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Stockholders' Message

To our stockholders, customers and employees:

2017 was a highly productive year for Simpson Manufacturing Co. as we laid the foundation to position the Company for long-term sustainable, increasingly profitable growth and enhanced operating leverage. At Simpson Manufacturing Co., Inc., through our subsidiary Simpson Strong-Tie Company Inc., we strive for excellence and remain committed to our employees, their families, our stockholders, customers and the community at large. Our mission to improve the performance and integrity of structures through our tested solutions is something that all of us at Simpson Strong-Tie are very passionate about. A commitment to operational excellence takes that mission a step further.

2017 consolidated net sales were $977 million, up 14% from $861 million in 2016, and our income from operations was $139 million, a slight decrease from 2016.

2020 Plan
In late 2017, we unveiled our 2020 Plan to maximize operating efficiencies and drive long-term stockholder value. The Plan is centered on three key operational objectives which include focusing on organic growth; rationalizing our cost structure to improve company-wide profitability; and improving working capital management and overall balance sheet discipline. We believe these objectives will substantially enhance our return on invested capital as well as provide additional capital to return to stockholders.

Importantly, the operational improvements we are making will not jeopardize the basic fundamentals of our business that enable us to achieve such strong gross profit and operating income margins. We maintain a trusted brand reputation through our proprietary testing capabilities, deep industry relationships and involvement with code officials to improve construction practices. We also pride ourselves on being able to provide reliable and timely delivery for our customers.

Creating Stockholder Value
We generated $119 million in cash flow from operations in 2017 and remain committed to returning 50% of that cash flow to stockholders. In 2017, we paid $37 million in quarterly cash dividends and committed $70 million for repurchases of common stock. Since we began paying dividends in January of 2004, we have increased our annual dividend by 440%. In the last five years, we have repurchased more than $183 million in shares. As part of our disciplined capital allocation strategy, we remain focused on organic growth through strategic capital investments in the business and acquisitions that fit our criteria for growth.

We also further enhanced our corporate governance policies in 2017. Key highlights from the year, which incorporate shareholder feedback, include board declassification and the elimination of cumulative voting; the adoption of proxy access; and the election of a new independent director, Michael Bless.

Commitment to Safety and Sustainability
We remain committed to providing a safe working environment for all of our employees. In addition, we are dedicated to sustainable building practices and strive to make our facilities as environmentally friendly and as cost effective as possible. Please reference the Social Responsibility section of our website at www.simpsonmfg.com for additional metrics and details pertaining to our commitment to safety and sustainability.

On behalf of everyone at Simpson Manufacturing Co., Inc., we thank you for your ongoing support.
We believe our 2020 Plan objectives reflect our dedication to integrity, innovation, leadership and service that will ensure our customers, employees and stockholders are rewarded for their loyalty, hard work and investment. Our founder, Barclay Simpson, instilled these values in our culture over 60 years ago, and we will continue to operate under these principles as we grow and execute on our goals.

Sincerely,

Karen Colonias
President and
Chief Executive Officer

Peter N. Louras, Jr.
Non-Executive Chairman of the Board of Directors


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