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Simpson Manufacturing (SSD)

Participants
Kim Orlando Addo Investor Relations
Karen Colonias President and Chief Executive Officer
Brian Magstadt Chief Financial Officer and Treasurer
Daniel Moore CJS Securities
Tim Wojs Baird
Steve Chercover D.A. Davidson
Julio Romero Sidoti & Company
Call transcript
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Operator

Greetings and welcome to the Simpson Manufacturing Company Incorporated Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kim Orlando from Addo Investor Relations. Kim. you, Thank

begin. You may

Kim Orlando

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

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

Karen Colonias

to sales walk to a and of key business everyone. third you and financials quarter then we’ll And and you our increasing significantly I’m Compared discussion Brian Further, sales strong outlook updated results profit detail. prior XXXX, summary year with to thank Simpson unprecedented through per in safety, value employee’s all to At diluted place safe health, to and related a priority strive rewarding share. our sincerely and to I'd begin results. delivered on improvement gross more times. drive earnings and initiatives. greater XX.X% in our on to primarily our discuss to Kim in performance our and result material with Thanks, margin, then from as to our year-over-year drivers considerable year-over-year a operations the through We quarter efforts volume. high gross $X.XX employees from detailed to of XX.X% results, a management level our our lower of for XX.X% the and perseverance of our combined increase as our afternoon, $XX.X our these other million second support the increased continuous company a XX.X%. good strengthen will margin expense restrictions, of work. COVID-XX their quarter, remains $XXX.X with achieved we I’ll To million income and well turn third in quarter and today. travel pleased strong higher in from ensure costs our labor with and XX.X% being help for like top our costs. profit improvement we our reduce a

disruptions employees of regards locations In these impacted thankful to the with continue our minimal of operating from Our pandemic. by that spread the to adherence the hurricanes were recent wildfires, our we protocols business COVID-XX, enabled the help diligence, affected or areas strict in none has minimize are negatively including to and to disasters. incredibly us

quarter co-op volume of helping center our safer, back substantial results, which related remodel efforts and the we our role to mission to in both and key in the stronger momentum repair structures. third space, rebuilding home with sales increase in our includes a customers. play to ongoing primarily prepared are build was the experienced Getting people in We the

more benefit prior outdoor are pandemic. spaces period. over of to their from and people remodel continue homes channel, business estimate in home We home in a of see repair We result time living from shift much renovations, as our consumer a behavior and the improved center year the more where spending we and toward COVID-XX XXX% sales as the

the disclosed second extremely we shipping into return happy location. their which to Lowe’s time customer center our home call, have previous a began our quarter, As we're products on as during in

We continued quarter. to make during third the on progress rollout our product

had set connectors industry of supplier. Lowe’s the September, end all been the leading exclusive with as our of stores As

of In solutions set addition, product X,XXX in product XXX competing set By in among both stores. our October, fastener to end manufacturers. we the completed our nearly all mechanical were be anchor expect Lowe's stores other and

throughout In while connector and Home carry out the this anchor of mechanical our are Depot fastener phased addition, most of the continues locations of the to Home remainder our line, year. being Depot products

anchor but our fastener reminder, products not and a in all mechanical were location. Depot Home some, As

quarter we supported period and Our starts in and content XXXX. respectively of into In X.X% west further versus the XX.X% XXXX. grew grew last a third housing of quarter sales XX.X%, grew] year are amount year-over-year. quarter the the versus of [start in homes, XX.X% second U.S. housing starts south by provide Notably XXXX, third and strong the meaningful where comparable

Europe, recovered Turning the Kingdom capacity to saw March. United late now France, and the with sales full nicely at our facilities now shutdowns in Covid-XX government due our we in to following operating

both quarter-over-quarter much improvement While in higher still slightly and the was related volume. the benefit currency foreign Europe of on of improved sales to translation, year-over-year

to to focus will to region our to we shift strategy. and Overall, early position with part our acquisition acquisition manufacturer now existing Europe, this the in strategy absorbed in we base market software share our quarter-end, I'd a acquired United like be a our our continue our subsequent line. product Kingdom to moving into market connector in The small company's in the grow October, operations to acquired expect benefit business. As complementary of closed the forward.

align estimate we wood providing remain the complete optimize of construction our previously home software To to the quarter over third over with technological connector builders. the software This a we've increase and core productivity LotSpec XXXX, XX% customers our during of and of to this believe choices a customers expertise in builders by which for will suite with help investments best As needs. Similar By solutions, our costs expanding with our purchase minimize believe discussed, proposition. acquisition made with provide their in and believe our We further designed and we small customers time. in sales capabilities to tailored business XXXX. technology in software end-to-end our we efficiency are figure solutions. area, competitive value to strengthen completed space for enhanced will applications, needs, software expands years software software wood of software the to more our innovative application of application was the offering and over have product builders to this for our our we

to to I'll interruptions Next, an our on implementation, update COVID-XX. continued turn SAP which to travel progress related despite has

in successfully working two following more locations, over inventory include so management. we've to Earlier the remains rollout unable year, That transitioned training our third benefits given fluid we uncertain, Immediately accurately to organizations branch to we said, our including better complete quarter, all duration our with to pandemic the impact location. sales severity aid enjoyed tool now COVID-XX the based management, particular of U.S. capital also is SAP. requirements and forecasting completed the live. highly which far the predict site and will to and international of this and travel Some UK we how on continue of are meetings remaining

we monitor currently and circumstances we XXXX. versus XXXX change. update in continue to such the anticipate goal end our completion timeline As of will a company-wide Though, near should

Now to our briefly allocation capital I'd touch like strategy. on

growth remain our continues strong the business debt. term. to the also flow, and cash down we cash capital appropriately generate on ensure has stockholder our priorities, be near working paying in year As needs the Well, for could focused while met preservation majority of pandemic been on our return to the focus during balancing

we COVID-XX. seven to as only past very with have be been the to supplier a grateful essential months, businesses minimal the Over to to other operate able disruptions

growth We that complement strengthen as footprint, existing continuing in would we software our consistently product manufacturing have to As our done were or also opportunities quarterly strategy capabilities. XXXX. dividends pleased declare very we're such, identifying our M&A offering, our since support to

Mike Before conclude, Officer. to I I'd like extend warm Olosky, a welcome Operating our Chief to new

over be As company. the previously XX years end November, announced, Simpson chemical a at leadership consumer goods spending global after numerous Henkel, in positions Mike will and of joining at

Ricardo opportunities service helping to Arevalo, instrumental We us Strong-Tie. XXXX, former Mike growth. are after be to Mike board seek for retired Simpson will years excited remain uncover and of innovative February he replaces our in on COO, XX in new of ways future who to have and

I than with financial more to While support macroeconomic the continue third economy. challenges and recognition find anticipated, our of service executed choice. durability position and capital strong performance key model could tested strategy, industry, longer product quarter sheet liquidity a dedicated plague search strong continued most has candidate quality our standards, brand that and in not business of to through the high our disciplined and be the superior pleased our our excellent our across right including industry The enables as our summary, despite leading strong broader an us importantly, we time customer flexibility, In board employees. financial to with elements, trusted challenging result solution, reputation took this a which and allocation the passionate our balance

like and in Looking of we the financial ahead, safety, experienced fourth the aside closures XXXX third to over dedication conditions. turn to will the to service. related to their we third due year winter trends experienced in outlook I'd best-in-class and commitment of believe seasonality through the thank greater from the health, customer quarter, Brian? and for during discuss holiday our and solid we valued quarter typically results and I demand to Brian now employees the detail. call continue quarter to like duration our talented

Brian Magstadt

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

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

our Now turning results. to

increasing As million. Karen highlighted, XX.X% $XXX.X strong, consolidated our to are sales

resulted Europe, from translations currencies, States Wood United the which to Gross In from XX.X% of by return increased. net which construction XX.X% XX% compared primarily America channels, $XXX.X new partially other to North home repair XX% increased and total increased costs, the $XXX.X some approximately to increased total which positive warehouse remodel Europe million, housing as sales currency In primarily sales strong foreign by margin of well $X.X a and margin XX.X%. due $XX.X of Europe's to in sales of due and reduced sales dollar. profit segment, million to in remodel a repair by activity, Europe the sales and extent activity. products X% a to higher local center to experienced sales, to labor shipping represented million, and gross still XX%, against points, resulting XXX volumes. strengthening sales, lesser material and primarily to represented increased lower concrete basis million, of costs. customer increased distributor due sales Gross benefited construction starts XX%. higher products Within as were offset compared currencies, increased by

more normalize would back margin to North support to shortly. our basis, to will which continue gross segment I discuss greater run steel compared outlook down we appropriate in improved XX.X%, we consolidated in in America demand heightened On a detail levels, As expect XX.X%. purchase a margin gross to to to our our rate,

XX.X%. XX.X% products, was concrete prior gross margin to to gross prior and compared year third in quarter. compared XX.X% wood was decreased quarter our XX%, quarter our compared XX.X% Europe, on year in product to the in products From to XX.X%, perspective, While a margin the for

costs Now, turning to third expenses. our operating and quarter

and stock million, and primarily Our expenses. engineering development based within costs, entertainment X.X% capitalized and expenses development Research which resulted to and profit lower by expectations travel, sharing, increased operating increases compensation Selling strong and software improved higher compensation, third North fuel stock-based lower X.X% due profit in they million, due offset In sales sharing, in by expense. $X.X advertising Total quarter America and million, and an in amortization, personnel to G&A On based offset to for travel X.X%, and X.X%. performance slightly a level, profit $XX sharing total costs. partly cash X.X% lower X%. in up increased segment expenses by to selling and and million, expenses operating expenses costs, increase and partially performance general $XX.X our commissions, to expenses in to the basis, expenses, $XX.X General XXXX depreciation administrative full-year compensation, associated America Europe, expenses. to were million, administrative X.X%. offset and cash partly insurance, cash increased approximately personnel North primarily were decreased. expenses were $XX.X On segment a due increased or Europe, increases in of increased

operating points, to of of compared expenses As were an XXX total sales, improvement basis a percentage XX.X%. XX.X%,

increased solid Our XX.X% with our million, increase $XX North operations America, increased to XX.X% of the gross $XX.X points. and from and XXX management to On by of $XX.X from $X.X and performance approximately our sales help operations operating expenses margin. compared a income drive increased combined Europe, gross primarily basis, income income In operations consolidated income top profit. strong of million, In margin, to line profit basis strength strong due costs from gross in a our to to diligent increased margin consolidated XX.X% operating our to due XX.X% million. million

tax share. $XX.X $X.XX $XX.X effective $X.XX million diluted million, fully remained or XX.X%. compared Accordingly, totaled income fully share, or flat per diluted to Our net rate per at

cash turning Now, flow. sheet balance our and to

sheet September compared slight a totaled the remained our down equivalents ample with million, of million, operate to healthy cash revolving facility at $XX paying quarter. X cash credit At balance and operations. a liquidity on the to June Our during day-to-day balance after million XX, $XXX.X decrease XX,

first of quarter as XXXX, length $XXX the order impact As given a to preserve precautionary the a the of Covid-XX credit line pandemic. million reminder, during uncertainty and down in we a financial flexibility, measure, of on revolving the of drew

borrowing. September As of for available million XX, approximately $XXX remained

typically levels September of by $XXX.X the construction June at the slightly $X.X inventory the inventory XX, increased the XX, fall activity to to summer experienced we've from decreased unprecedented maintain strive at in service pandemic. Our months. demand, see we we position as our million with through and million Along balance

We be efficiency, maximum on quarter continue from We and of service ensure million diligent our XXXX, while or flow our and purchasing maintaining delivery $XX.X X.X%. time improving focused generated operations million on of third management standards. to of strong to $X.X balance cash inventory for levels of practices a high decrease customer through the

XX, returns, minimal quarter, And $XX during of regards share, October In of for board January amount XX, a our cash third capital the XXXX. be expenditures, on $X.X the included During our implementation of directors on we approximately record third ongoing will which declared paid quarter, million quarterly dividends to which stockholders per we January SAP used dividend million as of payable XXXX X, for project. $X.XX a in to stockholder

like turn Before outlook. I'd questions, we XXXX the to discuss over call our financial to

reflect pandemic on quarter July, second fiscal As late progression a strong XX. as financial the additional as call and the as our our in today, on our operations. conditions business reminder, an well on of those of outlook we trends are XXXX of quarter Today, our based results, earnings reinstated impact to related outlook visibility October improved and the updating restrictions on restrictions, we of

the is continues our COVID-XX in I economic be to current year to state the impact current in ended as outlook expenses to note XXXX federal the with As December challenges we to marketplace, leading and taxes. XXXX combined of these material and thrilled of balance the range sales as were as in to industry customers, And to pull during are in income the to sales safely XX.X%. working reach, like ending margins increase. to and is in compared The from offerings, XX% a adverse such, our operational, ongoing today. thank macroeconomic margin the us our employees level time to follows: despite materially whether fiscal expect like In Thank related may geographic the the XX, up and give the estimated of potential conditions range Gross would our against stemming environment. from executing quarter our onsite for estimated we open net or XX.X% COVID-XX suppliers, to believe our your have estimated time, our to resulting are be XXXX be who the growth and would margins vendors consumers, to for customer a impact pandemic. pandemic, on operations, is of sheet on our XX, full-year At material of estimated Operating directly and ability both approximately and diverse XX%, times. uncertainty position, related macroeconomic in financial effective Operator? to financial [XX% to there operating attention of be confidence I to the as of range Net supporting we for to once XX%]. exit to back results and XX%, that X% high strong our investments strategic, XXXX. to continue the engagement, rate December percentage and range and you position closing, dedicated increase like are from I'd outlook should full gross raw this tax initiatives. financial costs, performance. We liquidity change our costs unprecedented the again including I'd a to call in remotely third operating with product all questions. anticipate

Operator

[Operator Thank Instructions] you. Thank you.

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

Daniel Moore

that sell at thanks as afternoon impact the to the Lowe's taking for questions we quantify modeling possible about it XXXX? full-year XXXX so impact during is think and of we start know, the kind kind inventory and to about Brian. and the do you, for you is How Karen always. [indiscernible] less of starters, Maybe Thank we think of as revenue quarter? much the Good expect

Brian Magstadt

end Lowe's we was The And in last in Karen center the noted but lines that smaller little for Dan. a for know bit a Sure are you is, the Depot lines connector were did then bit – QX compared sell just Lowe’s line. in the than was XXX%, QX Home on Combined done there product to was customers, those sets of in and quarter, those home which anchors, QX. more year. the – fasteners little in up sets and

getting we're or a that So, load-in we'll still home later, compatibility at able the those going and the were there, as little idea be but from XXX%. QX, compared center during just be to initial forward, of customers sell-in more re-sell will but what the good a of to those sets a information – perspective, little just provide up QX

Daniel Moore

QX, in correct? XXX

Brian Magstadt

Right.

Daniel Moore

too know, I than you And, you high that, know, More is a load thought magnitudes? what as or of, of Okay. know half are it way kind view you that guess a in just, process?

Brian Magstadt

It mentioned, no. was anchors as on QX, for I in sets. the the Again, For that load are and those smaller not extensive. fasteners

Daniel Moore

Okay.

Brian Magstadt

mention at Lowe's, without both would should America, or America look the, of we growth QX be company those, the would for I the exceeded revenue have as and quarter for North for XXXX. of thing the company North for the both One quarter during

Daniel Moore

you're been have saying, year-over-year would correct? is up You Lowe's, what without

Brian Magstadt

Correct.

Daniel Moore

contribute of the and/or Either to small tuck-in revenue okay. meaningful revenue Okay, on an any quarter basis? annualized two the acquisitions

Brian Magstadt

million would was impact And our But, again, acquisition. that builder to October. customers. $X.X application a zero small done software there. be to application, one, $X European revenue million but in the, those acquisition use no had from It's, No. particular then We about with revenue the very real software just We meaningful beginning to actually. did actually a at that the of QX. annual expect Well, able

Daniel Moore

it. Got

prepared in your comments And just Okay. to – Brian, on final elaborate, prior remarks. maybe the

margins think XXXX] exit some I cause it you've we expect operating What think obviously, it Is what and comps, margins margin XXXX, as we investment? you would to is that is difficult it pull and got mix? specific that said specifically [about but magnitude? you discrete pull to gross is know, back as back it

Brian Magstadt

likely Being restrictions. meetings, then efforts the us business other being we of the up that Yeah. about And we'll as like, we’re also, areas. don't that, no, year we to to and Sure, travel that and large think share of with – ramp think we I customer to in may the engagement but and be then grow those well, our for as to the very shows quarter interesting do next come look fourth there XXXX be be some do will attending initiatives yet. be And magnitude the you year. with able growth taking on some expecting have up that as plan some obviously like, of a able the balance to there trade

Daniel Moore

Got it.

Okay.

opposed So, it those would OpEx on more at margin all as of to commentary, gross appear. least

Brian Magstadt

Correct.

little the bit in margin there well. Although as may a gross area be there

Daniel Moore

jump full-year look Okay, and what seeing on queue, applied for revenue expectations maybe you're but in back year-over-year can QX I'll growth into] trends and in as outlook, generally? know, the revenue back does the you that and as October, what we your last more terms far guide of far about basis, [obviously like one, QX thus cadence, a given talk just

Brian Magstadt

Sure.

October. would growth so So that in QX guide the on over for pace far X% a last for we're imply and year, of the QX about with about year

Daniel Moore

back you. jump with Thank I'll any ups. follow Okay.

Brian Magstadt

Thanks.

Operator

you. Thank

comes with question. your question Tim Wojs Please next Our from proceed Baird. from

Tim Wojs

Guys, on nice job QX.

Karen Colonias

Thanks, Tim.

Tim Wojs

on dovetailing of question. on kind last the just Maybe the

recall, You how elaborate XX% is I the kind I did, XX%, you know, call of just here, quarter. go you the part obviously should it's, imply could through kind up, trend you maybe it quarter through, revenue of through kind if which if accelerated of because things XX% that maybe early July, the through know of paced

we that know, make to last the just that sure October, have I so comparison is X% to in number? sure a want year-over-year year number like you number, same just So, to make want

Brian Magstadt

Sure.

Tim Wojs

what would that. be driving And

Brian Magstadt

in revenue the X% That Tim. XXXX Yeah XXXX growth QX of QX that guide Okay. to the hit versus period. midpoint annual is order for both

X%, we revenue would net by and number year-to-date the taking we're guide. hit then about growing if that QX So,

October, that number. so right far on in And it's

quarter days to So, noted bit October. during little the commenting QX when for the about we that were seeing a release at those we're July you earnings were what QX early yes, different, compared

I think there? thoughts little be There Oh, have that. Karen, seasonality. it's just you of any do other may bit a

Karen Colonias

Yeah.

as conditions, have, tracking always have to of we – always customers we're winter the closed I mentioned, we down well what for think, some we quarter you our pretty did, actually fourth some you of the holidays, or always quarter our time. we've whether fourth to Christmas weaker, third. And Thanksgiving and it's know, are compared are second and as the typically quarter said, first

So, I think a, we we're consider normalized quarter. seeing just sort would fourth of a what of more

Tim Wojs

Okay.

[starts] your most I and mean, Okay. pretty still digits R&R still you're up right. are in double of some regions, activity, good seeing

deceleration I'm the understand guess, driven of, what might type that to have couple of I months? So, just last trying versus

Karen Colonias

you're of in Tim. if winter the always mean, right start months, I we've really number us if and is, start what anywhere four we you type tend numbers, Yeah, to remember, look that that you two trail but season. that puts months right said at to from

So, but seeing we've from got we're we've ground. the places still standpoint, already snow R&R nice on again, got numbers the where

So, holidays. it's see and both seasonality what function the winter from we really just the of from a those

Tim Wojs

Okay, inventory versus okay. normal of look here]? your how characterize as distributors, you at kind I would guess And [spend their you

Karen Colonias

We're pattern. pretty of We're seeing type or our much seeing not decreases. increases ordering any normal distributors

Tim Wojs

Okay.

looks what about sell-out to what the versus reconcile number on that quoted POS home guess sell-in channel, the was center then is just Okay. XXX% in that like? maybe your you And to I center side think there any things of way home

Karen Colonias

little Well get as the we customer. at bit POS it's coming Lowe’s the do we those but early, new look as a on especially numbers,

little So, idea the it’d as that ends. be probably better something year would a bit we have

Tim Wojs

Okay.

you have you've I up, demand a we you think picking in the just activities last next then And you sports uptick you seen little how bit decent pricing, have pricing an of XXXX, year? think here, know Okay. for steel, about would as is expectations about one on seen know

Karen Colonias

we there's we past, little an this cost Yeah, would increase we goods And element do steel we a that. we track in think of to sold, might year. are and increase. in consistency then we of correct; But we at pricing. that, a doing we not this increase in a of estimate price mentioned as seeing material the take key is if point, bit some this in price stability the and At noted, know, rest our look you're you do continue need a a to where throughout

Tim Wojs

guys. Thanks, Good good. rest the of luck year. on sounds Okay, the

Brian Magstadt

you, Tim. Thank

Karen Colonias

Tim. Thanks,

Operator

you. Thank

comes next Chercover question. your Davidson. question Our from from Steve with D.A. Please proceed

Steve Chercover

Thanks. Good everyone. afternoon,

of forgive if I and missed at in margin. sales, multitasking not it, from was exceed the were I you QX did you what you goes predicting So, but obviously, know, also me expectations your and but July, that end to just

think you you critical, being but, were don't So, too leverage? did I'm like, – conservative, know, were surprised? the what flow And you just margins just from the operating

Brian Magstadt

repair that continuing that’s I and was, We the strength and continued that we're to homes remodel know have been Steve, been trend backyards, a – this think another have Well, definitely people what going business that, amount of spaces of you. there's just and or as indoor part just whether then that And experiencing, in and extent. outdoor three their that the we're improving of is, year, it wave see. restrictions, be to it living you but living the back months, spaces, uncertainty COVID-related know,

but running even the bit I as – on we remotely part from or are the just the So, sales people us the other guess was little continuing a more OpEx, not been products more, our steel the been through, through, we cost have on have running busier per and I people it. out sales, se, out factories to know, normally and road on as that that we've of that's better And with and would got you meeting other utilization, have, attendance factory offices. of that on leading been the because attendance think virtually hand, virtually show sales then at of many reduced expenses trade people we working visiting we've have customers, from travel

know, you would on call volume it remodel through and that strong. very So, – center, to products that repair but continued have the I the type of be home

Steve Chercover

you I articulate the it's kind sure suburban it's we you know a you listen presumably, from you long-term you. of but, objectives and customers, in be for days, due from living like, very it would might COVID, density to And even your what meetings XXXX know, know, early know, get was increased seems be snatching thought that you'll victory and as from if you from homebuilders, feedback, your course, Okay, know, low actually good urbanization. beneficiary virtual

to mean, that in that density starting So, density is are towards turning high the I any comments terms on maybe tide see living? low back you front? of

Karen Colonias

when the Steve starts, family you housing and an look at multifamily. single a in starts decrease in see increase Yes. you obviously

it mentioned the in their some those So, that seeing from quarter, people also, we've moving area are the from builders some from first We've who of suburban as they clearly the of are last they to space. hearing numbers. being larger city more the seen those time out we homeowners, because want

put family unit that more single put we a content again. you So, And single and multi-family, mentioned, per basis we’ll both there that a couple typically our would product family homes would single on family. as tell we indicators that in in but

from would shift start the urban indicate is the suburban. density out So, see I that just we're moved think that what seeing you that that high to in

Steve Chercover

this $X bodes think out sales, we of if that presumably just imagine English] can't taking accretion. then company, it's fastener you. a almost of And there's a I finally, [this I worth well of competitor? you lot mean, Alright, million know, should well for

Karen Colonias

it's a company, Yeah, I a say, yeah, fastener connector company. connector not –

our run market and we'll to through facilities. share there, gain also be that So, some able production

So, little help a absorption. on bit

Steve Chercover

you. the All just year. Thank of for the wishes it. Got Best rest right.

Karen Colonias

Thanks Steve.

Brian Magstadt

Steve. Thanks

Operator

you. Thank

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

Julio Romero

Hope you good are well? afternoon. all Hey,

Brian Magstadt

Thanks Julio.

too. You

Julio Romero

European I ask did you improve if guess see and know, working margins what's you just could which excellent, kind there, but see into gross of maybe that strength talk I year-over-year, QX? about the continuing about well is down you operating do business, margins despite

Karen Colonias

Europe. a was Yeah, housing as we little and case first the the of mentioned, Unlike return considered essential, where that U.S., bit you wave know, in their tougher not materials construction had COVID-XX. from were Europe

and UK down, down. distributors closed our was our of facility only France many were not closed So,

bit the of So, the little up took we the in the saw or picking than a business U.S. longer up picking

they I team really nice to kind more normalized quarter, on done of are our reduced a breadth line. get bottom the them. focused job is sell strategy ours continuing And customers little to job of a on mentioned, rate there's work change back getting OpEx nice helping our a the third that great bit done sales job; had think force We've in entire doing to of as and management a were line. a that looking certainly, we we of of for those to a

the the they're and executing So, of fasteners, connectors, the a strategy. and job doing on that anchors, good

as those certainly in Europe. an as of uptick in in they we're and like were some seen On we negative happen in as looks will quite what year, have COVID-XX restrictions, don't seeing reports know second already it as earlier We've operations, news side, certainly hearing COVID-XX countries that regions. of we're the as some but in not wave far potential a those those but steep the put

Julio Romero

effects this of the that all I your and but tightness any it. customers cost and on your last any how you Have update the Got issues quarter, asked affects lumber? or Simpson? of customers at lumber I to on seen And related believe

Karen Colonias

product affecting by what not by a call but obviously, Well, wood we make, us fours sixes]. a [two that's from that wall directly, I know, you we standpoint stick, would and of two have

some our is again. heard wood housing that pricing obviously, heard is coming I've product. impacted certainly up, lumber supply that of we or kind our prices that for up. The prices going on going is particular standpoint, availability customer issues From if reduced, haven't needed back creates slowdown. I've of latest So, been down And by that are

So certainly far and as that will the the cost as pushed being price house, help shortage but as of the more the far pushed just concern as on haven't heard consumers. to up I of

And help that I back the prices the from as will as far drop think standpoint. this So, again, seeing housing down little in bit. those year, issues portability half a we're

Julio Romero

you flow quarter? be year-over-year expect know, cash me Maybe in would one to the for it. Got last is, up you fourth

Brian Magstadt

don’t so. I think

the – general that expectation now. I right Is would case. think that our yes, be

Julio Romero

Great. very Thanks much.

Brian Magstadt

Julio. Thanks,

Karen Colonias

Julio. Thanks,

Operator

you. Thank

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

Daniel Moore

thank Sorry, [indiscernible], again. you,

redundant, initiatives targeting given Just pulling or and about that we percentage more, [the XXXX as to XX.X% is year string the within range flat] on the OpEx for think this process signaling that you're regional expense revenue XX% normalizations as next of thought kind rise of are be now well? to is you a as of as percentage and little likely OpEx some the revenue, a sorry a to of year

Karen Colonias

go We in this both one. ahead, chime Yeah, Brian. Okay. on can

Brian Magstadt

in expected they’re rise say I’d to XXXX. likely

Daniel Moore

flow shifting a least Got M&A a the it? cash factor basis, That's to allocation stick to still And previously? if where do we had one of that to obviously, bit this, XX% I plan said missed you on to of How now that go back the you apologize, focus you it, sort shareholders does are pandemic? little given I at with capital then and helpful. the priorities returning goal in of forward more

Brian Magstadt

the more flow beyond to us would XX% go that fulfill to of the we at certainly thinking basis on that Sure. cash cash evaluate and or get get our as we're is, a we want help the the it, get investments make And our do but dividend, beyond even down. from that where as that's internal to from shareholders we’d that to One more other us as today remaining end year. returning We'd the down, evaluating so still there. operations thing like that that line other use about us help the particular take XXXX shareholders. that paid better. a in at by XXXX, efficient, then, return cash share repurchases, us the On customers know, help definitely balance acquisitions today, then, forward you in to of to We're done we're line as and far – like put to goal. profitable, strategy, evaluate, look But addition paid company's serve is

Daniel Moore

of be range targeting? spot there or sweet a Okay, and is acquisition would size that you generally

Karen Colonias

about know, complicated talked large You interested capabilities and extending We're very be our fastener material just the position. looking manufacturing as we've share really in a manufacturing as acquisition and in this, the the for that's market think, I Dan, in we'd certainly is space, space. building something smallest

small You to those bolt-ons, negotiate. saw pretty easy we incorporate did of are and to a couple

that a So, I why We're acquisition we is What a it and the would – And would have is fits of more might can do? the Simpson of it why our don't we think price. us? strategy for set why we owner sort looking that be right whatever be. target natural company right be to what the

Daniel Moore

Okay. More you to comments. quarter congrats obviously operating really Thank and strong come, again, leverage. And for obviously. on a,

Karen Colonias

Dan. Thanks Great.

Brian Magstadt

Dan. Thanks

Daniel Moore

you. Thank

Operator

are no time. There questions at This this program. concludes today's further

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