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Simpson Manufacturing (SSD)

Participants
Kim Orlando ADDO, IR
Karen Colonias Simpson’s President and CEO
Brian Magstadt CFO & Treasurer
Daniel Moore CJS Securities
Tim Wojs Robert Baird
Kurt Yinger D.A. Davidson
Julio Romero Sidoti & Company
Call transcript
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Operator

Greetings and welcome to Simpson Manufacturing Company’s First 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.

Now I would like to turn the conference over to your host, Kim Orlando of ADDO Investor Relations.

Kim Orlando

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

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

Karen Colonias

good and thank through full-year summary us I'll first afternoon, And Kim, financials initiatives. you outlook will updated business Thanks, detail. greater our in joining then quarter a and our key Brian walk begin of drivers XXXX you today. and with for performance everyone.

sales Our sales million on year-over-year volumes. first significantly quarter XX.X% net growing were higher consolidated strong, to $XXX.X

higher partially by to primarily gross factory, Our offset the in costs. warehouse, which margin expanded to lower labor, due were shipping XX.X% year quarter XX.X% prior from and costs, material

and center was XX.X% result earnings from operations COVID-XX expense in sales $X.XX. first income distribution The to of channel, a experienced increased $XX.X as increase XX% and period. Our sales home momentum compared million, significant increase the of a share primarily XX.X% we margin over in solid reduced costs the volume the prior-year continued our gross to where diluted in in the drove per an due in to with management combined of diligent our our increase to year-over-year quarter

the and our home reminder, where both home includes center much a of and center repair our business. are customers see As co-op remodel channel distribution we

see and to are year consumers to the of repair the channel as to renovations. contributed quarter the a in significantly ongoing growth center return space customer continuing as We result first quarter increased compared due to likely in of pandemic Lowe's as the continue the second a activity home XXXX. remodel their home last

benefited Our solid trends starts. US sales from in housing further

from grew XXXX first benefited As in we experience over the month which start, generally we lag demand housing year-over-year. of quarter starts XX% a quarter fourth strong the multiple the in time from

markets in surpass In starts the family addition, southern the housing regions housing in most content single where starts US broader US. in the especially western to and and we of the space sell the continued

chain in supply interruptions report material While February adverse notably the addressed have of demand Texas impact month weather resulted first certain we our in most performance. did since not a quarter to backordered in any conditions and

Now let's to turn Europe.

our improved strong first our solid basis customers’ needs chain shortages. inventory on and over the continue currency ability to meeting year practices sales prior supply quarter demand given due local Our broader management amid to our trends

operations March. a weaker to of in ordered cease conditions were reminder, were and As in of quarter France due to in the COVID-XX larger net when XXXX negatively affected Europe our sales first European operations Kingdom by late the two United in

in offices our help facilities production open but remain corporate today Europe operational of such work the spread as where from all in promote continue to of and of our to home possible distribution and As prevent major COVID-XX. we remote

the to marketplace. Lastly I'd recent like pricing to in take a some discuss moment dynamics

These to in X% we our implemented products our price inventory period significant manage material ahead for an included on us the to our on wood connectors, and clause customers. following notification order also costs. of properly April ranging for certain increases pre-buying announced to effort that price depending from X notice levels. a fasteners, into previously of went mix concrete XX-day increases rising As to XX%, The the offset US, prohibited February, early the effect in in a increases product in

rising result, not a to our from pre-buying we price believe experienced these in effort to the As meaningful wood material we an primarily increases. US second increase in we announced ranging further for products activity More recently, to connector do X% related a offset costs. XX%,

notified into on were customers XX April this increase June on effect of go which Our will XX.

strong initiatives. profit to expect I'd our turn our ability the end a growth on gross level price key the of through support We impact the high of increases to will margins to year. like help these maintain discussion now

and you of many believe event inorganic Analyst several a record continue of and on growth we in Day we combination organic held our are XX March Investor growth through virtual that aware, will a above-market us track opportunities. As which unveiled we help of initiatives

markets focused new our wood Our and into products. within of are opportunities competencies expansion organic concrete on core

Our inorganic licensing, focused IP, traditional M&A. be purchasing opportunities will on and

as in markets on the – repair, in have a engineered do-it-yourself that we market, each within given In leader construction first as the markets aspire or steel. initiatives opportunity equipment concrete, and these the three reminder, remodel, broader retail order growth our low-graded fastener timber, no a in well which OEM, particular and manufacturers, solutions, list As solutions. DIY, structural fastener original that product order a to OEM, I'll to appropriately of following be the focus of mass priority: being mass R&R grow timber, markets

which number has years. focus in In a for of addition, we're striving customer-facing a a leader to of ours been be technology, stronger

better solutions to customers specify the and with providing tools that design, helps to and job. I’m select, their them our proper referring right run the business the steps Here, software by for

in contractors, all believe as technological initiatives, distributors, in across along Simpson ability commitment will of expect as of enhanced model support will our We our each given all ongoing manufacturing relationship top key general. our advancements our areas our these code growth well engineering builders, deep-rooted drive of and growth We business throughout our to innovation. testing, successful be officials expertise, with research, and to engineers, with

products, we test have note and of stages It manufacturing development. to our these in important all five growth capabilities of Importantly, for initiatives initiatives. different existing distribution, that are is currently also results, currently

these successful ultimately Our the in our expanding customer potentially function users our areas be products and products end new and different base, a functions growth in promote future. introducing will marketing our to of and distribution channels, expanding to sales

Investor you key keep at unveiled initiatives will regarding company ambition updates apprised I'd highlight five-year Day. Analyst they our we arise. significant growth We to as also that like of our our

founded nine principles strengthen to on values-based which our the doing continued business Barclay guide Simpson our want today. company culture. our organization we of First, to

a Simpson instilling culture. important ensure significant of Our with programs a Strong-Tie them so to we them amount asset most relentless are spend time communicating safety-first leadership customer and focus a employees our in involving

choice of provide we on trusted the and partner choice. ambition be a you your easy quickly get meanings. want to product us. want to provider. your This aspire we our we business. that do partner We're it to many the brand Second, It a means want be solution of out to be takes solution to We job all to aspects in of And to with business site. make

is be product leader US above-market we number If be able to four, we accomplish which continue starts. this, to an growth have to ambition no accomplish can categories. to we relative in innovative housing strive or we will Third, doubt

in We the top invested operating foundation will margin income we within quartile the through capital return of continue continue remain finally, forward peers. proxy plan, to top our an XXXX quartile building stronger look will to expand to we to future even on ahead. the strong remain And our our peers. those After of expanding our

strategy. today Before capital like close on I'd our briefly I touch to allocation

to remain appropriately focused flows and growth return we As cash our generate on balancing priorities. business strong our stockholder continues

testing marketing in and investing We such expand personnel, our markets and the focus will remains solutions capabilities. which to develop as product sales key business to talented market a we engineering, in operate in strengthen our initiatives M&A share. complete order prioritize also improve our areas our lines for and in and growth

summary, expertise stemming despite help turbulence capital the potential pandemic. from stated in strong As first leveraging innovative space. macroeconomic interest strategic our In identify of are with performance previously acquisitions to technologies the ongoing we building investments or are we global including quarter venture thrilled

momentum of to continue positions like our and us enabled all for which the XXXX from operate I'd excellence, of reflect thank expect quarter of housing serve a to will pandemic benefit to during this safety to second business QX position strong operational our to starts primarily sales from continue is the dedication which health with strength. to ongoing employees We has well areas we their the environment. unique in

collaborative on a execution pertains ambitions to with environment Our our in growth forward Thank employees assist our and to in testing by company our opportunities growth adjacent model to time our have to our strategy. of leadership markets We it built initiatives ensure been your and leveraging engaged you engineering, as and for thoughtfully and the attention. team look innovation. on capitalizing business

and I greater call who will Brian? outlook discuss the Brian detail. over our to to financial XXXX quarter Now like our would turn first results in

Brian Magstadt

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

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

sales results, were Now increasing to as turning highlighted, strong, XX.X% net to our million. consolidated our $XXX.X Karen

segment, supported North sales co-op along America million to includes due the our sales were activity. XX.X% to remodel center channel by our repair primarily center return net and which higher home volumes the Sales of increased in volumes and Lowe's Within our customers. with distribution increased $XXX.X home

States sales Europe's sales to represented approximately concrete starts and experiencing compared in trends material benefit represented by sales our currency In Gross costs benefited offset increased to increased increased America increased of to million XX%. currency. which against gross costs. strengthening XX% higher million by primarily of dollar. some are currencies million Europe, also higher demand primarily lowered compared sales to basis from increased were Europe sales a foreign products warehouse from XX.X% margin stronger QX other United profit which total translations and margin On demand which shipping last XX.X%. segment to due new partially construction and to by margin year. to North repair $XXX.X XX.X% total products volumes a XX.X% positive local net XX% distribution continue to also housing the XX% gross to resulted resulting construction compared in of points Consolidated XXX of XX.X% basis, gross by We compared to and labor, solid due factory, in $XX.X activity. channels Wood $X.X and remodel from

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

increase our due Total XX%, quarter and expenses Selling as operating costs, increased due operating to in development turning were of costs, they America personnel by were expenses. in costs. amortization to fees, in to expenses X.X% Research $XX.X XXX and XX.X% primarily expense, patent to to professional X.X%. XX.X% sales. increases Total fees, and up stock-based segment increased X.X%. expenses depreciation And costs $XX.X offset $XX.X $XX.X and an administrative increased On operating XX.X%. million expenses basis and costs. million decrease due were net expenses million travel-related of up Now, X.X% million, a expenses to in decrease an costs. and first points a and in professional and improvement to costs, travel-related personnel professional North personnel to increases primarily fees, and engineering million, compared Europe, by compensation, basis, percentage offset stock-based selling a in General increases compensation, $XX.X or were a of approximately in

In million, top increase line XX.X% offset QX to our In operations operations primarily to helped to with partly million. approximately Europe, profit, increased drive income and $X.X management a gross basis, basis combined by to expense operating income increased from operating income a performance margin million, increased by to higher America, our $XX.X XX.X% North consolidated million, XX.X% in compared solid XXX consolidated operations $XX.X $XX.X profit. Our gross points. gross increased expenses. of to due primarily margin On increased from stronger from XX.X% diligent income due

vesting Our diluted of from XX.X% share. per XX.X% tax per units. lower Accordingly, $XX.X due the to million share credit or a to effective or fully tax rate stock to $X.XX diluted income fully totaled $XX.X on increased windfall million restricted compared $X.XX net

with healthy decrease to March sheet balance sheet compared balance flow, our day-to-day cash to and a and turning equivalents XXXX. our At $XXX.X March liquidity million, cash to $XX.X of ample XX, operations. totaled remained our Now, million cash operate XX,

was March our borrowing and As year-end. leases, of for XXXX, portion a from debt-free XX, the line $XXX unchanged capital on million credit of primary remain available of small full with we mostly

by raw Our pandemic. unprecedented inventory construction XX, the we've experienced continue December material March prices, XX position higher $XX balance levels at of million to throughout at from increased activity and $XXX.X million demand see of the as our with along we

We continue high inventory to this while rising levels delivery service carefully and costs our of manage limited supplies, customer striving purchases environment of standards. raw and material on-time in to all maintain

approximately of during of used million stockholder million million management, million strong expenditures effective improved returns, for in paid during quarter. and the As a regard $XX.X $XX.X of flow $X.X an quarter increase we we quarter. our working In result capital dividends the first XX.X%. capital first of or from profitability the $XX We generated operations for cash XXXX, to

had XX, through million amount of our the As share end of March XXXX. XXXX, full the of authorization we in remain effect which $XXX will available, repurchase

confidence strategic will to our improved that share initiatives relates both expect our in invested on a as capital, our opportunistic it operational remain higher return we business drive and to performance we’ll and activity. purchase expectation active Given and our continue

to meeting detail. board allocation will is take scheduled in priorities where in next early May review Our capital our place we greater

compared April year follows. on XX, financial we trends our reflect as updating increase we've of well estimate as as of like XX, price trends over certain our recent guidance demand full been to conditions operating I'd XXXX. be the today, our the XX% the December for margin as the in impact to outlook to XXXX outlook. call updating are in to questions, to the of of ending Before range Based of to discuss we to now our and turn elements XXXX XX.X% original We're business increasing range XX.X%. XX.X% experiencing announcements We're our stronger-than-anticipated the

in pressure While our important fiscal XXXX. we margins fiscal based XXXX, very XXXX increase are material anticipating to into we pleased raw in are operating and our for late current it's note that expectations, outlook on to costing

will substantially Our purchased the gross margins cost early XXXX reflect the prices. in or steel with steel steel an more average first recently into together half to prior surging of at higher sourced of market

continue price raw these our part our we typically As through sold raw buy prices, to are of impact expected lags to goods at and as begin impacting costs work our on-hand significantly even anticipated and from inventory averaging increases. prices the the raw increase our higher material to decline, for XXXX material cost materials adversely in margins latter of XXXX if

initiatives peers the our growth our will management. Day, However, margin proxy through Investor execution five-year as announced during on and our expand of plan remain which we our a key and successful ambitions company recent focus achieve careful our be to operating Analyst income to quartile within of expense to top

of believe investments and during that In projects a and the confidence our to due And open includes challenging for current to our In to our of improve this time, your pleased growth factory both maintenance tax trends XX% It's to this service Operator? to safety for support our in are like small and again during results and balance the tax to is for including updates. relative rates. we call the We ability outlined as are I'd operational diverse important supporting capital and spend, employees approximately as we were like you with sheet Analyst million effective expenditure and range I'd our million to customers to elevated today, state amount to our reach to in we demand our used carryover in maintain million spend our income be to maintenance fiscal financial pursuing paused and previously future in note At safety Investor levels quarter range time us our initiatives XXXX CapEx. be Day. only well and and related summary, combined first equipment our to safely product CapEx the very federal have with will be pandemic, dedicated forward. all $XX including $XX questions. reiterating significant rate very of thank strong XX% once who working performance. Thank which times. expect to these addition, attention of strong million and geographic moving scale, our for expenditure $XX excellence capital at to outlook we $XX offerings gives our time, finally, operating

Operator

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

Daniel Moore

afternoon. Brian, Karen and good

Karen Colonias

Hi, Dan.

Daniel Moore

for questions Thanks taking the really obviously on results. impressive congrats and

latest a The top round First April increases products? of X% to on of or going you a of in clarification. XX% question June, is in different of price is increases that on effect it into X put set the price that's

Karen Colonias

– the XX% and of X% That’s on those products. price first set so increases to were varying were

of XX% the were second mainly on connector X% products. increases set to price The wood

Daniel Moore

Specifically with the connectors.

Okay. helpful. That's

Just that. approximate give up XX%. and America I kind price? Perfect. want QX Can make breakdown you between to sure of North volume us heard sales

Brian Magstadt

a there. in Mostly of Brian. price lot volume. it’s Again, Not

did Just not QX we have in a reminder, of lows XXXX.

mentioned. there impacts so in and volume. price So that Europe so were a elements little obviously, volume ,the just we've – element but got mostly that mostly There increase I

Daniel Moore

Yes.

of benefit those us of given the most price still ahead the timing So of obviously pricing is increases?

Brian Magstadt

Correct.

Daniel Moore

XXXX did be think say the sustainable. we picky, previously mentioned, – guidance, think be would as but to this And a few to, a levels to not I times probably wouldn't you year. times for – said margins couple operating – of we looking at you And pointed then Brian, XX.X% XX.X% Okay. I and the

and Now, materially looking at we're least that higher. potentially

latest to stronger it just So now? much expected delta – anything of increases guide than is increases, the is of trying apart, volume and there are how just else much parse the of how of it initial sort in round we in the this where price and

Brian Magstadt

Dan. Sure,

So primarily, price.

based I higher-priced of for As sourced way our average prepared remarks, cost mentioned its currently while does inventory. into weighted in make it sales steel cost to my take of a on

effect increase we as earlier. the early However, is noted April in or price June

cost cost as that in on there's gross – at have it, So we reminder XXXX, pull – And operating margin we that will that a that increases margin average element. to based see today. as I'm just raw while weighted material that just again, in of information back that

So largely due that a noted we've due to of the those, but maybe in past. to little element selling volume the bit price benefit, mostly

Daniel Moore

And range growth there that you is a range those assumption targets margin underpinning share? can revenue targeted of that new new margin kind the

Brian Magstadt

just of increase there's We're for mid-single be it's the a line to now. a still the guide uncertainty volume that revenue that fair pretty is And digit But and number the of guide. expecting year. the noted revenue and associated I XXXX. amount margin yes the of think still for course number, necessarily is not up top price finished volume back with that operating element wide We there we're sharing right that half influencing the

Daniel Moore

you've least terms increasing And in of lastly is M&A. Perfect. for described capital allocation potentially as me, focus at

you etcetera. think in you've mentioned outside brought I some consultants,

as like. well. Thanks. looking of you larger as tuck-ins you or a the smaller Are possibility kind looks commentary any on are at Just at looking what pipeline deals

Karen Colonias

Yeah.

address can Dan. I if one, see that me Let

we're from few new able as but us a our onshore up us look widens with also as DIY versus us talked really the into look an standpoint we’ve for the opens see in it the so But help being for it might things some the from software about fastener standpoint control as initiatives, materials, buyouts. look our mid-rise space, areas funnel working space, initiatives, through. to to more times that growth those opportunities talked obviously in different we at about, initiatives So manufacturing in a you like building many that we’ve to steel opportunities slightly we

Daniel Moore

again. jump color good. Very follow with I'll for the any back Thanks right. ups. All

Karen Colonias

Thanks, Dan.

Brian Magstadt

Thanks, Dan.

Operator

Thank you.

is Tim from of W. Robert Please Baird. proceed. question Our Wojs next

Timothy Wojs

Nice Hey, everybody. work. Congratulations.

Karen Colonias

Thanks.

Timothy Wojs

Maybe first question. my

I of generally of the when to I you Just if What's range primary upper the operating a I guess say mean, go to margin kind look for. ask there’s getting you out guidance. fairly wide guess toggle price, you at little did – point a what the end? range get guys you you the end with between wider lower the Because

visibility seems there. So like it there's a amount of decent

I So volume. or to you it the end? upper get can Is just really guess lower what

Brian Magstadt

Hey, Tim. It’s Brian.

had that the earlier, half the we and out when So that had price with year guide related customers come to of we volume to just increase. primarily announced back our also

part the the as – we're current QX the elements of toward now, on that so looking that period guide that volume at guide. And wildcards QX, around time are

Timothy Wojs

did prior realization? any guide price And the include

Brian Magstadt

It did increase. the first on price

Timothy Wojs

things, handling Okay. market, challenges supply at And any? benefits in kind Got guess And mostly at are Karen, like supply how you had chain the that look from I at some benefited sounded of? know of look like of you. the I it issues, you you US I was have marketplace mean, Europe. you I competitor if mean, in you But you chain the when all guess, you It saw. if side you mentioned

Karen Colonias

everybody almost cardboard and many, adhesives. that building many for materials Well, in discovered as think us I are used resins OSB know, to our you from

take in had were of of we Texas, to And we to mentioned. something there felt. issues but We've get chain any I So being care when some resins. our was been able certainly certainly able customers, that supply that what freeze that's that

is only For pricing chain in tighter. an The is is wood supply getting talked but main not steel as is course, we've And issue availability process. manufacturing about the our issues steel. us, thing, of increasing, obviously for not

what raw get to have seeing that sure on being word this which allocation are vendors. forecast, a material we to be not that tight is continuing use steel very able we or And the from are our point at our the we’re We great. producing we’re monitor and

our many We're we're many, industry. our well with areas how within as we that well with in as the managing manufacturing, difficult working group buying working it our is forecasting construction have our through quite chain and supply So customers.

from point, good So that at standpoint, that. with Even shape resin we're in shape. back we're this good in

Timothy Wojs

Okay.

Brian Magstadt

on be would We're over that items containers, Karen, challenge. some of in little from Tim, I inventory bringing facilities bit buy asked a our bit in we And, being it. there. Just volume. think challenges there. bit a But managing you it's the or out product think versus certainly logistics We with competitors difficulty there, our other Asia benefiting little in our also to product customers maybe our we're from supply position about Europe, little more having a a

Timothy Wojs

Okay.

then from one for relative changed And when your about year? two ago, Good. me, Okay. think last were the where has this assumption SG&A maybe months we you to spend SG&A

Brian Magstadt

do And are call a in of out admin future Not you looking bringing than on One And like. would – is so we're want things course, thing and expense know ago our to some company, typically than compensation is for when tied in results. performance weighted earlier heavily on we're what the of significantly. much there. company got, the share ahead on we equity line it's think year the initiative that I were folks at sales today. the a with to product more they of associated reports forecasts and we've new I we focus spend as I mean, unit, less and testing like the SG&A code

relative $X last had year. in of stock QX over in to comp delta a – expense So million we QX

highlight came progressed very that of looking – back. a nicely year year the little to versus at last a because delta. that But that QX wanted Now, as QX I just a lot bit of expense

Timothy Wojs

Okay.

Okay. Great.

spending a the relatively like sounds just base consistent have of higher sales. and SG&A are So levels

got Thank you, queue. I've all That’s Good. back hop I’ll Okay. in guys. so

Brian Magstadt

you, Tim. Thank

Operator

Thank you.

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

Kurt Yinger

Yes. questions. Good taking and and my afternoon Brian Karen for thanks

Karen Colonias

Hi, Kurt.

Brian Magstadt

Kurt. Hi,

Kurt Yinger

Maybe, you ago. about just at starting event a investor the Brian, with Hey. month

to to think is kind expectations for given that before off how pressure the the still you at margin couple back kind change alluded or of that. operating by looking increase margin XXXX. the this gross the outlook the does that again your case Is XXXX. jumping of teens getting next of years or come, higher some I mid-teens into kind high point that yet to of of you're margin Realizing around

Brian Magstadt

term question, think timing that XXXX. Kurt. I it XXXX within Good and don't longer It's issue outlook. of Yeah. changes No, a more

Our increases then it As cost you've years, seen steel and in of other goes way. lags on sales the prior pricing

for we for longer to range XXXX, would I we'll operating and gets high-teens say, it leveraging back there or that XXXX, to there. mentioned that margin. due then due steel remarks, so average or gross ramp years margin in income get then we'll to back had that revenue we I the in to up if up ever build five what level expect initiatives growth have additional a of the environment, a prepared to to I then, reiterate So think gross the normalized more benefit. we bit pullback a And

Kurt Yinger

it, Got got it.

a And lows kind channel sense. the think impact then makes that obviously to the contributor a ballpark kind is when way in help that of kind subset year? of us then last And All has could of growth. That center about what any as at channel Okay. home center is percentage How stage? do this of there been QX of positive you you home really right. lapping revenue

Brian Magstadt

we Well, own on not out the don't those customers. its revenues breaking we're – for

comparable pull strong was to year-over-year very that continue talked people product to general were on it’s strong and line would That's it's increase, a comparable the see about. XXXX pretty did anchors, market. improving although over being mechanical their – very homes I response, mentioned we sales that as for expect, it's what perspective, due As Home to been category referring and Depot I'm channel XXXX to lows noted, We primarily residences like. a numbers. just our QX and in not that previous in up just from XX% a do on We we've the there. the a that well-documented, back

of as that just to in So, would we continue, expect on – DIY post-load-in, it a the far business much so to as RNR and for perspective, growth we XXXX. came see much because not comparable DIY, it although so rate expect

Kurt Yinger

right. Right,

Karen, just alluded Okay. That different had then last growth the stages me, sense. within being makes markets. to one for different target in those And initiatives, you within

stages? to at As can And could of XX growth the next kind line we think in compared trajectory? overall be you're, to XX you as look the I where months, impactful about, which most the just guess, earlier further areas down talk you

Karen Colonias

Yeah. the impact, biggest That's as would mass are fasteners. fastener market, significant And discuss the those about a opportunities the timber, a so OEM, use RNR really as where we of our can amount good that I well think we if talk line the areas, question. have those DIY,

there's growth nice so, And opportunity there. some

majority the needed. have more majority have of we We code still those do behind more areas. And products the needed to those products also – of areas. listings always develop. for products But have Obviously we products

marketing particular getting the amount work do, to code So we some though see and little a has manual, design to that team lot I product reports, The even of those initiatives. that for market we for lined those I a distribution up sales that the the work work we we would a Again, have that have do have have would still market, bit there, the of say. legwork testing, steel extra lot product of market have probably already on visible, we our in Again, probably growth and part product the we have more least of there. areas. work steel

various stages. in So they're all

Do cases, in line? products cases. have others. complete absolutely have in But mentioned, some some more in case, have needed Not cases we we code a each I many ready. all As in literature testing, literature, in we

various in So that's why I'm on initiatives. they're stages those five saying

Kurt Yinger

QX. luck great. here good color All Okay. and Appreciate in right. the Well,

Brian Magstadt

Kurt. Thank,

Karen Colonias

Kurt. Thanks, Great.

Operator

Thank you.

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

Julio Romero

Hey. and Brian. Good afternoon, Karen

Brian Magstadt

Hi, Julio.

Karen Colonias

Julio. Hey,

Julio Romero

is just I of first growth. length It expect the Lowe's, comparables. The home as the hearing the that of year-over-year rate. they activity, increased center not question growth your that robust you on the driven that’s what to persist? be lap customers But terms you R&R that from as runway the are My portion of strength by the growth won't understand in

Karen Colonias

Yeah.

had those with and in was R&R in both business, the continue it think substantial not Home saw going I to Lowe's the – that putting think and Depot grow, hearing XXXX. that I Lowe’s think through, I growth even And home forward, we was think so future a projects are is – but growth market. of still of – some that we improvement they still will think worked being it a be to still are a probably pulled I growth that lot and strong was there's very

Julio Romero

Okay. of average typically that How about price a does we long And cost lag material, think should how on increase average weighted that? your raw weighted by? costs

Karen Colonias

steel prices early year, year. and increases, – and to the question, of note expect It’s prices could that cost Julio. with consume we wait of could that a the through gross due next just that's in the of at XXXX element. And stay reflect into wanted why up pricesfully purchases, margin we amount as would those the early And we to prices be at pullback end we because the as catch I sales. that bring then on It then selling – steel steel long good where point, through go And – hand. assuming just have it they're

Julio Romero

But expect XXXX it. the continue – all kind way think to I or… just to to through of Got rise expectation your does clarify, steel

Karen Colonias

No.

Sorry.

me Let clarify.

So were current inventory stay market. increase the spot weighted it even – if in at the average amount in will will to price, prices flat

this were the pretty to if increase price, because buying our today's average of had to to sourced at current that continue will we've we prior got market continue amount environment. weighted inventory a large So we

in bring on at average. continue on based it. will that the consuming weighted weighted cost just price average our increase sales is how we're we anything of to And So current that

of today, today, bit where consumed this But we're have on lag. that a like there is of we today, But on would see commentary prices buying what margin it's today don't LIFO, so getting what we a not as is XXXX. at a prices steel pullback based gross any future So moment. see we into

Julio Romero

a know market touched you earlier. on about all that. space? how some you But the appreciate you're working concrete Maybe growth I this those I just maybe product think could you don't if Okay. of the you us on your have growth on the that initiatives. on update to if And five on any nascent I color you there, I to talk about And Can could developments. initiatives, opportunities know so markets – your talked talk your about we – key about for initiative give within of develop those progress some guess

Karen Colonias

Yeah. The talked we've this. concrete about market area,

Our opportunities bridges, thing. growth carbon roadways buildings, of fiber have product repairing sort is really we the one some that's get looking that as to

retrofitting now that specifiers is done mentioned, work got can the it that that reports we've we've or product looking being they're testing. on fiber the code have and and I solution structure. We repair that when product, so as they carbon product for their more got meet available so with aware they're And

Also were expanding an market the as our those the when did in areas. certainly XXXX trying the but our to them in expanding, focused and residential plan, concrete think we plants. area that's areas of I we products. space. area, concrete key I'm into really mentioned six we concrete So the for wastewater also Those all treatment on remember

Julio Romero

Okay. taking Great. Thanks questions. for quarter. the Nice

Karen Colonias

Great. Thanks, Julio.

Brian Magstadt

you, Julio. Thank

Operator

we gentlemen, and of this reached and conference. have your for end day. session much the a will and Thank participation today's Ladies very end the have you great question-and-answer