Stockholders' Message

To our stockholders, customers and employees:

Simpson Manufacturing Co., Inc. was founded on the principle of strengthening the performance and integrity of building structures. Sixty-two years later, our commitment to this mission is strong, and has been built into the core of the company culture. At Simpson Manufacturing Co., Inc., through our subsidiary Simpson Strong-Tie Company Inc., we pride ourselves on providing our customers with innovative products and superior service. We are dedicated to maintaining our trusted brand reputation through our proprietary testing capabilities and deep industry relationships. We are devoted to our employees and to ensuring that their workplace is a safe and sustainable environment. Finally, we are committed to the growth of Simpson Strong-Tie, and to providing value to all stakeholders involved.

Operational Execution
2018 was a year of solid operational execution for our company. We achieved consolidated full-year net sales of approximately $1.1 billion, up 10% from $977 million in 2017, and we produced strong earnings of $2.72 per diluted share, an increase of 40% year-over-year.

In October of 2017 we announced a 2020 Plan focused on maximizing operating efficiencies and enhancing long-term stockholder value. The 2020 Plan is centered on three key operational objectives which include driving organic growth; rationalizing our cost structure to improve company-wide profitability; and improving working capital management and overall balance sheet discipline. In relation to these goals, during 2018 we achieved:

  • Strong growth in sales volume throughout almost all areas of our company;
  • A 230 basis point year-over-year improvement in operating expenses as a percent of sales; and
  • Approximately $160 million in cash flow generated from operations, an increase of nearly $41 million, or 34% year-over-year.

These results represent tangible progress toward our key financial targets under the 2020 Plan, and we are extremely proud of the dedication and commitment from all of our employees who are working hard to reach these goals.

Creating Stockholder Value
Our strong cash flow supported our capital allocation priorities of returning a minimum of 50% of our cash flow from operations to our stockholders in the form of dividends and repurchases of shares of our common stock. In 2018 we paid $40 million in quarterly cash dividends and repurchased $111 million of our common stock. Our share repurchase activity in 2018 was a record for Simpson Manufacturing Co., Inc., and reflects our continued confidence in the strength and outlook of our business.

Over the past three years, we have increased our annual dividend by approximately 40% and have repurchased more than $230 million in shares, resulting in returns of our cash flow from operations to stockholders of over 90%.

In addition, as part of our disciplined capital allocation strategy, we also remain focused on augmenting organic growth with strategic business acquisitions that fit our criteria for growth. This includes enhancing our exposure to additional product lines or geographies that align with our diversification strategy to become less reliant on US housing starts.

Finally, we would like to acknowledge Peter Louras, our former Chairman, who is currently serving as a Board Director but will not be standing for re-election at our annual meeting in April of 2019, as he will have reached the end of his 20-year term limit. On behalf of the Board and management team at Simpson Strong-Tie, we would like to thank Peter for his many contributions over the past 20 years. His guidance has been instrumental in the company's achievements to date.

On behalf of everyone at Simpson Manufacturing Co., Inc., we thank you for your ongoing support.
As we look ahead to 2019, we remain committed to achieving our 2020 financial targets and focusing on the areas of our business we can control to ensure long-term sustainable growth, enhanced operating leverage and profitability, and continued return of capital to our valued stockholders.

Thank you for your continuous support,

Karen Colonias
President and
Chief Executive Officer

James Andrasick
Non-Executive Chairman of the Board of Directors

As part of an orderly transition, James Andrasick was named Chairman of the Board of Directors effective January 1, 2019. Mr. Andrasick has been a member of the Board since 2012 and currently serves as chair of its Audit and Finance Committee and serves on its Nominating and Governance Committee and Corporate Strategy and Acquisitions Committee.

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