To our stockholders, customers and employees:

Strong People, Strong Company

Despite the unique challenges presented by the COVID-19 pandemic in 2020, we’re extremely pleased with the way our company was able to persevere and even thrive this past year. As a major supplier to an industry that was deemed essential, we’ve continued to operate during the pandemic with minimal disruptions. By remaining resolute, agile and resilient, we were able to overcome obstacles to keep our customers up and running and to support a healthy and growing industry.

Our solid business performance in 2020 wouldn’t have been possible without the unwavering commitment of all our employees. We value the health, safety and well-being of our employees as a top priority, and we strive for continuous improvement in our business culture and practices to ensure that our company remains a safe and rewarding place to work.

Delivering Financial and Operational Excellence

Financially, we had a very strong 2020, with net sales of approximately $1.27 billion, up 11.6% from $1.14 billion in 2019. We generated strong earnings of $4.27 per diluted share, an increase of 43.3% year-over-year. Due to the significant level of uncertainty regarding future market conditions surrounding COVID-19, in April 2020 we elected to withdraw the financial targets established in our 2020 Plan. That said, we continued to execute based on the same underlying principles, with a focus on operating efficiencies and cost savings to guide us through the pandemic. As a result, we delivered on nearly every target we had set as part of our 2020 Plan goals.

Operationally, we’ve made significant strategic changes to our business since the onset of the 2020 Plan to ensure our foundation would be even stronger. This included positioning our business to be less vulnerable to the cyclicality of the US housing market by diversifying with key investments in adjacent products and markets. In addition, we narrowed our focus in the concrete space, driving market share gains and margin expansion, as well as strengthened our position in Europe and in the software space.

In 2020, we benefited from a shift in consumer behavior toward home renovations in the COVID-19 environment. We were thrilled to have Lowe’s return as a home center customer in the second quarter of 2020 and have since stocked all Lowe’s stores with our industry-leading connectors, mechanical anchors and fasteners.

Increasing Stockholder Value

We generated cash flow from operations of $207.6 million in 2020, which has enabled us to continue executing on our capital return priorities — including the payment of $40.4 million in quarterly cash dividends and the repurchase of $76.2 million of our common stock, reflecting our Board and management’s ongoing confidence in the company’s strategic direction. As a result, over the past three years, we’ve paid $120.5 million in dividends and repurchased $247.5 million of our common stock, resulting in cash returns to stockholders of more than 64.2% of our operating cash flows, exceeding our 50% capital return goal. Through our execution on the 2020 plan and this return of cash to stockholders, we achieved a return on invested capital(1) of 20% for the 2020 fiscal year.

Building a More Sustainable Future

Our mission to provide superior solutions that help people design and build safer, stronger structures not only drives us to design innovative products, but also guides how we manufacture them. At Simpson, we take great care to operate in a safe and environmentally responsible manner to protect our employees and help our customers build a better world. We pride ourselves on fostering a diverse and inclusive work environment, shaped by employees of all genders, ages, ethnicities and abilities, and we benefit from their unique perspectives across our entire company. Our engineers are focused on developing product innovations that reduce material waste, labor and installation cost, and we’re continually improving our production workflows and technology to ensure that we’re delivering the highest-quality solutions by the most efficient and economical means.

On behalf of everyone at Simpson Manufacturing Co., Inc., we thank all our loyal customers, employees, suppliers and stockholders for your ongoing support.

Sincerely,

Karen Colonias
President and
Chief Executive Officer

James Andrasick
Non-Executive
Chairman of the Board of Directors

 


(1)When referred to above, the company’s return on invested capital (“ROIC”) for a fiscal year is calculated based on (i) the net income of that year, as presented in the company’s consolidated statements of operations prepared pursuant to generally accepted accounting principles in the US (“GAAP”), as divided by (ii) the average of the sum of total stockholders’ equity and total long-term interest-bearing liabilities (which for the company are long-term capital lease obligations) at the beginning of and at the end of such year, as presented in the company’s consolidated balance sheets prepared pursuant to GAAP for that applicable year. That is to say, the company’s ROIC, a ratio or statistical measure, is calculated using exclusively financial measures presented in accordance with GAAP.