And for is last I about to just clarification as there's uncertainty – how

XXXX's margins EU your segment's longer-term basis using is that base segment margin X% XXX the EBIT you your of EBIT by for as improvement? the One improve X% margins points. – the for targets to EBIT or XXXX's Are

the I Strong-Tie to there metric. Simpson number number a delta. looking entities that XX [X.XX] the combination at believe the we And trailing in is the relative metric Europe's the combined the that months, as it's are

XXXX. it. questions Got taking very the Thanks Okay. of luck much for and best in

Thanks.

Julio. Thanks,

of question. Our proceed next Securities. CJS Daniel Please is with your Moore from question

to one Thank I'm that. of shareholders that you closes. strings Etanco earlier you. operating maybe pull the wondering might you on you Again, comments just expand on mentioned just wanted to cash of of the one the XX% of might after target revisit cash if returning flow

exceptionally after weigh obviously is lowering versus opening opportunities aggressive. pullback more market sort Is even Just us how of like more this there balance up? M&A equity deal. you Your opportunity Are to that that with the giving sheet strong the target? considering market be you

helpful? that with on thoughts that be where might any go So you would

Yes.

do start off, the Board be Board which focus always business, Paying loan the by Typically standpoint that Etanco our we continue Yes. CapEx growth. to time have from saying certainly that we in that Dan, significant our will would something, we'll I meetings. we the to in we projects upcoming have dividend, discussing with and again, mean pretty mentioned, the this we discussed. April then place on grow that cash will with I be continue But us Board the frame. April some help in as the really back we

at what come we all we'll factors have what be. So to just to and return as with percent will those up look see that

repurchases and evaluate are we'll And we'll at look to there that, a that extent take share the that. opportunistic

Okay.

do the You it. flow and Thanks certainly firepower color again. sheet for to have cash balance firepower the

that here balance And expectations now. phase-in all comfort XXXX, our in, XXXX's that they us to the One phased XXXX. some in and are there – that sheet. XXXX were thing effect of comfort we wanted that price all put using of I to to over that increases million add welcome. were gives they're us that price into that areas increases relative XXXX probably in the know You're in XXXX, increase strong one price $XXX around relative in having gives on the to And

today's reached the We have end concludes of conference. the question-and-answer session. This

disconnect your this may great you and a for evening. lines participation, time. You at your Thank have