UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, ~~2017~~2019



o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-13429

Simpson Manufacturing Co., Inc.

(Exact name of registrant as specified in its charter)



Delaware		94-3196943
(State or other jurisdiction of incorporation		(I.R.S. Employer
or organization)		Identification No.)

5956 W. Las Positas Blvd., Pleasanton, CA94588

(Address of principal executive ~~offices)~~offices, including zip code)

(925) 560-9000

(Registrant’s telephone number, including area code): ~~(925) 560-9000~~



Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share	SSD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No ý

Securities registered pursuant to Section 12(b) of the Act:

The number of shares of the registrant’s common stock outstanding as of ~~September 30, 2017: 47,313,707.~~October 31, 2019: 44,327,218.

~~NOTE ABOUT FORWARD-LOOKING STATEMENTS~~

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements relating to events or results that may occur in the future are forward-looking statements, including but not limited to, statements regarding our plans, sales, sales trends, sales growth rates, revenues, profits, costs, working capital, balance sheet, inventories, products, market strategies, market share, expenses (including operating expenses and research, development and engineering investments), unrecognized costs (including those with respect to unvested stock-based compensation), cost savings or reduction measures, repatriation of funds, factory utilization rates, results of operations, tax liabilities, losses, capital spending, housing starts, price changes (including product prices and raw material, such as steel prices), profitability, profit margins, effective tax rates, depreciation or amortization expenses, amortization periods, capital return, stock repurchases, dividends, compensation arrangements, record dates, prospective adoption of new accounting standards, effects of changes in accounting standards, effects and expenses of (including eventual gains or losses related to) mergers and acquisitions and related integrations, effects and expenses of equity investments, effects and expenses of relocating manufacturing facilities, effects of changes in foreign exchange rates or interest rates, effects and costs of facility consolidations and expansions (including related savings), effects and costs of software program implementations (including related capital expenditures and savings), needs for additional facilities, materials and personnel, effects and costs of credit facilities and capital lease obligations, headcount, engagement of consultants, the Company's 2020 Plan (discussed under "Management's Discussion and Analysis of Financial Condition and Results of Operations" below), the Company's efforts and costs to implement the 2020 Plan, the effects of the 2020 Plan and the projected impact of any of the foregoing on our business, financial condition and results of operations. Forward-looking statements generally can be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “target,” “continue,” “predict,” “project,” “change,” “result,” “future,” “will,” “could,” “may,” “likely,” “potentially,” or similar expressions. Forward-looking statements are necessarily speculative in nature, are based on numerous assumptions, and involve known and unknown risks, uncertainties and other factors (some of which are beyond our control) that could significantly affect our operations and may cause our actual actions, results, financial condition, performance or achievements to be substantially different from any future actions, results, financial condition, performance or achievements expressed or implied by any such forward-looking statements. Those factors include, but are not limited to: (i) general economic cycles and construction business conditions; (ii) customer acceptance of our products; (iii) product liability claims, contractual liability, engineering and design liability and similar liabilities or claims, (iv) relationships with key customers; (v) materials and manufacturing costs; (vi) financial conditions of customers, competitors and suppliers; (vii) technological developments, including software development; (viii) increased competition; (ix) changes in regulations (including changes in trade regulations) or industry practices; (x) litigation risks, and actions by activist shareholders; (xi) changes in market conditions; (xii) governmental and business conditions in countries where our products are manufactured and sold; (xiii) effects of merger or acquisition activities; (xiv) actual or potential takeover or other change-of-control threats; (xv) changes in our plans, strategies, objectives, expectations or intentions; and (xvi) other risks and uncertainties indicated from time to time in our filings with the U.S. Securities and Exchange Commission, including the Company's most recent Annual Report on Form 10-K under the heading “Item 1A - Risk Factors.” See below “Part I, Item 1A - Risk Factors.” Each forward-looking statement contained in this Quarterly Report on Form 10-Q is specifically qualified in its entirety by the aforementioned factors. In light of the foregoing, investors are advised to carefully read this Quarterly Report on Form 10-Q in connection with the important disclaimers set forth above and are urged not to rely on any forward-looking statements in reaching any conclusions or making any investment decisions about us or our securities. All forward-looking statements hereunder are made as of the date of this Quarterly Report on Form 10-Q and are subject to change. Except as required by law, we do not intend and undertake no obligation to update, revise or publicly release any updates or revisions to any forward-looking statements hereunder, whether as a result of the receipt of new information, the occurrence of future events, the change of circumstances or otherwise. We further do not accept any responsibility for any projections or reports published by analysts, investors or other third parties.

~~Each of the terms the “Company,” “we,” “our,” “us” and similar terms used herein refer collectively to~~ Simpson Manufacturing Co., Inc.~~, a Delaware corporation~~ and ~~its wholly-owned subsidiaries, including Simpson Strong-Tie Company Inc., unless otherwise stated.~~Subsidiaries

“Strong-Tie” and our other trademarks appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.TABLE OF CONTENTS

Part I - Financial Information



Item 1 - Financial Statements
		Page No.
	Condensed Consolidated Balance Sheets as of September 30, 2019, September 30, 2018, (unaudited) and December 31, 2018	4
	Condensed Consolidated Statements of Earnings and Comprehensive Income (unaudited) for the Three and Nine Months Ended September 30, 2019 and 2018	5
	Condensed Consolidated Statements of Stockholders' Equity (unaudited) at September 30, 2018, 2019 and December 31, 2018	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2019 and 2018	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3 - Quantitative and Qualitative Disclosures about Market Risk		30
Item 4 - Controls and Procedures		31
Part II - Other Information
Item 1 - Legal Proceedings		31
Item 1A - Risk Factors		32
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 6 - Exhibits		32

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, unaudited)


	September 30,						December 31,			September 30,						December 31,
	2017			2016			2016			2019			2018			2018
ASSETS
Current assets
Cash and cash equivalents	$	204,171		$	218,720		$	226,537		$	194,061		$	166,961		$	160,180
Trade accounts receivable, net	159,571			141,716			112,423			180,898			192,981			146,052
Inventories	244,476			220,207			232,274			242,730			279,503			276,088
Assets held-for-sale										—			9,251			—
Other current assets	13,276			12,321			14,013			17,565			12,220			17,209
Total current assets	621,494			592,964			585,247			635,254			660,916			599,529

Property, plant and equipment, net	265,178			229,670			232,810			250,950			257,679			254,597
Operating lease right-of-use assets										34,463			—			—
Goodwill	137,313			126,845			124,479			131,191			136,459			130,250
Equity investment (see Note 6)	2,582			—			2,500
Equity investment										2,485			2,498			2,487
Intangible assets, net	30,050			24,629			22,864			21,816			25,457			24,402
Other noncurrent assets	11,766			10,195			12,074			10,149			11,604			10,398
Total assets	$	1,068,383		$	984,303		$	979,974		$	1,086,308		$	1,094,613		$	1,021,663
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Capital lease obligations - current portion	$	1,047		$	—		$	—
Trade accounts payable	30,857			24,777			27,674			$	40,861		$	42,734		$	34,361
Accrued liabilities	87,946			62,714			60,477
Income taxes payable	360			3,420			—
Accrued profit sharing trust contributions	5,652			5,157			6,549
Accrued cash profit sharing and commissions	13,123			17,153			10,527
Accrued workers’ compensation	3,548			4,161			3,569
Accrued liabilities and other current liabilities										125,006			124,717			117,219
Total current liabilities	142,533			117,382			108,796			165,867			167,451			151,580

Capital lease obligations - net of current portion	2,875			—			—
Operating lease liabilities										27,256			—			—
Deferred income tax and other long-term liabilities	6,933			5,817			5,336			16,238			13,743			14,569
Total liabilities	152,341			123,199			114,132			209,361			181,194			166,149
Commitments and contingencies (see Note 8)
Commitments and contingencies (see Note 12)
Stockholders’ equity
Common stock, at par value	476			486			473			446			462			453
Additional paid-in capital	265,490			243,900			255,917			278,898			274,126			276,504
Retained Earnings	683,554			687,052			642,422			649,053			686,351			628,207
Treasury stock	(20,000		)	(47,002		)	—			(21,437		)	(24,491		)	(25,000		)
Accumulated other comprehensive loss	(13,478		)	(23,332		)	(32,970		)	(30,013		)	(23,029		)	(24,650		)
Total stockholders’ equity	916,042			861,104			865,842			876,947			913,419			855,514
Total liabilities and stockholders’ equity	$	1,068,383		$	984,303		$	979,974		$	1,086,308		$	1,094,613		$	1,021,663

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of ~~Operations~~Earnings and Comprehensive Income

(In thousands except per-share amounts, unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Net sales	$	262,476		$	230,974		$	745,345		$	660,470		$	309,932		$	284,178		$	874,029		$	836,964
Cost of sales	142,591			117,499			401,779			342,985			172,288			150,282			491,952			454,881
Gross profit	119,885			113,475			343,566			317,485			137,644			133,896			382,077			382,083
Operating expenses:
Research and development and other engineering	8,679			10,932			35,051			33,807			11,972			10,441			35,287			32,840
Selling	28,156			24,304			86,150			74,313			27,672			26,879			84,471			83,653
General and administrative	36,501			32,543			108,049			96,786			37,047			37,358			117,941			113,565
Total operating expenses													76,691			74,678			237,699			230,058
Net gain on disposal of assets	(147		)	(81		)	(147		)	(763		)	(14		)	(460		)	(265		)	(1,769		)
	73,189			67,698			229,103			204,143
Income from operations	46,696			45,777			114,463			113,342			60,967			59,678			144,643			153,794
Loss in equity method investment, before tax	(13		)	—			(53		)	—
Interest expense, net	(296		)	(82		)	(685		)	(400		)
Gain (adjustment) on bargain purchase of a business	(2,052		)	—			6,336			—
Gain on disposal of a business	443			—			443			—
Interest income (expense), net and other													(1,778		)	1,156			(2,394		)	284
Income before taxes	44,778			45,695			120,504			112,942			59,189			60,834			142,249			154,078
Provision for income taxes	16,581			15,898			40,972			40,601			15,503			16,473			36,324			40,202
Net income	$	28,197		$	29,797		$	79,532		$	72,341		$	43,686		$	44,361		$	105,925		$	113,876
Other comprehensive income
Translation adjustment													5,797			(2,950		)	5,825			(10,533		)
Unamortized pension adjustments													(362		)	—			(462		)	—
Comprehensive net income													$	49,121		$	41,411		$	111,288		$	103,343

Earnings per common share:
Net income per common share:
Basic	$	0.60		$	0.62		$	1.67		$	1.50		$	0.98		$	0.96		$	2.37		$	2.46
Diluted	$	0.59		$	0.62		$	1.66		$	1.49		$	0.97		$	0.95		$	2.35		$	2.43

Number of shares outstanding
Basic	47,367			48,119			47,544			48,231			44,477			46,192			44,673			46,375
Diluted	47,686			48,352			47,843			48,429			44,814			46,622			44,995			46,770

Cash dividends declared per common share	$	0.42		$	0.18		$	0.81		$	0.52		$	0.23		$	0.22		$	0.68		$	0.65

~~Simpson Manufacturing Co., Inc. and Subsidiaries~~

~~Condensed Consolidated Statements of Comprehensive Income~~

~~(In thousands, unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income $ 28,197
$ 29,797
$ 79,532
$ 72,341
Other comprehensive income (loss):
Translation adjustment, net of tax expense (benefit) 5,543
232
19,492
5,244
Comprehensive income $ 33,740
$ 30,029
$ 99,024
$ 77,585

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

At September 30, ~~2016~~2018 and ~~2017,~~2019, and December 31, ~~2016~~2018

(In thousands except per-share amounts, unaudited)


						Additional						Accumulated Other														Additional						Accumulated Other
	Common Stock					Paid-in			Retained			Comprehensive			Treasury						Common Stock					Paid-in			Retained			Comprehensive			Treasury
	Shares		Par Value			Capital			Earnings			Income (Loss)			Stock			Total			Shares		Par Value			Capital			Earnings			Income (Loss)			Stock			Total
Balance at January 1, 2016	48,184		$	481		$	238,212		$	639,707		$	(28,576	)	$	—		$	849,824
Balance at January 1, 2018																					46,745		$	473		$	260,157		$	676,644		$	(12,496	)	$	(40,000	)	$	884,778
Net income	—		—			—			72,341			—			—			72,341			—		—			—			113,876			—			—			113,876
Translation adjustment, net of tax	—		—			—			—			5,244			—			5,244			—		—			—			—			(10,533		)	—			(10,533		)
Options exercised	227		3			6,692			—			—			—			6,695			23		—			695			—			—			—			695
Stock-based compensation	—		—			9,039			—			—			—			9,039			—		—			7,939			—			—			—			7,939
Tax benefit of options exercised	—		—			140			—			—			—			140
Adoption of ASC 606, net of tax																					—		—						791			—			—			791
Shares issued from release of Restricted Stock Units	216		2			(3,998		)	—			—			—			(3,996		)	177		2			(5,130		)	—			—			—			(5,128		)
Repurchase of common stock	(1,090	)	—			(6,500		)	—			—			(47,002		)	(53,502		)	(985	)	—			10,000			—			—			(59,490		)	(49,490		)
Cash dividends declared on common stock, $0.52 per share	—		—			—			(24,996		)	—			—			(24,996		)
Common stock issued at $32.45 per share for stock bonus	10		—			315			—			—			—			315
Balance at September 30, 2016	47,547		486			243,900			687,052			(23,332		)	(47,002		)	861,104
Retirement of treasury stock																					—		(13		)				(74,986		)	—			74,999			—
Cash dividends declared on common stock, $0.65 per share																					—		—						(29,974		)	—			—			(29,974		)
Common stock issued at $57.41 per share for stock bonus																					8		—			465			—			—			—			465
Balance, at September 30, 2018																					45,968		462			274,126			686,351			(23,029		)	(24,491		)	913,419
Net income	—		—			—			17,393			—						17,393			—		—			—			12,757			—						12,757
Translation adjustment, net of tax	—		—			—			—			(9,164		)	—			(9,164		)	—		—			—			—			(2,378		)	—			(2,378		)
Pension adjustment, net of tax	—		—			—			—			(474		)	—			(474		)	—		—			—			—			376			—			376
Options exercised	43		—			1,281			—			—			—			1,281
Stock-based compensation	—		—			4,147			—			—			—			4,147			—		—			2,395			—			—			—			2,395
Tax benefit of options exercised	—		—			111			—			—			—			111
Adoption of new accounting standards																					—		—			—			(381		)	381			—			—
Shares issued from release of Restricted Stock Units	1		—			(22		)	—			—			—			(22		)	—		—			(17		)	—			—			—			(17		)
Repurchase of common stock	(154	)	—			6,500			—			—			(6,500		)	—			(970	)	—			—			—			—			(61,050		)	(61,050		)
Retirement of common stock	—		(13		)	—			(53,489		)	—			53,502			—			—		(9		)	—			(60,532		)	—			60,541			—
Cash dividends declared on common stock, $0.18 per share	—		—			—			(8,534		)	—			—			(8,534		)
Balance at December 31, 2016	47,437		473			255,917			642,422			(32,970		)	—			865,842
Cash dividends declared on common stock, $0.22 per share																					—		—			—			(9,988		)	—			—			(9,988		)
Balance, at December 31, 2018																					44,998		453			276,504			628,207			(24,650		)	(25,000		)	855,514
Net income	—		—			—			79,532			—			—			79,532			—		—			—			105,925			—			—			105,925
Translation adjustment, net of tax	—		—			—			—			19,492			—			19,492			—		—			—			—			(5,825		)	—			(5,825		)
Options exercised	120		1			3,565			—			—			—			3,566
Pension adjustment, net of tax																					—		—			—			—			462			—			462
Stock-based compensation	—		—			10,764			—			—			—			10,764			—		—			8,007			—			—			—			8,007
Shares issued from release of Restricted Stock Units	210		2			(5,168		)	—			—			—			(5,166		)	178		2			(5,905		)	—			—			—			(5,903		)
Repurchase of common stock	(461	)	—			—			—			—			(20,000		)	(20,000		)	(854	)	—			—			—			—			(51,437		)	(51,437		)
Cash dividends declared on common stock, $0.81 per share	—		—			—			(38,400		)	—			—			(38,400		)
Common stock issued at $44.26 per share for stock bonus	9		—			412			—			—			—			412
Balance at September 30, 2017	47,315		$	476		$	265,490		$	683,554		$	(13,478	)	$	(20,000	)	$	916,042
Retirement of treasury stock																					—		(9		)	—			(54,991		)	—			55,000			—
Cash dividends declared on common stock, $0.68 per share																					—		—			—			(30,088		)	—			—			(30,088		)
Common stock issued at $54.31 per share for stock bonus																					5		—			292			—			—			—			292
Balance at September 30, 2019																					44,327		$	446		$	278,898		$	649,053		$	(30,013	)	$	(21,437	)	$	876,947

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands, unaudited)


	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2019			2018
Cash flows from operating activities
Net income	$	79,532		$	72,341		$	105,925		$	113,876
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of assets	(147		)	(763		)
Gain on sale of assets and other							(263		)	(1,716		)
Depreciation and amortization	26,881			21,485			29,044			29,049
Write-off of software development project	—			153
Loss in equity method investment, before tax	53			—
Gain (adjustment) on bargain purchase of a business	(6,336		)	—
Gain on disposal of a business	(443		)	—
Deferred income taxes	2,552			1,481
Noncash lease expense							5,278			—
Deferred income taxes and other long-term liabilities							2,262			2,061
Noncash compensation related to stock plans	11,816			9,707			8,699			8,773
Excess tax benefit of options exercised and restricted stock units vested	—			(162		)
Recovery (provision) of doubtful accounts	79			(131		)
Provision of doubtful accounts							435			361
Foreign exchange gain on capital repatriation							—			(1,604		)
Changes in operating assets and liabilities, net of acquisitions:
Trade accounts receivable	(40,607		)	(35,463		)	(36,385		)	(58,678		)
Inventories	1,813			(22,992		)	31,163			(29,233		)
Trade accounts payable	698			2,806			8,130			14,254
Income taxes payable	1,686			6,745
Accrued profit sharing trust contributions	(902		)	(637		)
Accrued cash profit sharing and commissions	2,468			8,636
Other current assets	132			(2,751		)	(3,197		)	5,099
Accrued liabilities	5,291			6,611
Long-term liabilities	(234		)	(1,222		)
Accrued workers’ compensation	(21		)	(432		)
Other noncurrent assets	280			1,471
Accrued liabilities and other current liabilities							3,452			26,356
Other noncurrent assets and liabilities							(5,308		)	(629		)
Net cash provided by operating activities	84,591			66,883			149,235			107,969
Cash flows from investing activities
Capital expenditures	(45,106		)	(29,934		)	(24,495		)	(24,714		)
Asset acquisitions, net of cash acquired	(27,921		)	(5,361		)	(3,529		)	—
Proceeds from sale of property and equipment	617			1,278			2,498			3,539
Proceeds from sale of a business	9,613			—
Net cash used in investing activities	(62,797		)	(34,017		)	(25,526		)	(21,175		)
Cash flows from financing activities
Deferred and contingent consideration paid for asset acquisitions	(205		)	(27		)
Repurchase of common stock	(20,000		)	(53,502		)	(51,437		)	(49,490		)
Repayment of long-term borrowings and capital leases	(360		)	—
Repayment of debt and line of credit borrowings	(133		)	—
Debt issuance costs	—			(1,125		)
Issuance of common stock	3,566			6,695
Excess tax benefit of options exercised and restricted stock units vested	—			162
Proceeds from line of credit							13,308			—
Repayments of line of credit and capital leases							(14,335		)	(702		)
Issuance of common stock for exercise of options							—			695
Dividends paid	(27,044		)	(24,152		)	(30,002		)	(29,738		)
Cash paid on behalf of employees for shares withheld	(5,166		)	(3,996		)	(5,905		)	(5,128		)
Net cash used in financing activities	(49,342		)	(75,945		)	(88,371		)	(84,363		)
Effect of exchange rate changes on cash and cash equivalents	5,182			2,974			(1,457		)	(3,984		)
Net decrease in cash and cash equivalents	(22,366		)	(40,105		)
Net increase (decrease) in cash and cash equivalents							33,881			(1,553		)
Cash and cash equivalents at beginning of period	226,537			258,825			160,180			168,514
Cash and cash equivalents at end of period	$	204,171		$	218,720		$	194,061		$	166,961
Noncash activity during the period
Noncash capital expenditures	$	892		$	726		$	194		$	212
Capital lease obligations	4,362			—
Dividends declared but not paid	19,891			8,559			10,162			10,134
Contingent consideration for acquisition	1,314			—
Issuance of Company’s common stock for compensation	412			315			292			465

Simpson Manufacturing Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Simpson Manufacturing Co., Inc. and its subsidiaries (collectively, the “Company”). ~~There were no investments~~Investments in ~~affiliates that would render such affiliates to be considered variable interest entities.~~50% or less owned entities are accounted for using either cost or the equity method. All significant intercompany transactions have been eliminated.

Interim Reporting Period ~~Reporting~~

The accompanying unaudited ~~interim~~quarterly condensed consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These interim statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2018 (the “2018 Form 10-K”).

The unaudited quarterly condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial information set forth therein in accordance with GAAP. Certain prior period amounts in the condensed consolidated financial statements and the accompanying notes have been reclassified to conform to the current period’s presentation. The year-end condensed consolidated balance sheet data provided herein were derived from audited financial statements included in the 2018 Form 10-K, but do not include all disclosures required by GAAP. The Company’s quarterly results fluctuate. As a result, the Company believes the results of operations for this interim period presented are not indicative of the results to be expected for any future periods.

~~Revenue Recognition~~

The Company ~~recognizes revenue when the earnings process is complete, net~~changed its presentation of ~~applicable provision for discounts, returns~~its Consolidated Statement of Earnings and ~~incentives, whether actual~~Comprehensive Income to display non-operating activities, including foreign exchange gain (loss), and certain other income or ~~estimated, based on the Company’s experience. This generally occurs when products are shipped to the customer in accordance with the sales agreement or purchase order, ownership~~expenses as a separate line item below income from operations. Foreign exchange gain (loss), and risk of loss pass to the customer, collectability is reasonably assured and pricing is fixed or determinable. The Company’s general shipping terms are F.O.B. shipping point, and title is transferred and revenue is recognized when the products are shipped to customers. When the Company sells F.O.B. destination point, title is transferred and the Company recognizes revenue on delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing after-market repair and maintenance, engineering activities and software license sales and services, although less than 1.0% of net sales and not material to the condensed consolidated financial statements, are recognized as the services are completed or the software products and services are delivered. If actual costs of sales returns, incentives and discounts were to significantly exceed the recorded estimated allowance, the Company’s sales would be adversely affected.

~~Net Earnings Per Common Share~~

~~Basic earnings per common share are computed based on the weighted-average number of common shares outstanding. Potentially dilutive securities, using the treasury stock method, are~~other was previously included in ~~the diluted per-share calculations for all periods when the effect of their inclusion is dilutive.~~

general and administrative expenses and in income from operations. The ~~following is a reconciliation of basic earnings per common share to diluted earnings per share~~change did not affect income before taxes and net income as previously presented for the three months and nine months ended September 30, ~~2017 and 2016, respectively:~~2018.

Revenue Recognition

Three Months Ended
September 30, Nine Months Ended
September 30,
(in thousands, except per share amounts) 2017 2016 2017 2016
Net income available to common stockholders $ 28,197
$ 29,797
$ 79,532
$ 72,341
Basic weighted-average shares outstanding 47,367
48,119
47,544
48,231
Dilutive effect of potential common stock equivalents — stock options and restricted stock units 319
233
299
198
Diluted weighted-average shares outstanding 47,686
48,352
47,843
48,429
Earnings per common share:

Basic $ 0.60
$ 0.62
$ 1.67
$ 1.50
Diluted $ 0.59
$ 0.62
$ 1.66
$ 1.49
Potentially dilutive securities excluded from earnings per diluted share because their effect is anti-dilutive —
—
—
—

~~Dividend Declaration~~Generally, the Company's revenue contract with a customer exists when the goods are shipped, services are rendered; and ~~Notice of Annual Meeting~~

~~On September 28, 2017, the Board of Directors~~its related invoice is generated. The duration of the contract does not extend beyond the promised goods or services already transferred. The transaction price of each distinct promised product or service specified in the invoice is based on its relative stated standalone selling price. The Company ~~(the "Board") declared~~recognizes revenue when it satisfies a ~~cash dividend~~performance obligation by transferring control over a product to a customer at a point in time. The Company’s shipping terms provide the primary indicator of ~~$0.21per share, payable~~the transfer of control. The Company's general shipping terms are F.O.B. shipping point, where title and risk and rewards of ownership transfer at the point when the products leave the Company's warehouse. The Company recognizes revenue based on ~~January 25, 2018 to shareholders~~the consideration specified in the invoice with a customer, excluding any sales incentives, discounts, and amounts collected on behalf of ~~record as of January 4, 2018~~third parties (i.e., governmental tax authorities). Based on historical experience with the customer, the customer's purchasing pattern and ~~scheduled the Company’s 2018 annual meeting of stockholders for Monday, April 24, 2018.~~

~~Share Repurchases~~

~~During the third quarter of 2017,~~its significant experience selling products, the Company ~~received 35,887 shares~~concluded that a significant reversal in the cumulative amount of revenue recognized will not occur when the uncertainty (if any) is resolved (that is, when the total amount of purchases is known). Refer to Note 2 for additional information.

Net Income Per Common Share

The Company calculates net income per common share based on the weighted-average number of the Company's common stock ~~pursuant~~outstanding during the period. Potentially dilutive securities are included in the diluted per-share calculations using the treasury stock method for all periods when the effect is dilutive.

Accounting for Leases

The Company has operating and finance leases for certain facilities, equipment, autos and data centers. As an accounting policy for short-term leases, the Company elected to not recognize the ~~Company’s $20.0 million accelerated share repurchase program (the “ASR Program”) with Wells Fargo Bank, National Association, which constituted~~right-of-use asset and liability, if, at the ~~final delivery under~~commencement date, the ~~ASR Program initiated in June 2017. In August 2017,~~lease (1) has a term of 12 months or less and (2) does not include renewal and purchase options that the ~~Board increased its previous $125 million share repurchase authorization by $150 million~~Company is reasonably certain to ~~$275 million and extended such authorization to December 31, 2018.~~exercise. Monthly payments on short-term leases are recognized on the straight-line basis over the full lease term.

Accounting for Stock-Based Compensation

The Company ~~currently maintains an equity incentive plan, the Simpson Manufacturing Co., Inc. Amended and Restated 2011 Incentive Plan (the “2011 Plan”), which was originally adopted~~recognizes stock-based expense related to restricted stock unit awards on April 26, 2011, and was subsequently amended and restated on April 21, 2015. The 2011 Plan amended and restated in their entirety, and incorporated and superseded, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan (the “1994 Plan”), which was principally for the Company’s employees, and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan (the “1995 Plan”), which was for its independent directors. Awards previously granted under the 1994 Plan or the 1995 Plan were not affected by the adoptiona straight-line basis, net of ~~the 2011 Plan and continued to be governed by the 1994 Plan or the 1995 Plan, respectively.~~

Under the 1994 Plan and the 1995 Plan, the Company could grant incentive stock options and non-qualified stock options, although the Company granted only non-qualified stock options thereunder. The Company generally granted stock options under each of the 1994 Plan and the 1995 Plan once every year. Stock options vest and expire according to terms established at the grant date. Stock options granted under the 1994 Plan typically vested evenlyestimated forfeitures, over the requisite service period of ~~four years and have~~the awards, which is generally a vesting term of ~~seven~~four years. ~~Stock options granted under the 1995 Plan typically fully vest on the date of grant. Shares of common stock issued on exercise of stock options under the 1994 Plan and the 1995 Plan~~Stock-based expense related to performance share grants are ~~registered under the Securities Act of 1933, as amended (the "Securities Act").~~

Under the 2011 Plan, the Company may grant incentive stock options, non-qualified stock options, restricted stock and restricted stock units ("RSUs"), although the Company currently intends to award primarily performance-based and/or time-based RSUs and to a lesser extent, if at all, non-qualified stock options (see "Note 9 Stock-Based Incentive Plans") to its employees. The Company currently intends to grant RSUs that vest on the date of grant to its independent directors. The Company does not currently intend to award incentive stock options or restricted stock. Under the 2011 Plan, no more than 16.3 million shares of the Company’s

common stock in aggregate may be issued under the 2011 Plan, including shares already issued pursuant to prior awards and shares reserved for issuance on exercise of options previously granted under the 1994 Plan and the 1995 Plan. Shares of common stock to be issued pursuant to the 2011 Plan are registered under the Securities Act.

Subject to certain adjustments, the following limits shall apply with respect to any awards under the 2011 Plan that are intended to qualify for the performance-based exception from the tax deductibility limitations of section 162(m) of the U.S. Internal Revenue Code of 1986, as amended from time to time: (i) the maximum aggregate number of shares of the Company’s common stock that may be subject to stock options granted in any calendar year to any one participant shall be 150,000 shares; and (ii) the maximum aggregate number of shares of the Company’s common stock issuable or deliverable under RSUs granted in any calendar year to any one participant shall be 100,000 shares.

~~The following table represents the Company’s stock-based compensation activity for the three months and nine months ended September 30, 2017 and 2016, respectively:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2017 2016 2017 2016
Stock-based compensation expense recognized in operating expenses $ 370
$ 3,141
$ 10,942
$ 8,995
Less: Tax benefit of stock-based compensation expense in provision for income taxes 58
1,112
3,962
3,262
Stock-based compensation expense, net of tax $ 312
$ 2,029
$ 6,980
$ 5,733
Fair value of shares vested $ 428
$ 3,088
$ 10,764
$ 9,039
Proceeds to the Company from the exercise of stock-based compensation $ 2,268
$ 4,166
$ 3,566
$ 6,695
Tax effect from the exercise of stock-based compensation, including shortfall tax benefits ⁽¹⁾
$ —
$ 121
$ —
$ 140

⁽¹⁾~~Zero balances in the three and nine months ended September 30, 2017 is the result of the Company's adoption of FASB issued~~

~~Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718)~~ ~~Improvements to Employee Share-~~

~~Based Payment Accounting~~ ~~("ASU 2016-09") on January 1, 2017, refer to~~ ~~Recently Adopted Accounting Standards~~ ~~below.~~

With respect to certain performance-based RSUs awarded to the Company's employees in February 2017, the achievement of their performance-based metrics was initially estimated as being probable , and therefore, their expense was recognized in the first two quarters of fiscal 2017. Based on updated information, the Company subsequently determined that the likelihood of achievement of the performance-based metrics is no longer probable for certain awards. As a result, the Company ceased recognition of expense in the three-month period ended September 30, 2017 and also reversed $1.6 million of expense during the three-month period ended September 30, 2017 recognized for such RSUs during the six months ended June 30, 2017.

~~The Company allocates stock-based compensation expenses among cost of sales, research and development and other engineering expense, selling expense, or general and administrative expense~~measured based on the ~~job functions performed by~~grant date fair value and expensed on a graded basis over the ~~employees to whom~~service periods of the ~~stock-based compensation~~awards, which is ~~awarded.~~generally a performance period of three years. The assumptions used to calculate the fair value of ~~stock-based compensation~~options or restricted stock units are evaluated and revised, as necessary, to reflect market conditions and the ~~Company’s~~Company's experience. ~~Stock-based compensation capitalized in inventory was $0.3 million and $0.5 million as of September 30, 2017 and 2016, respectively.~~

Fair Value of Financial Instruments

~~The “Fair Value Measurements~~Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and ~~Disclosures” topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) establishes~~liabilities recorded at fair value are measured and classified under a three-tier fair valuation hierarchy ~~for disclosure~~based on the observability of the inputs ~~used to measure fair value. This hierarchy prioritizes~~available in the ~~inputs into three broad levels as follows:~~market: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets

and liabilities at fair value. ~~A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the~~The fair value ~~measurement.~~hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

As of September 30, ~~2017~~2019 and ~~2016 and December 31, 2016,~~2018, the Company’s investments included in cash equivalents consisted of only money market funds, which are the Company’s primary financial instruments ~~maintained in cash equivalents~~ and carried at cost, approximating fair value, based on Level 1 inputs. The ~~balances~~balance of the ~~Company's~~Company’s primary financial instruments ~~at the dates indicated were~~ as ~~follows:~~

At September 30, At December 31,
(in thousands) 2017 2016 2016
Money market funds $ 5,409
$ 13,334
$ 2,832

of September 30, 2019 and 2018 was$0.1 million and $7.6 million, respectively. The carrying amounts of trade accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s contingent consideration related to acquisitions is classified as Level 3 within the fair value hierarchy as it is based on unobserved inputs such as management estimates and entity-specific assumptions and is evaluated on an ongoing basis. ~~As of September 30, 2017, the estimated fair value of the Company's contingent consideration was approximately a total of $1.3 million.~~

Income Taxes

The Company uses an estimated annual ~~effective~~ tax rate to measure the tax benefit or tax expense recognized in each interim period. ~~The following table presents the Company’s effective tax rates and income tax expense for the three months and nine months ended September 30, 2017 and 2016, respectively:~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except percentages) 2017 2016 2017 2016
Effective tax rate 37.0 % 34.8 % 34.0 % 35.9 %
Provision for income taxes $ 16,581
$ 15,898
$ 40,972
$ 40,601

For the three months ended September 30, 2017, the Company's effective income tax rate increased to 37% from 35%, primarily due to a reduction of the nonrecurring bargain purchase gain related to the Gbo Fastening Systems acquisition (see "Gain (adjustment) on bargain purchase of a business" below ), which was not taxable.

For the nine months ended September 30, 2017, the Company's effective income tax rate decreased to 34.0% from 35.9%. The decrease was primarily due to an adjusted nonrecurring bargain purchase gain related to the Gbo Fastening Systems acquisition (see "Gain (adjustment) on bargain purchase of a business" below), which was not taxable, and the adoption of FASB Accounting Standards Update No. 2016-09 on January 1, 2017 (see "Recently Adopted Accounting Standards" below), which recognizes the excess tax benefits of stock-based awards as a reduction to income tax expense instead of the previous methodology which recorded the benefits on the balance sheets as a component of stockholders' equity.

Acquisitions

Under the business combinations topic ~~of the FASB~~ ASC 805, the Company accounts for acquisitions as business combinations and ascribes acquisition-date fair values to the acquired assets and assumed liabilities. Provisional fair value measurements are made at the time of the ~~acquisitions.~~acquisition. Adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as information necessary to complete the analysis is obtained. ~~Fair~~The fair value of intangible assets are generally based on Level 3 inputs.

~~Multi Services Dêcoupe S.A~~.

In August 2016, the Company purchased all of the outstanding shares of Multi Services Dêcoupe S.A. ("MS Decoupe"), a Belgium public limited company, for $6.9 million. MS Decoupe primarily manufactures and distributes wood construction, plastic, and

metal labeling products in Belgium and the Netherlands, including distributing the Company's products manufactured at the Company's production facility in France. With this acquisition, the Company could potentially offer the Belgium market a wider-range of its products, shorten delivery lead times, and expand the Company's sales presence into the Netherlands market. During the third quarter of 2017, the Company finalized its fair value measurement of assets acquired and liabilities assumed in this acquisition. MD Decoupe assets and liabilities included cash and cash equivalents of $1.4 million, other current assets of $1.6 million, noncurrent assets of $5.0 million, current liabilities of $0.6 million and noncurrent deferred income tax liabilities of $1.0 million. Included in noncurrent assets was goodwill of $1.4 million, which was assigned to the Europe segment, and intangible assets of $1.7 million, both of which are not subject to tax-deductible amortization. The estimated weighted-average amortization period for the intangible assets is 10 years.

~~CG Visions, Inc.~~

In January 2017, the Company acquired CG Visions, Inc. ("CG Visions") for up to approximately $20.8 million. CG Visions provides scalable technologies and services in building information modeling ("BIM") technologies, estimation tools and software solutions to a number of the top 100 mid-sized to large builders in the United States, which are expected to complement and support the Company's sales in North America. During the third quarter of 2017, the Company finalized its fair value measurement of assets acquired and liabilities assumed in this acquisition. CG Visions assets and liabilities included other current assets of $0.5 million, noncurrent assets of $20.4 million, current liabilities and contingent consideration of $1.1 million. Included in noncurrent assets was goodwill of $10.1 million, which was assigned to the North America segment, and intangible assets of $10.3 million, both of which are not subject to tax-deductible amortization. The estimated weighted-average amortization period for the intangible assets is 7 years.

~~Gbo Fastening Systems AB~~

In January 2017, the Company acquired Gbo Fastening Systems AB ("Gbo Fastening Systems"), a Sweden limited company, for approximately $10.2 million. Gbo Fastening Systems manufactures and sells a complete line of CE-marked structural fasteners as well as fastener dimensioning software for wood construction applications, currently sold mostly in northern and eastern Europe, which are expected to complement the Company's line of wood construction products in Europe.

~~Gain (Adjustment) on Bargain Purchase of a Business~~

In the first quarter of 2017, the Company recorded a preliminary nontaxable bargain purchase gain of $8.4 million, which was included in the condensed consolidated statements of operations. During the third quarter of 2017, the Company reevaluated the fair value of the assets acquired and liabilities assumed in Gbo Fastening Systems acquisition and recorded that the estimated fair value of the assets acquired and liabilities assumed was approximately $16.5 million. Consequently, a bargain purchase adjustment of $2.1 million was recorded resulting in a total of $6.3 million adjusted gain on bargain purchase of a business, which was included in the condensed consolidated statements of operation.

~~The following table represents the final allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed in the Gbo Fastening Systems acquisition:~~

(In thousands)
Assets *

Cash and cash equivalents $ 3,956
Accounts receivable 4,914
Inventory 13,591
Other current assets 760
Property, plant, equipment and noncurrent assets 3,929
27,150
Liabilities
Accounts payable 4,500
Other current liabilities 6,146
10,646

Total net assets 16,504
Gain (adjustment) on bargain purchase of a business (6,336 )
Total purchase price $ 10,168
* Intangible assets acquired were determined to have little to no value, thus were not recognized.

The results of operations of businesses acquired in 2016 through 2017 were included in the Company’s condensed consolidated results of operations since the date of the applicable acquisition. Such businesses are not material to the Company on an individual or aggregate basis, and accordingly, pro forma results of operations are not presented.

~~Sales of Gbo Poland and Gbo Romania~~

As a result of incompatibility with Simpson's market strategy, the Company completed the sale of all of its equity in Gbo Fastening Systems' Poland and Gbo Romania subsidiaries on September 29, 2017 and October 31, 2017, respectively, for approximately $10.2 million, resulting in a gain of $0.4 million which was presented in the accompanying condensed statements of operations.

~~Recently Adopted~~ Accounting Standards - To Be Adopted

In ~~March~~June 2016, the FASB issued ~~Accounting Standards Update~~ASU No. ~~2016-09, Compensation~~2016-13, “Financial Instruments - ~~Stock Compensation~~Credit Losses (Topic ~~718),~~

~~Improvements to Employee Share-Based Payment Accounting~~ ("326): Measurement of Credit Losses on Financial Instruments.” ASU ~~2016-09")~~, ~~which amends existing~~2016-13 amendments provide guidance ~~related to~~on accounting for ~~employee share-based payments affecting~~current expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. The required measurement methodology is based on expected loss model that includes historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 eliminates the ~~income tax consequences of awards, classification of awards as equity or liabilities,~~probable incurredloss recognition in current GAAP. ASU 2016-13 is effective for interim and ~~classification on the statement of cash flows. ASU 2016-09~~annual periods beginning after December 15, 2019. Early adoption is ~~effective~~permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is evaluating the impact of the adoption of this new accounting guidance on its consolidated financial statements.

Accounting Standards - Recently Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”).The core requirement of ASU 2016-02 is to recognize assets and liabilities that arise from leases, including those leases classified as operating leases. The amendments require a lessee to recognize a liability to make lease payments (the lease liability) and a right-of-use asset ("ROU") representing its right to use the underlying asset for the lease term in the statement of financial position. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. On January 1, ~~2017,~~2019, the Company adopted ASU ~~2016-09.~~

~~This new guidance requires all excess tax benefits~~2016-02 using the optional transition method. The Company elected and ~~tax deficiencies be recognized as income tax expense~~applied a few practical transition expedients including, not reassessing whether any expired or ~~benefit~~existing contracts are or contain leases; not reassessing the lease classification for any expired or existing leases and not reassessing initial direct costs for any existing leases. The Company has operating and finance leases for certain facilities, equipment, autos and data centers. The adoption of ASU 2016-02 resulted in the ~~income statement~~recognition of ROU assets and ~~classified as an operating activity in~~lease liabilities of approximately $34.3 million and $35.1 million, respectively on January 1, 2019. The adoption had no material impact on the statement of cash flows. The Company prospectively adopted this guidance with the tax impact of a $1.1 million tax benefit recognized in the consolidated income statements and classified it as an operating activity in thecondensed consolidated statement of operations or cash flows. The guidance also requires a policy election either to estimate the number of awards that are expected to vest or to account for forfeitures whenever they occur. The Company did not change its policy for calculating accrual compensation costs by estimating the number of awards that are expected to vest. Therefore, when the Company adopted this guidance, there was no recognized cumulative effect adjustment to retained earnings. In addition, this guidance requires cash paid by an employer, when directly withholding shares for tax withholding purposes, to be classified in the statement of cash flows as a financing activity, which differs from the Company's previous method of classification of such cash payments as an operating activity. Accordingly, the Company applied this provision retrospectively and for the nine monthsSee Note 10.

ended September 30, 2017 and 2016 and reclassified $5.2 million and $4.0 million, respectively, from operating activities to financing activities in the condensed consolidated statements of cash flows.

~~In March 2016, the FASB issued Accounting Standards Update No. 2016-07,~~ ~~Simplifying the Transition to the Equity Method of Accountin~~g ("ASU 2016-07"), which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The amendments in ASU 2016-07 are effective for public companies for fiscal years beginning after December 15, 2016, including interim periods therein, with early adoption permitted. The new standard should be applied prospectively for investments that qualify for the equity method of accounting after the effective date. On January 1, 2017, the Company prospectively adopted ASU 2016-07. Adoption of ASU 2016-07 has had no material effect on the Company's consolidated financial statements and footnote disclosures.

~~In January 2017, the FASB issued Accounting Standards Updated No. 2017-01, Business Combinations (Topic 805):~~ ~~Clarifying the Definition of a Business~~ ("ASU 2017-01"), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The new guidance clarifies that a business must also include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606, Revenue from Contracts with Customers. ASU 2017-01 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2017, with early adoption permitted. On January 1, 2017, the Company prospectively adopted ASU 2017-01. Adoption of ASU 2017-01 has had no material effect on the Company's consolidated financial statements and footnote disclosures.

All other issued and effective accounting standards during ~~2017~~the third quarter of 2019 were determined to be not relevant or material to the Company.

~~Recently Issued Accounting Standards Not Yet Adopted~~

~~Other than the following, there have been no new developments to those recently issued accounting standards disclosed in the Company’s 2016 Annual Report on Form 10-K.~~

~~In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (later codified as ASC 606),~~2. Revenue from Contracts with Customers ~~which supersedes nearly all existing~~

Disaggregated revenue ~~recognition guidance~~

The Company disaggregates net sales into the following major product groups as described in the footnote for segment information included in these interim financial statements under ~~GAAP. ASC 606 provides a five-step model for revenue recognition~~Note 13.

Wood Construction Products Revenue. Wood construction products represented 84% and 85% of total net sales in the nine months ended September 30, 2019 and 2018, respectively.

Concrete Construction Products Revenue. Concrete construction products represented 16% and 15% of total net sales in the nine months ended September 30, 2019 and 2018, respectively.

Customer acceptance criteria. Generally, there are no customer acceptance criteria included in the Company's standard sales agreement with customers. When an arrangement with the customer does not meet the criteria to be ~~applied to all~~accounted for as a revenue ~~contracts with customers. The five-step model includes: (1) determination of whether a~~ contract ~~an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of~~under the ~~performance obligations~~standard, the Company recognizes revenue in the ~~contract; (3) determination~~amount of nonrefundable consideration received when the ~~transaction price; (4) allocation~~Company has transferred control of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The core principle of ASC 606 is that an entity should recognize revenue for the transfer of goods or services ~~equal~~and has stopped transferring (and has no obligation to ~~the amount that it expects to be entitled to receive for those~~transfer) additional goods or services. ASC 606 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASC 606 is effective for annual and interim periods beginning after December 15, 2017. The Company ~~will adopt~~offers certain customers discounts for paying invoices ahead of the ~~new standard~~due date, which are generally between 30 to 60 days after the issue date.

Other revenue. Service sales, representing after-market repair and maintenance, engineering activities and software license sales and services were less than 1.0% of net sales and recognized as the services are completed or the software products and services are delivered. Services may be sold separately or in bundled packages. The typical contract length for a service is generally less than one year. For bundled packages, the Company accounts for individual services separately when they are distinct. A distinct service is separately identifiable from other items in the bundled package if a customer can benefit from the service on ~~January 1, 2018.~~ its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate services in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the services.

Reconciliation of contract balances

Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing. As of September 30, 2019, the Company had no contract assets or contract liabilities from contracts with customers.

3. Net Income Per Share

The following table reconciles basic net income per share of the Company's common stock to diluted net income per share for the three and nine months ended September 30, 2019 and 2018, respectively:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2019		2018		2019		2018
Net income available to common stockholders	$	43,686	$	44,361	$	105,925	$	113,876
Basic weighted-average shares outstanding	44,477		46,192		44,673		46,375
Dilutive effect of potential common stock equivalents — restricted stock units	337		430		322		395
Diluted weighted-average shares outstanding	44,814		46,622		44,995		46,770
Net income per common share:
Basic	$	0.98	$	0.96	$	2.37	$	2.46
Diluted	$	0.97	$	0.95	$	2.35	$	2.43

4. Stockholders' Equity

Share Repurchases

During the third quarter of 2019, the Company ~~management has completed~~repurchased 348,901 shares of the Company's common stock in the open market at an average price of $61.44 per share, for a ~~review~~total of ~~our significant customer contracts~~$21.4 million. For the nine months ended September 30, 2019, the Company repurchased 854,349 shares of the Company's common stock in the open market at an average price of $60.21 per share, for a total of $51.4 million. As of September 30, 2019, approximately $48.6 million remains available for repurchase under the previously announced $100.0 million share repurchase authorization (which expires at the end of 2019).

5. Stock-Based Compensation

The Company allocates stock-based compensation expense related to equity plans for employees and non-employee directors among the cost of sales, research and development and other engineering expense, selling expense, or general and administrative expense based on ~~that preliminary review, we expect~~ the ~~adoption~~job functions performed by the employees to whom the stock-based compensation is awarded. The Company recognized stock-based compensation expense related to its equity plans for employees of ~~ASC 606 will not result in material differences from our accounting for revenues under the current revenue recognition guidance effective~~$2.1 million and $2.8 million for the ~~Company today. The Company has not yet completed the process of quantifying the effects (if any) of changes that will result from adoption.~~

ASC 606 permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application(modified retrospective method). The Company will adopt the new standard using the modified retrospective approach through a cumulative-effect adjustment (if any) to retained earnings as of the effective date. The Company is also identifyingthree months ended September 30, 2019 and ~~preparing to implement changes to our accounting policies~~2018, respectively, and ~~practices, business processes, systems~~$8.7 million and ~~controls to support the enhanced disclosure requirements from ASC 606.~~

~~In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740),~~ ~~Intra-Entity Transfers of Assets Other Than Inventory~~ ~~("ASU 2016-16"), which requires companies to account~~$8.8 million for the ~~income tax effects of intercompany sales~~nine months ended September 30, 2019 and ~~transfers of assets other than~~2018, respectively. Stock-based compensation cost capitalized in inventory ~~when~~was not material for all periods presented.

During the transfer occurs. Current guidance requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized. The amendment is to be applied using a modified retrospective approach. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. Based on current information

~~and subject to future events and circumstances,~~nine months ended September 30, 2019, the Company ~~does not know whether ASU 2016-16 will have a material impact on its financial statements upon adoption.~~

~~In January 2017,~~granted 208,321 restricted stock units ("RSUs") to the ~~FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill~~Company's employees, including officers, and ~~Other (Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment~~ ~~("ASU 2017-04"), which eliminates the requirement to calculate the implied~~seven non-employee directors at an estimated weighted average fair value of ~~goodwill to measure a goodwill impairment charge or Step 2 of the goodwill impairment analysis. Instead, an impairment charge will be recorded~~$57.73 per share based on the ~~excess~~closing price (adjusted for the present value of ~~a reporting unit's carrying amount over its fair value using Step 1~~dividends) of the ~~goodwill impairment analysis.~~Company's common stock on the grant date. The ~~standard is required~~RSUs granted to the Company's employees may be time-based, performance-based or time- and performance-based. Certain of the performance-based RSUs are granted to officers and key employees, where the number of performance-based awards to be ~~adopted for annual~~issued is based on the achievement of certain Company performance criteria established in the RSU agreement over a cumulative three year period. These awards cliff vest after three years. In addition, these same officers and ~~interim impairment tests performed after December 15, 2019. The amendment is~~key employees also receive time-based RSUs, which vest pursuant to a three-year graded vesting schedule. Time- and performance based RSUs that are granted to the Company's employees excluding officers and certain key employees, vest ratably over the four year life of the award, and require the underlying shares of the Company's common stock to be ~~applied prospectively. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. Based on current information and~~ subject to ~~future events~~a performance-based adjustment during the first year of the award.

As of September 30, 2019, the Company's aggregate unamortized stock compensation expense was approximately $13.2 million, which is entirely attributable to unvested RSUs and ~~circumstances, the Company does not know whether ASU 2017-04 will have~~is expected to be recognized in expense over a ~~material impact on its financial statements upon adoption.~~weighted-average period of 2.4 years.

2.6. Trade Accounts Receivable, Net

Trade accounts receivable at the dates indicated consisted of the following:


	At September 30,						At December 31,			At September 30,						At December 31,
(in thousands)	2017			2016			2016			2019			2018			2018
Trade accounts receivable	$	165,101		$	145,966		$	116,368		$	186,219		$	197,378		$	149,886
Allowance for doubtful accounts	(1,166		)	(945		)	(895		)	(1,434		)	(1,312		)	(1,364		)
Allowance for sales discounts and returns	(4,364		)	(3,305		)	(3,050		)	(3,887		)	(3,085		)	(2,470		)
	$	159,571		$	141,716		$	112,423		$	180,898		$	192,981		$	146,052

3.7. Inventories

Inventories at the dates indicated consisted of the following:



	At September 30,				At December 31,
(in thousands)	2019		2018		2018
Raw materials	$	91,088	$	114,075	$	98,058
In-process products	24,554		28,251		24,645
Finished products	127,088		137,177		153,385
	$	242,730	$	279,503	$	276,088

At September 30, At December 31,
(in thousands) 2017 2016 2016
Raw materials $ 87,100
$ 83,613
$ 86,524
In-process products 26,248
20,313
20,902
Finished products 131,128
116,281
124,848
$ 244,476
$ 220,207
$ 232,274

4.8. Property, Plant and Equipment, Net

Property, plant and equipment, net, at the dates indicated consisted of the following:


	At September 30,						At December 31,			At September 30,						At December 31,
(in thousands)	2017			2016			2016			2019			2018			2018
Land	$	33,030		$	30,217		$	32,127		$	29,132		$	30,173		$	30,034
Buildings and site improvements	201,877			176,430			183,882			197,075			203,323			198,809
Leasehold improvements	5,911			5,682			5,550			4,909			4,694			4,826
Machinery, equipment, and software	289,970			249,227			248,861			345,861			323,091			330,076
	530,788			461,556			470,420			576,977			561,281			563,745
Less accumulated depreciation and amortization	(297,321		)	(275,096		)	(273,302		)	(339,920		)	(316,768		)	(318,388		)
	233,467			186,460			197,118			237,057			244,513			245,357
Capital projects in progress	31,711			43,210			35,692			13,893			13,166			9,240
	$	265,178		$	229,670		$	232,810		$	250,950		$	257,679		$	254,597

5.9. Goodwill and Intangible Assets, Net

Goodwill at the dates indicated was as follows:



	At September 30,				At December 31,
(in thousands)	2019		2018		2018
North America	$	96,192	$	95,677	$	96,435
Europe	33,710		39,404		32,471
Asia/Pacific	1,289		1,378		1,344
Total	$	131,191	$	136,459	$	130,250

At September 30, At December 31,
(in thousands) 2017 2016 2016
North America $ 95,781
$ 85,988
$ 85,488
Europe 40,038
39,402
37,616
Asia/Pacific 1,494
1,455
1,375
Total $ 137,313
$ 126,845
$ 124,479

Intangible assets, net, at the dates indicated were as follows:


	At September 30, 2017							At September 30, 2019
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
(in thousands)	Amount		Amortization			Amount		Amount		Amortization			Amount
North America	$	33,923	$	(16,728	)	$	17,195	$	31,305	$	(18,461	)	$	12,844
Europe	29,430		(16,575		)	12,855		23,351		(14,379		)	8,972
Total	$	63,353	$	(33,303	)	$	30,050	$	54,656	$	(32,840	)	$	21,816


	At September 30, 2016							At September 30, 2018
	Gross					Net		Gross					Net
(in thousands)	Carrying Amount		Accumulated Amortization			Carrying Amount		Carrying Amount		Accumulated Amortization			Carrying Amount
North America	$	27,488	$	(17,347	)	$	10,141	$	30,715	$	(15,993	)	$	14,722
Europe	31,090		(16,602		)	14,488		23,935		(13,200		)	10,735
Total	$	58,578	$	(33,949	)	$	24,629	$	54,650	$	(29,193	)	$	25,457



	At December 31, 2018
	Gross					Net
(in thousands)	Carrying Amount		Accumulated Amortization			Carrying Amount
North America	$	30,825	$	(16,002	)	$	14,823
Europe	22,353		(12,774		)	9,579
Total	$	53,178	$	(28,776	)	$	24,402

At December 31, 2016
Gross Net
(in thousands)
Carrying
Amount

Accumulated
Amortization

Carrying
Amount
North America $ 23,562
$ (13,811 ) $ 9,751
Europe 27,880
(14,767 ) 13,113
Total $ 51,442
$ (28,578 ) $ 22,864

Intangible assets consist of definite-lived and indefinite-lived assets. Definite-lived intangible assets include customer relationships, patents, unpatented technology, and non-compete agreements. Amortization expense ~~for~~of definite-lived intangible assets ~~during~~was $1.4 million for each of the ~~three months~~three-month periods ended September 30, ~~2017~~2019 and ~~2016, totaled $1.5~~2018, respectively, and was $4.1 million and ~~$1.5~~$4.0 million ~~respectively; and during~~for the nine months ended September 30, ~~2017~~2019 and ~~2016, totaled $4.7 million and $4.6 million,~~2018, respectively. The weighted-average amortization period for all amortizable intangibles on a combined basis is 5.2 years.

The only indefinite-lived intangible asset, consisting of a trade name, totaled $0.6 million at September 30, ~~2017.~~2019.

At September 30, ~~2017,~~2019, the estimated future amortization of definite-lived intangible assets was as follows:



(in thousands)

Remaining three months of 2019	$	1,371
2020	5,460
2021	4,981
2022	3,118
2023	2,314
2024	1,349
Thereafter	2,607
	$	21,200

(in thousands)

Remaining three months of 2017 $ 1,635
2018 5,505
2019 5,185
2020 5,155
2021 4,675
2022 2,774
Thereafter 4,505
$ 29,434

The changes in the carrying amount of goodwill and intangible assets for the nine months ended September 30, ~~2017,~~2019, were as follows:



				Intangible
(in thousands)	Goodwill			Assets
Balance at December 31, 2018	$	130,250		$	24,402
Acquisitions	1,815			1,213
Reclassifications	(370		)	481
Amortization	—			(4,065		)
Foreign exchange	(504		)	(215		)
Balance at September 30, 2019	$	131,191		$	21,816

Intangible
(in thousands) Goodwill Assets
Balance at December 31, 2016 $ 124,479
$ 22,864
Acquisitions 10,066
10,351
Reclassifications (189 ) 626
Amortization —
(4,725 )
Foreign exchange 2,957
934
Balance at September 30, 2017 $ 137,313
$ 30,050

~~6. Investments~~10. Leases

On ~~December 23, 2016,~~January 1, 2019, the Company ~~acquired a 25.0% equity interest in Ruby Sketch Pty Ltd. (“Ruby Sketch”), an Australian proprietary limited company, for $2.5 million, for which the Company accounts for its ownership interest~~adopted ASU 2016-02 using the ~~equity accounting~~optional transition method. ~~Ruby Sketch develops software that assists in designing residential structures, primarily used in Australia, and potentially for the North America market.~~ The Company has ~~no obligation~~operating leases for certain facilities, equipment and autos. The existing operating leases expire at various dates through 2023, some of which include options to ~~make any additional capital contributions~~extend the leases for up to ~~Ruby Sketch.~~5 years. The Company measured the lease liability at the present value of the lease payments to be made over the lease term. The lease payments are discounted using the Company's incremental borrowing rate. The Company measured the ROU assets at the amount at which the lease liability is recognized plus initial direct costs incurred or prepayment amounts. The ROU assets are amortized on a straight-line basis over the lease term.

~~For~~The following table provides a summary of leases included on the ~~three~~condensed consolidated balance sheets, condensed consolidated statements of earnings, and ~~nine months ended September 30, 2017, the Company recorded an equity loss~~condensed consolidated statements of $13 thousand and $53 thousand, respectively, with respect to its Ruby Sketch investment. However, the investment increased $82 thousand due to the foreign currency translation, primarily related to the strengthening Australian dollar against United States dollar, resulting in a $2.6 million balancecash flows as of September 30, ~~2017.~~2019:



	Condensed Consolidated Balance Sheets Line Item	At September 30, 2019
(in thousands)
Operating leases
Assets
Operating leases	Operating lease right-of-use assets	$	34,463
Liabilities
Operating - current	Accrued expenses and other current liabilities	$	7,037
Operating - noncurrent	Operating lease liabilities	27,256
Total operating lease liabilities		$	34,293

Finance leases
Assets
Property and equipment, gross	Property, plant and equipment, net	$	3,569
Accumulated amortization	Property, plant and equipment, net	(2,578		)
Property and equipment, net	Property, plant and equipment, net	$	991
Liabilities
Other current liabilities	Accrued expenses and other current liabilities	$	1,116
Other long-term liabilities	Deferred income tax and other long-term liabilities	764
Total finance lease liabilities		$	1,880

The components of lease expense were as follows:



	Condensed Consolidated Statements of Operations Line Item	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)		2019		2019
Operating lease cost	General administrative expenses and cost of sales	$	2,379	$	6,784

Finance lease cost:
Amortization of right-of-use assets	General administrative expenses	$	218	$	654
Interest on lease liabilities	Interest expense, net	16		54
Total finance lease		$	234	$	708

Other information

Supplemental cash flow information related to leases as follows:



	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2019		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,324	$	6,604
Finance cash flows for finance leases	290		870

Operating right-of-use assets obtained in exchange for lease obligations during the current period	1,616		3,704

The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2019:



(in thousands)	Operating Leases			Finance Leases
Remaining three months of 2019	$	2,355		$	290
2020	8,928			1,160
2021	7,441			484
2022	5,307			—
2023	3,590			—
Thereafter	13,551			—
Total lease payments	41,172			1,934
Less: Present value discount	(6,879		)	(54		)
Total lease liabilities	$	34,293		$	1,880

The following table summarizes the Company's lease terms and discount rates as of September 30, 2019:



Weighted-average remaining lease terms (in years):
Operating leases	6.72
Finance leases	1.68
Weighted-average discount rate:
Operating leases	5.37	%
Finance leases	3.23	%

7.11. Debt

Credit Facilities

The Company has revolving lines of credit with various banks in the United States and Europe. Total available credit at September 30, ~~2017,~~2019, was ~~$304.0~~$303.2 million including revolving credit lines and an irrevocable standby letter of credit in support of various insurance deductibles.

~~The Company’s primary credit facility is a revolving line~~ As of ~~credit with $300 million in available credit. On July 25, 2016,~~September 30, 2019, the Company entered into a second amendment (the "Amendment") to the credit facility. For additional information about the Amendment, see the Company's Current Report on Form 8-K dated July 28, 2016. As amended, this credit facility will expire on July 23, 2021. Amounts borrowedhad an outstanding balance of $0.5 million under this credit facility bear interest at an annual rate equal to either, at the Company’s option, (a) the rate for Eurocurrency deposits for the corresponding deposits of U.S. dollars appearing on Reuters LIBOR1screen page (the “LIBOR Rate”), adjusted for any reserve requirement in effect, plus a spread of 0.60% to 1.45%, determined quarterly based on the Company’s leverage ratio (at September 30, 2017, the LIBOR Rate was 1.23%), or (b) a base rate, plus a spread of 0.00% to 0.45%, determined quarterly based on the Company’s leverage ratio. The base rate is defined in a manner such that it will not be

less than the LIBOR Rate. The Company will pay fees for standby letters of credit at an annual rate equal to the applicable spread described above, and will pay market-based fees for commercial letters of credit. The Company is required to pay an annual facility fee of 0.15% to 0.30% of the available commitments under the credit facility, regardless of usage, with the applicable fee determined on a quarterly basis based on the Company’s leverage ratio. The Company was also required to pay customary fees as specified in a separate fee agreement to the agent under the credit facility. The Company’s unused borrowing capacity under other revolvingthese credit lines, and a term note totaled $4.0 million at September 30, 2017. The other revolving credit lines and the term note charge interest ranging from 0.47% to 8.25%, currently have maturity dates from July 2017 to December 2017. The Company had no0 amounts outstanding ~~debt balance~~ as of September 30, ~~2017 and 2016,~~2018, and December 31, ~~2016,~~2018, respectively. The Company was in compliance with its financial covenants at September 30, ~~2017.~~2019.

~~Capital Lease Obligations~~

The Company entered into two four-year lease agreements for certain office equipment with Cisco Systems Capital Corporation for a total of approximately $4.4 million, which was recorded in fixed assets as capital lease obligations. These capital lease obligations are included in current liabilities and other long-term liabilities in the accompanying condensed consolidated balance sheets. The interest rates for these two capital leases are 2.89% and 3.50%, respectively, and the two leases will mature in May 2021 and July 2021, respectively.

~~As of September 30, 2017, the current portion of the outstanding liability for the leased equipment was approximately $1.0 million and the long-term portion was approximately $2.9 million.~~

8.12. Commitments and Contingencies

~~Environmental~~

The Company’s policy with regard to environmental liabilities is to accrue for future environmental assessments and remediation costs when information becomes available that indicates that it is probable that the Company is liable for any related claims and assessments and the amount of the liability is reasonably estimable. The Company does not believe that any such matters will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

Litigation

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of ~~business. Corrosion, hydrogen enbrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design~~business, including those arising from or related to contractual matters, commercial disputes, intellectual property, personal injury, environmental matters, product performance or warranties, product liability, insurance coverage and ~~assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors~~personnel, labor and employment disputes.

Litigation can ~~contribute~~be expensive and disruptive to ~~failure~~normal business operations. Moreover, the results of ~~fasteners, connectors, anchors, adhesives, specialty chemicals, such as fiber reinforced polymers,~~complex legal proceedings are often uncertain and ~~tool products. In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets,~~difficult to predict, and the ~~Company’s website.~~

AsCompany's view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the ~~date of this Quarterly Report on Form 10-Q, the Company is not a party~~loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company's operations or its financial position, liquidity or results of operations. Insurance coverages are maintained and estimated costs are recorded for such claims and lawsuits, including costs to settle claims and lawsuits, based on experience involving similar matters and specific facts known. The Company believes that its defenses and assertions in pending legal proceedings ~~which the Company expects individually or in the aggregate~~have merit and does not believe that any of these pending matters, after consideration of applicable reserves and rights to indemnification, will have a material adverse effect on the Company’s consolidated financial ~~condition, cash flows~~position. However, substantial unanticipated verdicts, fines and rulings do sometimes occur. As a result, the Company could from time to time incur judgments, enter into settlements or ~~results~~revise its expectations regarding the outcome of ~~operations. Nonetheless, the resolution of any claim or litigation is subject to inherent uncertainty~~certain matters, and such developments could have a material adverse effect on its results of operations in the ~~Company’s financial condition,~~period in which the amounts are accrued and/or its cash flows ~~or results~~in the period in which the amounts are paid.

The Company previously recorded a charge to administrative expense of ~~operations.~~approximately $2.9 million, net of tax for a certain pending legal proceeding during the period ended December 31, 2018. The Company has recorded an additional charge of approximately $100,000 in the period ended September 30, 2019, resulting in the total charge recorded for such matter being approximately $3.0 million, net of tax.

~~Potential Third-Party Claims~~

Gentry Homes, Ltd. v. Simpson Strong-Tie Company, Inc., et al., Case No. 17-cv-00566, was filed in federal district court in Hawaii against Simpson Strong-Tie Company, Inc. and Simpson Manufacturing, Inc. on November 20, 2017. The Gentry case is a product of a previous state court class action, Nishimura v. Gentry Homes, Ltd., et al. which is now closed. The Nishimura case concerned alleged corrosion of the Company’s galvanized strap-tie holdowns and mudsill anchor products used in a residential project in Honolulu, Hawaii, Ewa by Gentry. In the Nishimura case, the plaintiff homeowners and the developer, Gentry, arbitrated their dispute and agreed on a settlement in the amount of $90 million, with $54 million going to repair costs and $36 million going to attorney's fees. In the Gentry case, Gentry alleges breach of warranty and negligent misrepresentation related to the Company’s strap-tie holdowns and mudsill anchor products. Gentry is demanding general, special, and consequential damages from the Company in an amount to be proven at trial. Gentry also seeks pre-judgment and post-judgment interest, attorneys’ fees and costs, and other relief.

Stephen Kaneshiro, et al. v. Stanford Carr Development, LLC et al./Stanford Carr Development, LLC, et al. v. Simpson Strong-Tie Company, Inc., Civil No. ~~11-1-1522-07, was~~18-1-1472-09 VLC, is a putative class action lawsuit filed in the Hawaii First ~~Circuit court~~Circuit. The Company was added as a third-party defendant on ~~July 20, 2011.~~December 28, 2018. The ~~Nishimura~~ ~~case involves claims~~homeowner plaintiffs allege that all homes built by ~~homeowners at Ewa by Gentry, a Honolulu development~~Stanford Carr Development and its subsidiaries (collectively "Stanford Carr") in the State of ~~approximately 2,400 homes. The claims arise out of alleged corrosion of~~Hawaii have strap-tie holdowns and ~~mud-sill anchor products supplied by the Company. The plaintiff homeowners originally sued the developer, Gentry Homes, Ltd. (“Gentry”), as well as the Company. In 2012~~mudsill anchors that are suffering premature corrosion. Stanford Carr has asserted indemnity and ~~2013, the Hawaii First Circuit granted the Company’s motions to dismiss and for summary judgment, resulting in the dismissal of all of the homeowners’~~contribution claims against the ~~Company, and the Company has not since then been a party to the proceedings. The dismissed claims against the Company remain subject to potential appeal by the plaintiffs.~~Company.

Potential Third-Party Claims

~~Gentry and the plaintiff homeowners thereafter moved their dispute to arbitration, and the Hawaii state court stayed the lawsuit pending arbitration. The Company was not a party to the arbitration.~~

Gentry initially reported no significant damage claims related to the Ewa development. In August 2016, Gentry advised the Company for the first time that a substantial number of plaintiff homeowners claimed serious corrosion of mudsill anchors and strap-tie holdowns. The plaintiff homeowners and Gentry proceeded to arbitration in April 2017. During the pendency of the arbitration, Gentry and the plaintiff homeowners reached a settlement of their dispute, pursuant to which Gentry agreed to pay approximately $90 million to the plaintiff homeowners.

In October 2017, Gentry demanded that the Company pay Gentry the amount it paid the plaintiff homeowners to settle their claims, asserting the Company was responsible for breach of warranty, negligent misrepresentation and fraud in connection with the supply of strap-tie holdowns and mud-sill anchor products to Gentry. As of the date of this Quarterly Report on Form 10-Q, Gentry had not yet initiated legal proceedings against the Company.

~~The Company admits no liability in connection with the~~ ~~Nishimura~~ case. At this time, the Company cannot reasonably ascertain the likelihood that it will be found responsible for substantial damages to Gentry or to the homeowners should they appeal; whether any legal theory against the Company might be viable, or the extent of the liability the Company might face if Gentry were to proceed against it.

The Company will vigorously defend any claims against it, whether appeal by the plaintiff homeowners, or third party claims by Gentry. Based on facts currently known to the Company and subject to future events and circumstances, the Company believes that all or part of any claims that any party might seek to allege against it related to the ~~Nishimura~~ ~~case may be covered by its insurance policies.~~

Charles Vitale, et al. v. D.R. Horton, Inc. and D.R. Horton-Schuler Homes, LLC, Civil No. 15-1-1347-07, a putative class action lawsuit, was filed in the Hawaii First Circuit on July 13, 2015, in which homeowner plaintiffs allege that all homes built by D.R Horton/D.R. Horton-Schuler Homes (collectively "Horton Homes") in the State of Hawaii have strap-tie holdowns that are suffering premature corrosion. The ~~complaint alleges that various manufacturers make strap-tie holdowns that suffer from such corrosion, but does not identify the Company’s products specifically.~~court has denied a motion for statewide class certification. The Company is not currently a party to the Vitale ~~lawsuit, but the lawsuit in the future could potentially involve the Company’s strap-tie holdowns.~~

lawsuit. If claims are asserted against the Company in the Vitale case, it will vigorously defend any such claims, whether brought by the plaintiff homeowners, or third party claims by Horton Homes. Based on facts currently known to the Company and subject to future events and circumstances, the Company believes that all or part of any claims that any party might seek to allege against it related to the Vitale case may be covered by its insurance policies.

~~Given the nature and the complexities involved in the~~ ~~Nishimura~~ ~~and~~ ~~Vitale~~ proceedings, the Company is unable to estimate reasonably a likelihood of possible loss or range of possible loss until the Company knows, among other factors, (i) whether it will be named in either lawsuit by any party; (ii) the specific claims and the legal theories on which they are based (iii) what claims, if any, might be dismissed without trial, (iv) the extent of the claims, including the size of any potential class, particularly as damages are not specified or are indeterminate, (v) how the discovery process will affect the litigation, (vi) the settlement posture of the other parties to the litigation, (vii) the extent to which the Company’s insurance policies will cover the claims or any part thereof, if at all, (viii) whether class treatment is appropriate; and (ix) any other factors that may have a material effect on the litigation.

While it is not feasible to predict the outcome of proceedings to which the Company is not currently a party, or reasonably estimate a possible loss or range of possible loss for the Company related to such matters, in the opinion of the Company, either the likelihood of loss from such proceedings is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s financial position, results of operations or cash flows either individually or in the aggregate. Nonetheless, the resolution of any claim or litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

~~9. Stock-Based Incentive Plans~~

The Company currently has one stock-based incentive plan, the 2011 Plan, which incorporates and supersedes its two previous plans except for awards previously granted under the two plans (see "Note 1 Basis of Presentation — ~~Accounting for Stock-Based~~

~~Compensation”~~). Generally, participants of the 2011 Plan have been granted stock-based awards, only if the applicable Company-wide and/or profit-center operating goals, or strategic goals, established by the Compensation and Leadership Development Committee (the "Committee") of the Board at the beginning of the year, were met. In 2017, some of the grants made will vest only if Company-wide and/or profit-center operating goals established by the Committee at the beginning of the year are met.

The Company granted restricted stock units (“RSUs”) under the 2011 Plan in 2015, 2016 and 2017. The fair value of each restricted stock unit award is estimated on the measurement date as determined in accordance with GAAP and is based on the closing market price of the underlying Company's common stock on the day of the grant or the immediately preceding the trading date. The fair value excludes the present value of the dividends that the RSUs do not participate in. The RSUs may be time-based, performance-based or time- and performance-based. The restrictions on the time-based RSUs granted to our named executive officers and certain members of our senior management in 2017 and prior generally lapse on the date of the award and each of the first, second and third anniversaries of the date of the award. The restrictions on the time-based RSUs granted in 2017 generally lapse on the first, second, third and fourth anniversaries of the date of the award. The restrictions on the performance-based RSUs granted to our named executive officers and certain members of the Company’s senior management in 2017 and prior, in addition to their time-based RSUs, generally lapse following a performance period set for the RSUs on the date of the award, and shares of our common stock underlying such awards are subject to performance-based adjustment before becoming vested. In addition, the restrictions on the time- and performance-based RSUs granted to our employees in 2017 generally lapse on the first, second, third and fourth anniversaries of the date of the award, provided that the applicable performance goals are achieved within the year of grant. Generally, performance-based awards (including time- and performance-based awards) granted under the 2011 Plan may vest following the end of the performance periods only if the applicable performance goals are achieved within such periods.

Under the 2011 Plan, or the applicable grant agreement, the vesting of RSUs granted thereunder may accelerate in four situations: (1) retirement after meeting certain age and/or service tenure conditions, (2) death, (3) disability, and (4) certain situations linked to a change in our control or our sale of assets. In case of early vesting of performance-based awards in any one of the four situations, shares of the underlying stock that could eventually vest in favor of the officer will be prorated based on the early-vesting date and the date when the applicable vesting period is scheduled to expire.

On February 4, 2017, 606,299 RSUs were awarded to the Company's employees, including officers, at an estimated fair value of $43.42 per share, based on the closing price on February 3, 2017. On May 16, 2017, 10,066 RSUs were awarded to each of the Company's seven independent directors at an estimated value of $41.52 per share based on the closing price of shares of the Company's common stock on May 15, 2017, which RSUs vested fully on the date of the grant.

~~The following table summarizes changes to the Company’s unvested RSUs for the nine months ended September 30, 2017:~~

Shares
Weighted-
Average Price

Aggregate
Intrinsic
Value *
Unvested Restricted Stock Units (RSUs) (in thousands) (in thousands)
Outstanding at January 1, 2017 615
$ 31.81
26,915
Awarded 616

Vested (327 )

Forfeited (38 )

Outstanding at September 30, 2017 866
$ 36.14
$ 42,469
Outstanding and expected to vest at September 30, 2017 844
$ 36.11
$ 41,366


*	~~The intrinsic value is calculated using the closing price per share of $49.04 of the underlying Company's common stock as reported by the New York Stock Exchange on September 30, 2017.~~

The total intrinsic value of RSUs vested during the nine-month periods ended September 30, 2017 and 2016, was $11.0 million and $10.8 million, respectively, based on the market value on the award date.

~~No stock options were granted in 2016 or in the first nine months of 2017.~~

~~The following table summarizes the changes to the Company’s outstanding non-qualified stock options for the nine months ended September 30, 2017:~~

Shares
Weighted-
Average
Exercise Price

Weighted-
Average
Remaining
Contractual Life

Aggregate
Intrinsic
Value *
Non-Qualified Stock Options (in thousands) (in years) (in thousands)
Outstanding at January 1, 2017 251
$ 29.66
1.1 3,558
Exercised (120 )

Forfeited —

Outstanding and exercisable at September 30, 2017 131
$ 29.66
0.3 $ 2,534


*	The intrinsic value represents the amount, if any, by which the fair market value of the underlying Company's common stock exceeds the exercise price of the stock option, using the closing price per share of $49.04 such stock as reported by the New York Stock Exchange on September 30, 2017.

~~The total intrinsic value of stock options exercised was $1.7 million and $2.4 million during nine-month periods ended September 30, 2017 and 2016, respectively.~~

As of September 30, 2017, there was $17.3 million, unrecognized cost related to unvested stock-based compensation arrangements under the 2011 Plan for awards made through February 2017. The portion of this cost related to RSUs awarded through May 2017 (as discussed above) is expected to be recognized over a weighted-average period of 2.3 years.

~~10.~~13. Segment Information

The Company is organized into ~~three~~3 reportable ~~segments. The~~ segments, which are defined by the regions where the Company’s products are manufactured, marketed and distributed to the Company’s customers. The three regional segments are the North America segment, comprising primarily the United States and Canada; the Europe segment, comprising continental Europe and the United Kingdom; and the Asia/Pacific segment, ~~which the Company believes is not significant to its overall performance,~~ comprising the Company’s operations in China, Hong Kong, the South Pacific and the Middle East. The Company's China and Hong Kong operations are manufacturing and administrative support locations, respectively. These three reportable segments are similar in several ways, including the types of materials ~~the~~used in production, production processes, ~~the~~ distribution channels and ~~the~~ product applications. The Company’s measure of profit or loss for its reportable segments is income (loss) from operations.

The following tables illustrate certain measurements used by management to assess the performance of its reportable segments as of or for the following periods:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2017			2016			2017			2016			2019			2018			2019			2018
Net Sales
North America	$	213,254		$	197,459		$	612,765		$	569,198		$	265,505		$	239,898		$	746,009		$	705,932
Europe	47,137			31,485			126,752			86,003			42,219			42,020			121,647			124,096
Asia/Pacific	2,085			2,030			5,828			5,269			2,208			2,260			6,373			6,936
Total	$	262,476		$	230,974		$	745,345		$	660,470		$	309,932		$	284,178		$	874,029		$	836,964
Sales to Other Segments*
North America	$	625		$	732		$	2,403		$	1,994		$	520		$	683		$	1,327		$	1,889
Europe	175			157			424			338			479			140			1,568			740
Asia/Pacific	4,088			10,821			14,657			22,550			7,600			7,586			21,272			20,907
Total	$	4,888		$	11,710		$	17,484		$	24,882		$	8,599		$	8,409		$	24,167		$	23,536
Income (Loss) from Operations
Income (Loss) from Operations**
North America	$	41,972		$	42,356		$	110,748		$	112,924		$	56,844		$	56,280		$	139,489		$	152,724
Europe	5,139			3,899			7,443			4,180			5,386			3,953			9,645			6,053
Asia/Pacific	(218		)	250			(341		)	1,257			(481		)	(86		)	(837		)	(1,749		)
Administrative and all other	(197		)	(728		)	(3,387		)	(5,019		)	(782		)	(469		)	(3,654		)	(3,234		)
Total	$	46,696		$	45,777		$	114,463		$	113,342		$	60,967		$	59,678		$	144,643		$	153,794

* ~~The sales~~Sales to other segments are eliminated in consolidation.

** Beginning in the first quarter of 2019, income from inter-segment sales, previously included in income from operations for segment reporting, is now presented below income from operations. Income from inter-segment sales is eliminated in consolidation but was an expense in the North America and Europe segment and income in the Asia/Pacific segment.

At
At September 30, December 31,
(in thousands) 2017 2016 2016
Total Assets

North America $ 946,180
$ 795,339
$ 853,826
Europe 211,083
178,428
165,121
Asia/Pacific 26,006
26,291
25,118
Administrative and all other (114,886 ) (15,755 ) (64,091 )
Total $ 1,068,383
$ 984,303
$ 979,974



							At
	At September 30,						December 31,
(in thousands)	2019			2018			2018
Total Assets
North America	$	1,246,617		$	1,080,910		$	1,119,012
Europe	169,183			208,888			157,437
Asia/Pacific	28,009			28,448			25,644
Administrative and all other	(357,501		)	(223,633		)	(280,430		)
Total	$	1,086,308		$	1,094,613		$	1,021,663

Cash collected by the Company’s United States subsidiaries is routinely transferred into the Company’s cash management accounts and, therefore, has been included in the total assets of “Administrative and all other.” Cash and cash equivalent balances in the “Administrative and all other” segment were ~~$116.0~~$135.9 million, ~~$128.6~~$87.5 million, and ~~$137.4~~$113.6 million, as of September 30, ~~2017~~2019 and ~~2016,~~2018, andDecember 31, ~~2016,~~2018, respectively. Total "Administrative and all other" assets are net of inter-segment due to and from accounts eliminated in consolidation.

While the Company manages its business by geographic segment, ~~presented as additional information,~~ the following table illustrates the distribution of the Company’s net sales by product group as additional information for the following periods:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018

Wood construction products	$	255,869	$	238,230	$	731,898	$	710,880
Concrete construction products	53,947		45,832		141,883		125,847
Other	116		116		248		237
Total	$	309,932	$	284,178	$	874,029	$	836,964

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2017 2016 2017 2016

Wood construction products $ 224,317
$ 193,513
$ 639,207
$ 562,025
Concrete construction products 38,051
37,461
105,785
98,445
Other 108
—
353
—
Total $ 262,476
$ 230,974
$ 745,345
$ 660,470

Wood construction products include connectors, truss plates, fastening systems, fasteners and pre-fabricated shearwalls, and are used for connecting and strengthening wood-based construction primarily in the residential construction market. Concrete construction products include adhesives, chemicals, mechanical anchors, carbide drill bits, powder actuated tools and fiber reinforcing materials, and are used for restoration, protection or strengthening concrete, masonry and steel construction in residential, industrial, commercial and infrastructure construction.

The Company’s largest customer, attributable mostly to the North America segment, accounted for 11.0% and 11.3% of net sales for three months and nine months ended September 30, 2019, respectively, and 10.5% of net sales, accounted for the nine months ended September 30, 2018.

~~11.~~14. Subsequent Events

On October 24, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.23 per share, estimated to be $10.2 million in total. The dividend will be payable on January 23, 2020, to the Company's stockholders of record on January 2, 2020.

In ~~the fourth quarter of 2017,~~November 2019, the Company ~~announced employee reductions~~sold its selling and distribution facility in British Columbia, Canada for approximately $9.5 million in net proceeds after closing costs and sale price adjustments, which resulted in an estimated gain on disposal of fixed assets of $5.6 million. To provide a temporary transition until the ~~North America~~Company relocates to the new leased facility, the Company is leasing back the sold facility from the buyer for approximately five months. The Company treated the leaseback transaction as a short-term lease and ~~Europe segments and related estimated severance expenses of approximately $3.0 million to $3.5 million, most of which to be recorded in~~will recognize the ~~fourth quarter of 2017.~~rent expense on the straight-line basis over the lease term.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~The following is a discussion and analysis~~

Each of the ~~consolidated financial condition~~terms the “Company,” “we,” “our,” “us” and ~~results~~similar terms used herein refer collectively to Simpson Manufacturing Co., Inc., a Delaware corporation and its wholly-owned subsidiaries, including Simpson Strong-Tie Company Inc., unless otherwise stated. The Company regularly uses its website to post information regarding its business and governance. The Company encourages investors to use http://www.simpsonmfg.com as a source of ~~operations for~~information about the ~~Company for the three months~~Company.

“Strong-Tie” and ~~nine months ended September 30, 2017. The following discussion~~our other trademarks appearing in this report are our property. This report contains additional trade names and ~~analysis should be read in conjunction~~trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with ~~the interim Condensed Consolidated Financial Statements and related Notes included in Part I, Item 1, "Financial Statements”~~any of this Quarterly Report on Form 10-Q. The following discussion and analysis contain forward-looking statements that reflect our plans, estimates, and beliefs as discussed in the “Note About Forward-Looking Statements” at the beginning of this Quarterly Report on Form 10-Q. Our actual results could differ materially from those plans, estimates, and beliefs. Factors that could cause or contribute to these ~~differences include those discussed below and elsewhere in this~~companies.

CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as ~~well~~amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements generally can be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “target,” “continue,” “predict,” “project,” “change,” “result,” “future,” “will,” “could,” “can,” “may,” “likely,” “potentially,” or similar expressions that concern our strategy, plans, expectations or intentions. Forward-looking statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, business outlook, priorities, expectations and intentions, expectations for sales growth, comparable sales, earnings and performance, stockholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, our strategic initiatives, including the impact of these initiatives on our strategic and operational plans and financial results, and any statement of an assumption underlying any of the foregoing and other statements that are not historical facts. Although we believe that the expectations, opinions, projections and comments reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and we can give no assurance that such statements will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.

Forward-looking statements are subject to inherent uncertainties, risk and other factors ~~discussed~~that are difficult to predict and could cause our actual results to vary in ~~Part I, Item 1A, “Risk Factors”~~material respects from what we have expressed or implied by these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those expressed in our ~~Annual Report~~forward looking statements include, among others, those discussed under the Item 1A. Risk Factors and Item7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2018 Form 10-K.

We caution that you should not place undue reliance on ~~Form 10-K for~~these forward-looking statements, which speak only as of the ~~year ended December 31, 2016.~~date of this report. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise of the risks and factors that may affect our business.

~~Business~~

Overview

We design, manufacture and sell building construction products that are of high quality and performance, easy touse and cost-effective for customers. We operate in three business segments determined by geographic region: North America,Europe and Asia/Pacific.

Our ~~primary business strategy is to grow through~~strategic plan for growth includes increasing our market share and profitability in Europe; growing our market share in the concrete space; and continuing to develop our software to support our core wood products offering while leveraging our strengths in engineering, sales and distribution, and our strong brand name. We believe these initiatives and objectives are crucial to not only offer a more complete solution to our customers and bolster our sales of core wood connector products, but also to mitigate the effect of the cyclicality of the U.S. housing market.

On October 30, 2017, we announced the 2020 Plan to provide additional transparency into the execution of our strategic plan and financial objectives. ~~Subject to future events~~Under the 2020 Plan, we initially assumed (i) housing starts growing as a percentage in the mid-single digit, (ii) increasing our market share and ~~circumstances,~~profitability in Europe, and (iii) gaining market share in both our truss and concrete product offerings. At the time of the announcement, our 2020 Plan iswas centered on the following three key operational ~~objectives as further described below.~~objectives.

First, a continued focus on organic growth with a goal to achieve ~~organically~~ a net sales ~~compound~~compounded annual growth rate of approximately8% ~~from~~(from $860.7 million reported in fiscal ~~2016~~2016) through fiscal 2020.

Second, rationalizing our cost structure to improve company-wide profitability by reducing total operating expenses as a ~~percent~~percentage of net sales from 31.8% in fiscal 2016 to a range of 26.0% to 27.0% by fiscal 2020. We expect to achieve this initiative, aside from top-line growth, through cost reduction measures in Europe and our concrete product line, zero-based budgeting for certain expense categories, a SKU reduction program to right-size our product offering and a

commitment to remaining headcount neutral (except in the production and sales departments to meet demands from sales growth). Offsetting these reductions will be the Company’s ongoing investment in its software initiatives as well as the expenses associated with our ongoing SAP ~~implementation.~~implementation, which includes increasing headcount when necessary.

Third, improving our working capital management and overall balance sheet discipline primarily through the reduction of inventory levels ~~by aggressively eliminating 25 to 30%~~in connection with the implementation of ~~the Company’s product SKUs and implementing~~ Lean principles in many of our factories. ~~We believe~~This included improving our inventory turn rate from two-times a year for fiscal 2016 to four-times by the end of 2020. With these efforts, we ~~can~~believed we could achieve an ~~overall~~additional 25% to 30% reduction of our raw ~~material~~materials and finished ~~good~~goods inventory ~~over the next three years~~through 2020 without impacting day-to-day production and shipping procedures.

~~We believe our efforts~~Since 2016, organic net sales has grown at a compound annual growth rate of 10%. Based on current trends and conditions, we expect to achieve our 8% net sales goal.

We are continuing to work towards reducing our operating expenses to a range of 26% to 27% of net sales by the end of 2020. Operating expenses as a percentage of net sales were 24.7% and 26.3% for the quarters ended September 30, 2019 and September 30, 2018, respectively, and 27.2% and 27.5% for the nine months ended September 30, 2019 and September 30, 2018, respectively. In dollars, operating expenses increased $2.0 million from the quarter ended September 30, 2018 to the quarter ended September 30, 2019 (mostly due to increased personnel costs) and increased $7.6 million from the nine months ended September 30, 2018 to the nine months ended September 30, 2019 (mostly due to increased consulting fees and personnel costs). In late 2017 and throughout 2018, we engaged a leading management consultant to perform an independent in-depth analysis of our operations, which contributed towards a reduction of expenses in 2018 and could potentially result in initiatives that reduce expenses beyond the 2020 Plan as well as improvements to net working capital. We incurred additional success-based consulting expenses in 2018 and 2019 due to these initiatives. These fees concluded as of the end of September 30, 2019. We expect these related consulting fees incurred in 2018 and 2019 will ~~contribute~~have a one-year or less pay back.

When we initiated our 2020 Plan in October 2017, it did not factor in macro events out of our control such as a volatile steel market as well as steel tariffs and other trade events. Given increases in raw material cost and resulting degradation on our gross profit margins from 48% in 2016, we recasted our 2020 target for improving our operating income margin to ~~improved business performance~~a range of 16% to 17% by the end of 2020. This is revised down from our prior 2020 target range of 21% to 22%, and in-line to slightly up compared to our operating ~~results, improve returns~~margin of 16.4% in 2016. While the gross margin pressures have caused us to revise this goal, it’s important to note that rationalizing our cost structure has helped mitigate further downward pressure on our operating profit margins. We also recasted operating margins for Europe from a target of 10% by the end of 2020, which includes approximately 2% of net sales in costs associated with the SAP implementation, to a range of 6% to 7%, including the same 2% of SAP implementation costs. Higher material costs have also contributed to this revision yet it still reflects a 700-800 basis point improvement from 2016 and substantial progress in the segment.

Since 2016, we have reduced our inventory in North America, which is the bulk of our total inventory, by over 18% in pounds on hand, including an approximate 22% reduction in finished goods, while total dollars on hand increased marginally by a little over 1%.

We accomplished this reduction in inventory in pounds on hand even as three particular factors have transpired since October of 2017 when we released the 2020 Plan that have required us to build more inventory than expected:

we pro-actively increased our anchor inventory in anticipation of potential tariffs on our mechanical anchor finished goods from China, as well as in anticipation of additional demand related to The Home Depot, Inc. ("Home Depot") rollout;

we bought an additional allotment of steel in order to mitigate the potential impact of availability; and

we have inventory levels to ensure we can meet our customer needs as we continue our SAP roll-out.

Since 2016, our weighted average cost per pound of total inventory on hand and raw materials on hand in North America, which we cannot control, increased. As a result, there has not been a marked improvement in our inventory turns based on dollars and we no longer believe we can achieve an inventory turn rate of four-times per year by the end of 2020. We continue to strive to effectively manage our inventory by what we can control as a way of improving our use of working capital.

Through execution on the 2020 Plan, we expected by the end of fiscal 2020 to achieve a return on invested capital⁽¹⁾ ~~and allow us~~target within the range of 17% to 18% from 10.5% in 2016. Given the pressure on gross margins, we updated our expectation for return on invested capital to be ~~more aggressive~~ in ~~repurchasing shares~~a range of 15% to 16% by 2020. The Company's return on invested capital was 13.0% for the last four quarters ended September 30, 2019. Meeting the return on invested capital target is dependent on the Company's ability to return capital to our shareholders, usually in the form of cash dividends or share repurchases of the Company's common stock, which

may or may not occur at the same levels as prior years. Nonetheless, we remain committed to returning 50% of our ~~stock in the near-term.~~cash flows from operations through fiscal 2020.

We believe our ability to achieve industry-leading ~~margins from a~~ gross profit margins and operating income ~~standpoint~~margins is due to the high level of value-added services that we provide to our customers. Aside from our strong brand recognition and trusted reputation, ~~Simpson~~the Company is unique due to our extensive product testing capabilities and our state-of-the-art test lab; strong customer support and education for engineers, builders and contractors; a deep 40-plus year relationships with engineers that get our products specified on the blueprint and pulled through to the job site; product availability with delivery, typically, in ~~typically~~ 24 hours ~~or less;~~to 48 hours; and an active involvement with code officials to improve building codes and construction practices. Based on current information, we expect the competitive environment to be relatively ~~stable. We also expect~~stable with U.S. single-family housing starts to ~~continue~~be flat or growing in the low single digits for the remainder of 2019 compared to ~~grow~~2018. For the purposes of re-defining our 2020 Plan objectives, during years 2017 to 2020 we assume U.S. single-family housing starts growing, as a percentage, in the ~~mid~~low-single digits on average.

Prior to ~~high single digits over~~ the ~~next few years, which should support a sustainable organic revenue growth outlook in North America for many of our products.~~

~~We have invested in strategic initiatives to help us perform throughout all industry cycles, such~~as scaling up our wood construction products operations in Europe and ongoing development of our software solutions, including truss software, as our market strategy is to sell engineered product solutions. In support of this effort, we acquired Gbo Fastening Systems AB (“Gbo Fastening Systems”)

~~and CG Visions, Inc. (“CG Visions”) in January 2017, as we believe these two acquisitions fit into our current business model and growth strategy.~~

~~While~~2020 Plan, acquisitions were part of a dual-fold approach to ~~growth in the past, our go-forward~~growth. Our strategy ~~will focus~~since has primarily focused on organic growth, supported by strategic capital investments in the business. As such, we have and will ~~de-emphasize~~continue to focus less on acquisitions activities, ~~going forward,~~ especially ~~as it relates to~~in the concrete repair space. ~~An exception may occur~~However, we will from time to time evaluate acquisition opportunities and if the right opportunity ~~were~~arises we are open to ~~arise~~acquisitions in other areas of our business, such as in our core fastener space, which is ~~the particular~~an area where we believe it would be beneficial to gain additional production capacity to support our wood ~~business.~~business or to enhance our wood and concrete product portfolio with additional value–added products, we may pursue the opportunities.

Factors Affecting Our Results of Operations

Unlike lumber or other products that have a more direct correlation to housing starts, our products are used to a greater extent in areas that are subject to natural forces, such as seismic or wind events. Our products are generally used in a sequential process that follows the construction process. Residential and commercial construction begins with the foundation, followed by the wall and the roof systems, and then the installation of our products, which flow into a project or a house according to these schedules. ~~Foundation product sales could be considered a leading indicator for our product sales. Sales of foundation products in the third quarter of 2017 increased compared to the same period in 2016.~~

Our sales also tend to be seasonal, with operating results varying from quarter to quarter. With some exceptions, our sales and income have historically been lower in the first and fourth quarters than in the second and third quarters of a fiscal year, as our customers tend to purchase construction materials in the late spring and summer months for the construction season. ~~In addition, weather~~Weather conditions, such as extended cold or wet weather, which affect and sometimes delay installation of some of our products, could negatively affect our results of operations. Political, ~~and~~ economic events such as tariffs and the possibility of additional tariffs on imported raw materials or finished goods or such as labor disputes can also ~~affect~~have an effect on our ~~sales~~gross and ~~profitability.~~

~~Operating expenses as a percentage of net sales were under 28% for the third quarter of 2017 and down 104 basis points from the prior year quarter~~operating profits as well as ~~down 185 basis points compared to~~ the ~~second quarter~~amount of ~~2017, primarily due to lower stock-based compensation expense and cash profit sharing expense on lower operating income and reduced payouts under our executive officer cash profit sharing plan.~~inventory on-hand.

~~Acquisitions~~

~~North America~~

In January 2017, we acquired CG Visions for approximately $20.8 million subject to specified holdback provisions and post-closing adjustments. This acquisition is expected to enable us to build closer partnerships with builders by offering software and services to help them control costs and increase efficiency at all stages of the home building process. We expect to look for opportunities to incorporate our products into CG Visions' building information modeling ("BIM") packages and apply CG Visions’ expertise to our existing and future software initiatives.

~~Europe~~

In January 2017, we acquired Gbo Fastening Systems for approximately $10.2 million. Gbo Fastening Systems manufactures and sells a complete line of European approved CE-marked structural fasteners, mostly in northern and eastern Europe, which we expect to eventually distribute and sell in western Europe. We have begun distributing into the Nordic countries wood connector products that were manufactured in the Company's manufacturing facilities in western Europe. Further, we expect to access Gbo Fastening Systems' expertise in product development and testing, and proficiency in fastener manufacturing and surface treatment, to strengthen Gbo Fastening Systems' global presence and contribute engineering expertise in automatic fastening systems and fastener collation to help broaden its fastener and structural connectors lines.

In July 2017, the Company entered into an agreement to sell all of the outstanding shares in Gbo Fastening Systems' Poland and Romania subsidiaries ("Gbo Poland" and "Gbo Romania", respectively). The sale of Gbo Poland closed on September 29, 2017, and the sale of Gbo Romania closed on October 31, 2017. The Company will retain Gbo Fastening Systems' operations in Sweden and Norway.

ERP Integration

In July 2016, our Board of Directors (the "Board") approved a plan to replace our current in-house enterprise resource planning ("ERP") and externally sourced accounting platforms with a fully integrated ERP platform from SAP America, Inc. ("SAP") in multiple phases by location ~~over a period of three to four years~~ at all facilities plus our headquarters, with a focus on configuring,

instead of customizing, the standard SAP modules.

We ~~anticipate~~went live with our first wave of the ~~ERP~~SAP implementation project in February of 2018, and we implemented SAP at two additional locations in 2019. We are tracking toward rolling out SAP technology in our remaining U.S. branches by early 2020, and company-wide completion of the SAP roll-out during 2021. While we believe the SAP implementation will ~~cost approximately $30 million~~be beneficial to ~~$34 million through 2019, including capital expenditures. Annual~~the Company over time, annual operating expenses ~~will~~have and are expected to continue to increase ~~from 2017 to~~through 2024 as a result of the ERP project, ~~partly~~primarily due to increases in training costs and the ~~amortization~~depreciation of ~~related~~previously capitalized costs.

~~We believe that the ERP project has progressed well in the first nine months of 2017 and is currently on track and on budget.~~ As of September 30, ~~2017,~~2019, we have capitalized ~~$8.3~~$19.2 million and expensed $22.4 million of the costs, including depreciation of capitalized costs associated with the ERP project. We expect to go live with our first locations in the first quarter of 2018. We anticipate that, as the project progresses further into 2018, we will spend more time and resources in training our staff for the new platform, as opposed to configuring the SAP modules, and we expect to record the cost associated with such training as expense.

Business Segment Information

Our North America segment has generated more revenues primarily from wood construction products compared to concrete construction products. ~~Due to improved~~During the nine months' period ended on September 30, 2019, economic conditions ~~including an increase~~and wet weather resulted in lower than projected single-family housing starts, which decreased wood construction product sales volumes over the same time period. Wood construction product sales volume decreased compared to the first nine months of 2018, partly due to lower U.S. housing starts as a result, in part due to unusually wet conditions across the U.S with the first 6 months of 2019 being the wettest on record over the past 125 years according to the National Weather Service. Concrete construction product sales volume increased compared to the first nine months of 2018, which was also mostly due to increased sales volumes. Our wood

construction product net sales ~~in regions of~~increased 9% for the ~~segment have trended up,~~quarter ended September 30, 2019 compared to the quarter ended September 30, 2018 primarily due to ~~increases in unit~~increased sales ~~volumes and an approximately 4% price increase~~volumes. Our concrete construction product net sales increased 22% for ~~our connector products in~~ the ~~United Stated effective on December 1, 2016, as well as added revenues from CG Visions. See “North America” below. Our truss sales decreased slightly in the third~~ quarter ~~of 2017. Our truss specialists continue to convert small to medium size truss customers to our design and management software in 2017.~~

During the third quarter of 2016, we initiated a multi-year plan to increase our North America factory production efficiency, aiming to achieve a 75% factory utilization rate on two full shifts by moving high-volume connector production from both our Riverside and Western Canada facilities to our other three manufacturing locations in North America. As ofended September 30, ~~2017, we had relocated 100% of our planned high-volume connector production. Our factory utilization was approximately 45% when this project began and~~2019 compared to the quarter ended September 30, 2018 also mostly due to increased sales volumes. Looking ahead to the fourth quarter, we are ~~currently operating at approximately 60% factory utilization. Based on current information and subject to future events and circumstances, we estimate this transition~~cautiously optimistic that demand will ~~save approximately~~be steady until winter weathers slows or stops new construction. Operating expenses increased $3.0 million ~~per year, mostly in production costs. Both~~for the ~~Riverside~~quarter ended September 30, 2019 compared to the quarter ended 2018 and ~~Western Canada locations will continue as sales and distribution locations, and maintain~~increased $12.7 million for the ~~capability~~first nine months of 2019 compared to ~~manufacture custom orders to continue to meet~~ the ~~Company's service and product availability commitments to customers in the Southwestern region~~first nine months of ~~the United States and Western region of Canada.~~2018.

In late 2016, we collaborated with ~~The~~ Home Depot ~~Inc. (“The Home Depot”)~~ to ~~roll out~~make our mechanical anchor line of products ~~that are~~ available ~~at The~~in Home ~~Depot. This collaboration increased a portion of our finished goods inventory and we expect to~~Depot stores. We continue to ~~introduce~~rollout our mechanical anchor line of products ~~through approximately 1,900 of The~~at Home Depot ~~store locations throughout 2017~~stores and ~~beyond. Once the rollout is completed, we anticipate this opportunity will meaningfully contribute~~seek to our concrete business lines going forward and estimate that on an annualized basis it could potentially increase our net sales by approximately $30 million. In addition, we are presenting the BIM platform acquired from CG Visions to various builders to showcase the software and for us to determine which modules and services that builders might be interested in using to support their business.add additional products.

Our Europe segment also generates more revenues from wood construction products than concrete construction products. For the first nine months of 2019, concrete construction product net sales increased compared to the first nine months of 2018. Europe net sales were also negatively affected by foreign currency translations resulting from Europe currencies weakening against the United States dollar. In local currency, Europe net sales increased primarily due to increases in average product prices. Wood construction product sales ~~increased 67% in~~decreased for the ~~third~~ quarter ~~of 2017~~ended September 30, 2019 compared to the ~~third~~ quarter ~~of 2016, primarily due to the acquisition of Gbo Fastening Systems.~~ended September 30, 2018. Concrete construction product sales are mostly ~~project based~~project-based, and net sales increased ~~11% in~~7% for the ~~third~~ quarter ~~of 2017~~ended September 30, 2019 compared to the ~~third~~ quarter ~~of 2016,~~ended September 30, 2018, primarily due to ~~the completion~~timing of ~~large projects during the third quarter of 2017. We are uncertain whether concrete construction product net sales will continue to grow at this pace~~projects. Operating expenses decreased $1.2 million for the ~~remainder of 2017. In connection with~~quarter ended September 30, 2019 compared to the ~~Gbo Fastening Systems acquisition, we estimated demand for wood connector products~~quarter ended September 30, 2018 and decreased $4.8 million for the ~~Nordic region and have placed inventory in Sweden. Our Western European locations are working on sales and marketing plans for a complete line~~first nine months of ~~fastener products and expect~~2019 compared to ~~introduce them to our customers by~~ the ~~end~~first nine months of ~~2017.~~2018. See ~~“Europe”~~“Europe” below.

Our Asia/Pacific segment has generated revenues from both wood and concrete construction products. We ~~have closed our sales offices located in China, Thailand and Dubai; and discontinued our selling activities in Hong Kong, due to continued losses in the regions. We~~ believe that the Asia/Pacific segment is not significant to our overall performance.



(1	)	When referred to above, the Company’s return on invested capital (“ROIC”) for a fiscal ~~year~~period is calculated based on (i) the net income of ~~that year~~the last four quarters as presented in the Company’s condensed consolidated statements of operations prepared pursuant to generally accepted accounting principles in the U.S. (“GAAP”), as divided by (ii) the average of the sum of the total stockholders’ equity and the total long-term liabilities at the beginning of and at the end of such ~~year,~~period, as presented in the Company’s consolidated balance sheets prepared pursuant to GAAP for that applicable year. For the purposes of comparability in this calculation, total long-term liabilities excludes long-term operating lease liabilities, which were recognized as of September 30, 2019 as a result of the January 1, 2019 adoption of ASU 2016-02. As such, the Company’s ROIC, a ratio or statistical measure, is calculated using exclusively financial measures presented in accordance with GAAP.

Business Outlook

Based on current business trends and conditions, our outlook for fiscal 2019 is as follows:

2019 full-year gross margin is estimated to be in the range of approximately 43.5% to 44.0%.

2019 full-year operating expenses, as a percentage of net sales, is estimated to be between approximately 27.5% and 28.5%.

2019 full-year effective tax rate will be between approximately 25.5% to 26.5% including both federal and state income tax rates.

Results of Operations for the Three Months Ended September 30, ~~2017,~~2019, Compared with the Three Months Ended September 30, ~~2016~~2018

Unless otherwise stated, the below results, ~~announced below,~~ when providing comparisons (which are generally indicated by words such as “increased,” “decreased,” “unchanged” or “compared to”), compare the results of operations for the three months ended September 30, ~~2017,~~2019, against the results of operations for the three months ended September 30, ~~2016.~~2018. Unless otherwise stated, the results announced below, when referencing “both quarters,” refer to the three months ended September 30, ~~2016~~2018 and the three months ended September 30, ~~2017. To avoid fractional percentages, all percentages~~2019.

The Company changed its presentation of its consolidated statement of operations to display non–operating activities, including foreign exchange gain (loss), and certain other income or expenses as a separate item below income from operations. Foreign exchange gain (loss), and other income or expenses were previously included in general and administrative expenses, and in income from operations, respectively. Income before tax and net income for the three months and nine months ended September 30, 2018 presented below were ~~rounded to~~not affected by the ~~nearest whole number.~~change in presentation.

Unless otherwise stated, the Company’s results below, when referencing “recent acquisitions,” refer to the August 2016 acquisition of Multi Services Dêcoupe S.A. ("MS Decoupe") and the January 2017 acquisitions of Gbo Fastening Systems and CG Visions; when referencing “recently acquired businesses,” refer to MS Decoupe, Gbo Fastening Systems and/or CG Visions, as applicable; and when referencing “acquired net sales,” refer to net sales of such acquired businesses, as applicable. When referencing the “recent North America acquisition,” the Company’s results below refer to the CG Vision acquisition; and when referencing “recent Europe acquisitions,” refer to the MS Decoupe and Gbo Fastening Systems acquisitions.

Third Quarter ~~2017~~2019 Consolidated Financial Highlights

The following table illustrates the differences in ~~the~~ our operating results for the three months ended September 30, ~~2017,~~2019, from the three months ended September 30, ~~2016,~~2018, and the increases or decreases for each category by segment:


	Three Months Ended															Three Months Ended			Three Months Ended															Three Months Ended
				Increase (Decrease) in Operating Segment																		Increase (Decrease) in Operating Segment
	September 30,			North						Asia/			Admin &			September 30,			September 30,			North						Asia/			Admin &			September 30,
(in thousands)	2016			America			Europe			Pacific			All Other			2017			2018			America			Europe			Pacific			All Other			2019
Net sales	$	230,974		$	15,795		$	15,652		$	55		$	—		$	262,476		$	284,178		$	25,607		$	199		$	(52	)	$	—		$	309,932
Cost of sales	117,499			13,691			11,084			357			(40		)	142,591			150,282			21,602			19			386			(1		)	172,288
Gross profit	113,475			2,104			4,568			(302		)	40			119,885			133,896			4,005			180			(438		)	1			137,644
Research and development and other engineering expense	10,932			(2,331		)	116			(38		)	—			8,679			10,441			1,593			(36		)	(26		)	—			11,972
Selling expense	24,304			2,007			1,839			6			—			28,156			26,879			1,418			(438		)	(187		)	—			27,672
General and administrative expense	32,543			2,892			1,384			173			(491		)	36,501			37,358			(28		)	(768		)	173			312			37,047
Loss (gain) on sale of assets	(81		)	(80		)	(11		)	25			—			(147		)
																			74,678			2,983			(1,242		)	(40		)	312			76,691
Gain on sale of assets																			(460		)	459			(11		)	(2		)	—			(14		)
Income from operations	45,777			(384		)	1,240			(468		)	531			46,696			59,678			563			1,433			(396		)	(311		)	60,967
Loss in equity method investment, before tax	—			(13		)	—			—			—			(13		)
Interest expense, net	(82		)	23			(249		)	30			(18		)	(296		)
Gain (adjustment) on bargain purchase of a business	—			—			(2,052		)	—			—			(2,052		)
Gain on disposal of a business	—						443						—			443
Interest expense, net and other																			1,156			(1,962		)	(438		)	(486		)	(48		)	(1,778		)
Income before income taxes	45,695			(374		)	(618		)	(438		)	513			44,778			60,834			(1,399		)	995			(882		)	(359		)	59,189
Provision for income taxes	15,898			(657		)	433			(123		)	1,030			16,581			16,473			(1,348		)	88			(137		)	427			15,503
Net income	$	29,797		$	283		$	(1,051	)	$	(315	)	$	(517	)	$	28,197		$	44,361		$	(51	)	$	907		$	(745	)	$	(786	)	$	43,686

Net sales increased ~~14%~~9.1% to ~~$262.5~~$309.9 million from ~~$231.0~~$284.2 million. ~~Recently acquired businesses accounted for $15.8 million (50%) of the increase in net sales.~~ Net sales to ~~contractor distributors,~~home centers, dealer distributors, ~~home centers~~lumber dealers and ~~lumber dealers~~contract distributors increased primarily due to ~~increased home construction activity~~increases in sales volumes and higher average ~~net sales unit~~product prices. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented ~~86%~~83% and 84% of the Company's total net sales in the third quarters of ~~2017~~2019 and ~~2016,~~2018, respectively. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented ~~14%~~17% and 16% of the Company's total net sales in the third quarters of ~~2017~~2019 and ~~2016,~~2018, respectively.

Gross profitincreased 2.8% to ~~$119.9~~$137.6 million from ~~$113.5~~$133.9 million. Gross profit margins decreased to ~~46%~~44.4% from ~~49%. Recently acquired businesses had an average gross profit margin~~47.1%, primarily due to increases in material, factory and overhead expense (on lower production) and labor costs each as a percentage of ~~31% in the third quarter of 2017. The gross~~net sales. Gross profit margins, including some inter-segment expenses, which were eliminated in consolidation, and excluding other expenses that are allocated according to product group, decreased to ~~46%~~44.4% from ~~50%~~47.3% for wood construction products and ~~increased~~decreased to ~~35%~~41.6% from ~~32%~~43.4% for concrete construction ~~products.~~products, respectively.

Research and development and engineering expense ~~decreased 21%~~ increased 14.7% to ~~$8.7~~$12.0 million from ~~$10.9~~$10.4 million, primarily due to an increase of $1.9 million in personnel costs, which was mostly due to ~~a reclassification of $2.5 million year-to-date expenses associated with recent the North America acquisition~~reclassifying employees from ~~engineering expense to selling expense and~~ general and administrative to research and development and engineering.

Selling expense increased 3.0% to $27.7 million from $26.9 million, primarily due to an increase of $1.8 million in personnel costs, partly offset by decreases of $0.6 million in cash profit sharing and sales commissions and $0.6 million in professional fees.

General and administrative expense decreased 0.8% to $37.0 million from $37.4 million, primarily due to reclassifying employees from general and administrative to research and development and engineering, as well as decreases of ~~$0.4~~$0.9 million in cash profit sharing expense and ~~$0.3 million in stock-based compensation expense.~~

~~Selling expense~~ ~~increased 16% to $28.2 million from $24.3 million primarily due to increases of $3.2 million in personnel costs, $0.8 million in advertising costs and~~ $0.6 million in ~~amortization expense, which was partly offset by decreases of $0.7 million~~consulting and professional fees. Included in stock-based compensation expense and $0.5 million in cash profit sharing expense. Recent acquisitions increased selling expense by $2.0 million, including the reclassification of $0.3 million year-to-date expenses associated with the North America acquisition from engineering expense to selling.

~~General~~general and administrative expense are SAP implementation and support costs of $3.6 million, which increased ~~12% to $36.5~~$1.6 million from $32.5 million, primarily due to increases of $4.0 million in personnel costs, $1.6 million in depreciation expense, $1.0 million in professional fees and $0.7 million in software licensing and maintenance and hosting expense, which was partly offset by decreases of $2.4 million in cash profit sharing expense on lower income from operations (or "operating income") and reduced payouts under our executive officer cash profit sharing plan and $1.0 million in stock-based compensation. Recent acquisitions increased general and administrative expenses by $5.2 million, including the ~~reclassification of $2.2 million year-to-date expenses, associated with the North America acquisition from engineering expense to selling expense.~~prior quarter.

~~Gain (adjustment) on bargain purchase of a business~~ - On January 3, 2017, we acquired Gbo Fastening Systems for approximately $10.2 million. This transaction was recorded as a business combination and resulted in a preliminary bargain purchase gain estimate of $8.4 million, which represented an estimate of the excess fair value of the net assets acquired and liabilities assumed over the consideration exchanged as of the acquisition date. In the third quarter of 2017, we completed our estimate of the fair value for the assets acquired and liabilities assumed and concluded that the fair value of the assets acquired and liabilities assumed was $16.5 million, which resulted in an adjusted bargain purchase gain of $6.3 million and a decrease of the bargain purchase gain of $2.1 million. This nonrecurring, non-operating income gain adjustment is included in the line item “Gain (adjustment) on bargain purchase of a business” in our results of operations for the three months ended September 30, 2017.

~~Gain on a disposal of a business -~~ ~~On September 29, 2017, we sold all of the outstanding shares of Gbo Poland for approximately $10.2 million, resulting in a gain of $0.4 million (both amounts are subject to post-closing adjustments).~~

Our effective income tax rate ~~increased~~decreased to ~~37%~~26.2% from 35%, primarily due to a reduction of the nonrecurring gain on a bargain purchase related to the Gbo Fastening Systems acquisition (see "Gain (adjustment) on bargain purchase of a business" above), which 27.1%.

Consolidated net income was ~~not taxable.~~

~~Net income~~ ~~was $28.2~~$43.7 million compared to ~~$29.8~~$44.4 million. Diluted net income per common share was ~~$0.59~~$0.97 compared to $0.62. The decrease in net income was primarily due to the $2.1 million reduction on the nonrecurring bargain purchase gain (see "Gain (adjustment) on bargain purchase of a business" above), which decreased diluted net income by $0.04 per common share.$0.95.

Net sales

The following table represents net sales by segment for the three-month periods ended September 30, ~~2016~~2019 and ~~2017,~~2018, respectively:

North Asia/
(in thousands) America Europe Pacific Total
Three months ended

September 30, 2016 197,459
31,485
2,030
$ 230,974
September 30, 2017 213,254
47,137
2,085
262,476
Increase $ 15,795
$ 15,652
$ 55
$ 31,502
Percentage increase 8 % 50 % 3 % 14 %



	North						Asia/
(in thousands)	America			Europe			Pacific			Total
Three months ended
September 30, 2018	$	239,898		$	42,020		$	2,260		$	284,178
September 30, 2019	265,505			42,219			2,208			309,932
Increase (decrease)	$	25,607		$	199		$	(52	)	$	25,754
Percentage Increase (decrease)	10.7		%	0.5		%	(2.3		)%	9.1		%

The following table represents segment net sales as percentages of total net sales for the three-month periods ended September 30, ~~2016~~2019 and ~~2017,~~2018, respectively:

North
America
Europe
Asia/
Pacific
Total
Percentage of total 2016 net sales 85 % 14 % 1 % 100 %
Percentage of total 2017 net sales 81 % 18 % 1 % 100 %



	North America		Europe		Asia/ Pacific		Total
Percentage of total 2018 net sales	84	%	15	%	1	%	100	%
Percentage of total 2019 net sales	86	%	14	%	—	%	100	%

Gross profit

The following table represents gross profit by segment for the three-month periods ended September 30, ~~2016~~2019 and ~~2017,~~2018, respectively:


	North						Asia/			Admin &						North						Asia/			Admin &
(in thousands)	America			Europe			Pacific			All Other			Total			America			Europe			Pacific			All Other		Total
Three months ended
September 30, 2016	$	99,524		$	13,500		$	511		$	(60	)	$	113,475
September 30, 2017	101,628			18,068			209			(20		)	119,885
September 30, 2018																$	116,969		$	16,034		$	893		$	—	$	133,896
September 30, 2019																120,974			16,214			455			1		137,644
Increase (decrease)	$	2,104		$	4,568		$	(302	)	$	40		$	6,410		$	4,005		$	180		$	(438	)	$	1	$	3,748
Percentage increase	2		%	34		%	*			*			6		%
Percentage Increase (decrease)																3.4		%	1.1		%	*			*		2.8		%

* The statistic is not meaningful or material.

The following table represents gross profit as a percentage of sales by segment for the three months ended September 30, ~~2016~~2019 and ~~2017,~~2018, respectively:

(in thousand)
North
America
Europe
Asia/
Pacific

Admin &
All Other
Total
2016 gross profit percentage 50 % 43 % 25 % * 49 %
2017 gross profit percentage 48 % 38 % 10 % * 46 %



	North America		Europe		Asia/ Pacific		Admin & All Other	Total
2018 gross profit percentage	48.8	%	38.2	%	39.5	%	*	47.1	%
2019 gross profit percentage	45.6	%	38.4	%	20.6	%	*	44.4	%

* The statistic is not meaningful or material.

North America

Net sales increased 8%10.7%, primarily due to increases in sales volumes and higher average ~~net~~ sales ~~unit prices as well as in sales volumes. Canada's net sales increased for the quarter primarily due to increased sales volumes.~~prices. Canada's net sales were ~~not significantly~~negatively affected by foreign currency translation.

Gross profit as a percentage of net sales decreased to ~~48%~~45.6% from ~~50%~~48.8% primarily due to ~~increased~~increases in material costs, factory and overhead costs (on lower production) and labor ~~expenses.~~costs, each as a percentage of net sales.

Research and development and engineering expense ~~decreased $2.3~~increased $1.6 million, primarily due to ~~a $2.5~~an increase of $1.8 million ~~reclassification of year-to-date expenses associated with the recent North America acquisition~~in personnel costs, which was mostly due to moving certain employees, whose primary responsibilities changed during 2019, from ~~engineering expense to selling and~~ general and administrative ~~expense as well as decreases of $0.5 million in cash profit sharing expense~~to research and ~~$0.3 million in stock-based compensation.~~development and engineering.

Selling expense increased ~~$2.0~~$1.4 million, primarily due to increases of ~~$1.7~~$1.8 million in personnel costs, ~~$0.7~~$0.5 million in advertising ~~costs~~ and ~~$0.6 million in amortization expense, which was~~promotional expenses, partly offset by decreases of ~~$0.7~~$0.6 million in stock based compensation expense and $0.5 million in cash profit sharing expense. The recent North America acquisition increased selling expense by $0.3 million, due to the reclassification of year-to-date expenses associated with the recent North America acquisition from engineering expense to selling expense.professional fees.

General and administrative expense decreased slightly, which was mostly due to moving certain employees, whose primary responsibilities changed during 2019, from general and administrative to research and development and engineering. Included in general and administrative expense are SAP related costs of $2.9 million, which increased ~~$2.9~~$1.2 million from the prior quarter.

Income from operations increased slightly by $0.4 million, primarily due to the $2.2 million reclassification of year-to-date expenses associated with the recent North America acquisition from engineering expense to general and administrative expense as well as an increase of $1.6 million in depreciation expense,increased gross profit, partly offset by ~~decreases of $1.7 million in cash profit sharing expense and $0.6 million in stock-based compensation.~~

~~Income from operations decreased $0.4 million mostly due to~~ increased operating ~~expenses, which was partially offset by increased gross profits.~~expenses.

Europe

Net sales increased ~~50% primarily due to acquired net sales~~0.5%, despite approximately $2.3 million of ~~$14.3 million, which accounted for 92% of the increase in net sales in Europe. Net sales were positively affected by approximately $1.3 million in~~negative foreign currency translations ~~primarily related to the strengthening of the Euro and Polish zloty~~resulting from European currencies weakening against the United States dollar. In local currency, Europe net sales increased primarily due to ~~increased~~increases in both volume and average ~~net sales unit prices.~~product price.

Gross profit ~~margin decreased~~as a percentage of net sales increased to ~~38%~~38.4% from ~~43% primarily due to the recent~~38.2%. Europe ~~acquisitions, which had an average~~ gross profit ~~margin of 24% in the third quarter of 2017.~~was also negatively affected by foreign currency translation.

Selling expense ~~increased $1.8~~decreased $0.4 million, primarily due to ~~an increase~~decreases of ~~$1.4~~$0.3 million in cash profit sharing and sales commissions.

General and administrative expense decreased $0.8 million, primarily due to decreases of $0.3 million in severance expense, $0.2 million in personnel costs ~~mostly~~and $0.2 million in cash profit sharing expense. Included in general and administrative expense are SAP related ~~to the recent Europe acquisitions,~~costs of $0.7 million, which increased ~~selling expense by $1.7 million.~~$0.4 million from the prior quarter.

Income from operations increased ~~$1.2~~$1.4 million, ~~mostly~~primarily due to ~~increased gross profit, partially offset by higher~~lower operating expenses.

Asia/Pacific

For information about the Company's Asia/Pacific segment, please refer to the ~~table~~tables above setting forth changes in our operating results for the three months ended September 30, ~~2017~~2019 and ~~2016.~~2018, respectively.

~~Administrative and All Other~~

~~General and administrative expenses decreased primarily due to a decrease of $0.9 million in cash profit sharing expense.~~

~~Business Outlook~~

~~Based on current information and subject to future events and circumstances, the Company currently estimates that:~~

~~It will recognize severance charges between $3.0 and $3.5 million in the fourth quarter of 2017.~~

~~Market prices for steel will be stable for the remainder of 2017.~~

~~Gross profit margin for the full-year of 2017 will be approximately 45% to 46%.~~

~~Depreciation expense for the full-year 2017 will be approximately $28 million to $29 million.~~

~~Amortization expense for the full-year 2017 will be approximately $6 million to $7 million.~~

The effective tax rate for the full-year of 2017 will be between 35% and 36%, affected by the nonrecurring bargain purchase gain recorded in 2017 and the adoption of ASU 2016-09, which requires all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement.

Results of Operations for the Nine Months Ended September 30, ~~2017,~~2019, Compared with the Nine Months Ended September 30, ~~2016~~2018

Unless otherwise stated, the results announced below, when providing comparisons (which are generally indicated by words such as “increased,” “decreased,” “unchanged” or “compared to”), compare the results of operations for the nine months ended September 30, ~~2017,~~2019, against the results of operations for the nine months ended September 30, ~~2016.~~2018. Unless otherwise stated, the results announced below refer to the nine months ended September 30, ~~2016~~2018 and the nine months ended September 30, ~~2017. To avoid fractional percentages, all percentages presented below were rounded to the nearest whole number.~~2019.

Unless otherwise stated, the Company’s results below, when referencing “recent acquisitions,” refer to the August 2016 acquisition of MS Decoupe and the January 2017 acquisitions of Gbo Fastening Systems and CG Visions; when referencing “recently acquired businesses,” refer to MS Decoupe, Gbo Fastening Systems and/or CG Visions, as applicable; and when referencing “acquired net

sales,” refer to net sales of such acquired businesses, as applicable. When referencing the “recent North America acquisition,” the Company’s results below refer to the CG Vision acquisition; and when referencing “recent Europe acquisitions,” refer to the MS Decoupe and Gbo Fastening Systems acquisitions.

Year-to-Date (9-month) ~~2017~~2019 Consolidated Financial Highlights

The following table illustrates the differences in our operating results for the nine months ended September 30, ~~2017,~~2019, from the nine months ended September 30, ~~2016,~~2018, and the increases or decreases for each category by segment:


	Nine Months Ended			Increase (Decrease) in Operating Segment												Nine Months Ended			Nine Months Ended			Increase (Decrease) in Operating Segment												Nine Months Ended
	September 30,			North						Asia/			Admin &			September 30,			September 30,			North						Asia/			Admin &			September 30,
(in thousands)	2016			America			Europe			Pacific			All Other			2017			2018			America			Europe			Pacific			All Other			2019
Net sales	660,470			$	43,567		$	40,749		$	559		$	—		$	745,345		836,964			$	40,077		$	(2,449	)	$	(563	)	$	—		$	874,029
Cost of sales	342,985			27,405			29,562			1,762			65			401,779			454,881			39,323			(1,267		)	(1,064		)	79			491,952
Gross profit	317,485			16,162			11,187			(1,203		)	(65		)	343,566			382,083			754			(1,182		)	501			(79		)	382,077
Research and development and other engineering expense	33,807			876			349			19			—			35,051			32,840			2,876			(143		)	(286		)	—			35,287
Selling expense	74,313			6,750			4,921			166			—			86,150			83,653			2,694			(1,573		)	(303		)	—			84,471
General and administrative expense	96,786			10,039			2,668			253			(1,697		)	108,049			113,565			7,157			(3,285		)	162			342			117,941
																			230,058			12,727			(5,001		)	(427		)	342			237,699
Gain on sale of assets	(763		)	673			(14		)	(43		)	—			(147		)	(1,769		)	1,263			226			15			—			(265		)
Income from operations	113,342			(2,176		)	3,263			(1,598		)	1,632			114,463			153,794			(13,236		)	3,593			913			(421		)	144,643
Loss in equity method investment, before tax	—			(53		)	—			—			—			(53		)
Interest expense, net	(400		)	109			(257		)	248			(385		)	(685		)
Gain (adjustment) on bargain purchase of a business	—			—			6,336			—			—			6,336
Gain on disposal of a business	—			—			443			—			—			443
Interest expense, net and other																			284			(1,765		)	131			(1,465		)	421			(2,394		)
Income before income taxes	112,942			(2,120		)	9,785			(1,350		)	1,247			120,504			154,078			(15,001		)	3,724			(552		)	—			142,249
Provision for income taxes	40,601			86			885			(489		)	(111		)	40,972			40,202			(5,508		)	1			356			1,273			36,324
Net income	$	72,341		$	(2,206	)	$	8,900		$	(861	)	$	1,358		$	79,532		$	113,876		$	(9,493	)	$	3,723		$	(908	)	$	(1,273	)	$	105,925

Net sales increased ~~13%~~4.4% to ~~745.3~~$874.0 million from ~~$660.5~~$837.0 million. ~~Recent acquisitions accounted for $43.4 million (51%) of the increase in net sales.~~ Net sales to home centers, dealer distributors and lumber dealers ~~contractor distributors and home centers~~ increased, primarily due to ~~increased home~~increases in average product prices and concrete construction ~~activity and average net unit price.~~product sales volumes. Net sales to contractor distributors decreased. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented ~~86%~~84% and 85% of the Company's total net sales in both the first nine months of ~~2017~~2019 and ~~2016,~~2018, respectively. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented ~~14%~~16% and 15% of the Company's total net sales in both the first nine months of ~~2017~~2019 and ~~2016,~~2018, respectively.

Gross profit ~~increased to $343.6~~was flat at $382.1 million ~~from $317.5 million.~~for both the first nine months of 2019 and 2018. Gross profit margins decreased to ~~46%~~43.7% from ~~48%. Recently acquired businesses had an average gross profit margin~~45.7%, primarily due to increases in material and labor costs as a percentage of ~~31% in the first nine months~~net sales, all as a percentage of ~~2017.~~net sales. The gross profit margins, including some inter-segment expenses, which were eliminated in consolidation, and excluding other expenses that are allocated according to product group, decreased to ~~47%~~43% from ~~49%~~46% for wood construction products and ~~decreased~~increased to ~~34%~~42% from ~~36%~~39% for concrete construction products.

Research and development and engineering expense increased 4%7.5% to ~~$35.1~~$35.3 million from ~~$33.8~~$32.8 million primarily due to an increase of $3.7 million in personnel costs, which was mostly due to moving certain employees, whose primary responsibilities changed during 2019, from general and administrative to research and development and engineering, partly offset by decreases of $0.5 million in supply expense, $0.4 million in cash profit sharing expense and $0.2 million in professional and legal fees.

Selling expense increased 1.0% to $84.5 million from $83.7 million, primarily due to increases of ~~$1.1~~$3.1 million in personnel costs ~~mainly attributable to the addition of staff~~ and ~~pay rate increases instituted on January 1, 2017, and $0.5~~$0.6 million in ~~product development and support,~~professional fees, partly offset by ~~a decrease~~decreases of ~~$0.6~~$2.1 million in cash profit sharing, ~~on lower operating income.~~

~~Selling~~sales commissions and ~~marketing~~agent commissions expense, ~~increased 16% to $86.2 million from $74.3 million primarily due to recent acquisitions, which increased selling expense by $5.5 million, as well as increases of $3.8~~ $0.5 million in ~~personnel costs, $2.7~~advertising and promotional expense and $0.2 million in ~~point of purchase, trade show and sale promotion costs and $0.7 million in amortization expense, partly offset by a decrease of $0.9 million in cash profit sharing costs on lower operating income.~~stock-based compensation expense.

General and administrative expense increased ~~12%~~3.9% to ~~$108.0~~$117.9 million from ~~$96.8~~$113.6 million, primarily due to increases of ~~$6.8~~$4.9 million in consulting and legal fees, $1.1 million in computer software and hardware costs, $1.0 million in personnel ~~costs mostly related to recent acquisitions and the addition of staff and pay rate increases instituted on January 1, 2017, $5.3~~expense, $0.5 million in ~~legal~~facility expense and professional fees mostly related to strategic initiatives such as software and systems integration and compensation and governance changes, $3.4 million in software licensing, maintenance and hosting fees, $1.5$0.4 million in stock-based compensation, ~~and $0.9 million in depreciation expense, which was~~ partly offset by ~~a decrease~~decreases of ~~$5.1~~$1.9 million in cash profit sharing expense ~~on lower operating income~~ and ~~reduced payouts under our executive officer cash profit sharing plan as well as an increase of~~ $1.9 million ~~from favorable net foreign currency translations. Recently acquired businesses were responsible for $8.3 million of the total increase~~in severance expense. Included in general and administrative ~~expenses.~~

~~Gain (adjustment) on bargain purchase of a business~~ ~~- On January 3, 2017, we acquired Gbo Fastening Systems for approximately $10.2 million. This transaction was recorded as a business combination in accordance~~expense are costs associated with the ~~business acquisition method. We recorded a bargain purchase gain~~SAP implementation and support of ~~$6.3~~$9.4 million, an increase of $2.1 million over the first nine-months of 2018.

Gain on sale of assets - In 2016, an eminent domain claim was exercised on land owned by the Company with an offer for the taking of land. The Company challenged the offer, which ~~represents~~resulted in the Company receiving an ~~estimate~~additional $1.0 million in the first quarter of 2018 for the taking of the ~~excess fair value of the net assets acquired and liabilities assumed over the consideration exchanged as of the acquisition date. This nonrecurring, non-operating income gain is included~~land, which occurred in ~~the line item “Gain (adjustment) on bargain purchase of a business” in our results of operations for the nine months ended September 30, 2017.~~2016.

Our effective income tax rate decreased to ~~34%~~25.5% from ~~36%~~26.1%. ~~The decrease~~

Consolidated net income was ~~primarily due to a nonrecurring gain on a bargain purchase related to the Gbo Fastening Systems acquisition, which was not taxable, and the adoption of ASU 2016-09 in 2017 as highlighted above.~~

~~Net income~~ ~~was $79.5~~$105.9 million compared to ~~$72.3~~$113.9 million. Diluted net income per common share was ~~$1.66~~$2.35 compared to ~~$1.49. The increase in net income was primarily due to the nonrecurring $6.3 million gain on a bargain purchase, which increased diluted net income by $0.13 per common share.~~$2.43.

Net sales

The following table represents net sales by segment for the nine-month periods ended September 30, ~~2016~~2018 and ~~2017,~~2019, respectively:

North Asia/
(in thousands) America Europe Pacific Total
Nine Months Ended

September 30, 2016 569,198
86,003
5,269
$ 660,470
September 30, 2017 612,765
126,752
5,828
745,345
Increase $ 43,567
$ 40,749
$ 559
$ 84,875
Percentage increase 8 % 47 % 11 % 13 %



	North						Asia/
(in thousands)	America			Europe			Pacific			Total
Nine Months Ended
September 30, 2018	$	705,932		$	124,096		$	6,936		$	836,964
September 30, 2019	746,009			121,647			6,373			874,029
Increase (decrease)	$	40,077		$	(2,449	)	$	(563	)	$	37,065
Percentage increase (decrease)	5.7		%	(2.0		)%	(8.1		)%	4.4		%

The following table represents segment net sales as percentages of total net sales for the nine-month periods ended September 30, ~~2016~~2018 and ~~2017,~~2019, respectively:

North
America
Europe
Asia/
Pacific
Total
Percentage of total 2016 net sales 86 % 13 % 1 % 100 %
Percentage of total 2017 net sales 82 % 17 % 1 % 100 %



	North America		Europe		Asia/ Pacific		Total
Percentage of total 2018 net sales	84	%	15	%	1	%	100	%
Percentage of total 2019 net sales	85	%	14	%	1	%	100	%

Gross profit

The following table represents gross profit by segment for the nine-month periods ended September 30, ~~2016~~2018 and ~~2017,~~2019, respectively:


	North						Asia/			Admin &						North						Asia/		Admin &
(in thousands)	America			Europe			Pacific			All Other			Total			America			Europe			Pacific		All Other			Total
Nine Months Ended
September 30, 2016	280,940			34,746			1,867			(68		)	$	317,485
September 30, 2017	297,102			45,933			664			(133		)	343,566
September 30, 2018																$	335,497		$	45,082		$	1,423	$	81		$	382,083
September 30, 2019																336,251			43,900			1,924		2			382,077
Increase (decrease)	$	16,162		$	11,187		$	(1,203	)	$	(65	)	$	26,081		$	754		$	(1,182	)	$	501	$	(79	)	$	(6	)
Percentage increase	6		%	32		%	*			*			8		%
Percentage increase (decrease)																0.2		%	(2.6		)%	*		*			—		%

* The statistic is not meaningful or material.

The following table represents gross profit as a percentage of sales by segment for the nine-month periods ended September 30, ~~2016~~2018 and ~~2017,~~2019, respectively:

(in thousand)
North
America
Europe
Asia/
Pacific

Admin &
All Other
Total
2016 gross profit percentage 49 % 40 % 35 % * 48 %
2017 gross profit percentage 49 % 36 % 11 % * 46 %



(in thousand)	North America		Europe		Asia/ Pacific		Admin & All Other	Total
2018 gross profit percentage	47.5	%	36.3	%	20.5	%	*	45.7	%
2019 gross profit percentage	45.1	%	36.1	%	30.2	%	*	43.7	%

* The statistic is not meaningful or material.

North America

Net sales increased ~~8% mostly~~5.7%, primarily due to increased average ~~unit price in the United States and increased overall~~product prices, partly offset by lower sales volumes. Canada's net sales were negatively affected by approximately $1.2 million due to foreign currency translation. In local currency, Canada net sales increased primarily due to ~~increased sales volumes on flat~~increases in average ~~net sales unit~~product prices. ~~Canada's net sales were not significantly affected by foreign currency translation. The recent North America acquisition increased net sales by $4.5 million.~~

Gross profit margin ~~was unchanged at 49% as the effect of increased average net sales unit prices was offset by~~decreased to 45.1% from 47.5%, primarily due to increases in material costs, labor costs and factory and overhead ~~expenses.~~costs (on lower production), each as a percentage of net sales.

Research and development and engineering expense increased $0.9 million primarily due to increases of $0.8 million in personnel costs mainly related to the addition of staff and pay rate increases instituted on January 1, 2017, and $0.5 million in product development and support, partly offset by a decrease of $0.7 million in cash profit sharing expense.

Selling expense increased $6.8 million, primarily due to increases of $3.8 million in personnel costs mostly related to the addition of staff and pay rate increases instituted on January 1, 2017, $2.7 million in point of purchase, trade show and sale promotion costs and $0.7 million in amortization expense, partly offset by a decrease of $0.9 million in cash profit sharing costs on lower operating income.

General and administrative expense increased $10.0 million, primarily due to increases of $4.7 million in personnel costs, mostly related to the North America acquisition and the addition of staff and pay rate increases instituted on January 1, 2017, $4.9 million in legal and professional fees, mostly related to strategic initiatives such as software and systems integration and compensation and governance changes, $3.0 million in software licensing, maintenance and hosting fees, $0.9 million in stock-based compensation, $0.8 million in depreciation expense and $0.5 million in intangible amortization expense, partly offset by a decrease of $3.3 million in cash profit sharing expense. The recent North America acquisition increased general and administrative expense by $4.6 million.

~~Income from operations decreased $2.2 million, mostly due to increased operating expenses, which were partially offset by higher gross profit.~~

~~Europe~~

Net sales increased 47% primarily due acquired net sales of $39.0 million, which accounted for 96% of the total increase. Net sales were negatively affected by approximately $1.0 million in foreign currency translations primarily related to the weakening of the British pound against the United States dollar beginning in the latter half of 2016.

Gross profit margin decreased to 36% from 40% primarily due to our recent Europe acquisitions. The acquired businesses in Europe had an average gross profit margin of 24% in the first nine months of 2017.

~~Selling expense increased $4.9~~$2.9 million, primarily due to an increase of ~~$3.9~~$3.3 million in personnel costs, which was mostly ~~related~~due to ~~acquisitions and the addition of staff. The recent Europe acquisitions increased selling expense by $5.1 million.~~

~~General~~reclassifying employees from general and administrative to research and development and engineering.

Selling expense increased $2.7 million, primarily due to increases of ~~$1.6~~$3.6 million in personnel costs ~~mostly related to the addition~~and $0.6 million in professional fees, partly offset by decreases of ~~staff and pay rate increases instituted on January 1, 2017, $0.8~~$1.5 million in cash profit sharing, ~~expense, $0.8 million in software licensing~~sales commissions and ~~data processing fees, $0.4 million in professional fees and~~agent commissions expense, $0.3 million in ~~stock based~~advertising and promotional expense and $0.2 million in stock-based compensation expense.

General and administrative expense increased $7.2 million, primarily due to increases of $5.1 million in consulting and legal fees, $1.2 million in personnel costs, $1.0 million in computer software and hardware costs, $0.7 million in facility expense, partly offset by ~~the benefit from $2.0~~decreases of $0.9 million in ~~net foreign currency translation~~cash profit sharing expense. Included in ~~the current period. Recent Europe acquisitions increased~~ general and administrative expense are costs associated with the SAP implementation of $7.4 million, an increase of $1.5 million over the first nine-months of 2018. These expenses were primarily professional fees.


•	Gain on sale of assets - In 2016, an eminent domain claim was exercised on land owned by the Company with an offer for the taking of the land. The Company challenged the offer, which resulted in the Company receiving an additional $1.0 million in the first quarter of 2018 for the taking of the land.

Income from operations decreased $13.2 million, mostly due to increased operating expenses.

Europe

Net sales decreased 2.0%, primarily due to approximately $8.2 million of negative foreign currency translations resulting from some Europe currencies weakening against the United States dollar. In local currency, Europe net sales increased primarily due to increases in both average product prices and volume.

Gross profit margins decreased to 36.1% from 36.3%, primarily due to an increase in material costs as a percentage of net sales, partly offset by ~~$3.7 million.~~lower shipping and warehouse costs. Europe gross profit was negatively affected by foreign currency translation.

Selling expense decreased $1.6 million, primarily due to decreases of $0.7 million in advertising and promotional expense, $0.6 million in agent commission expense, and $0.2 million in personnel costs.

General and administrative expense decreased $3.3 million, primarily due to decreases of $2.0 million in severance costs and $1.0 million in personnel costs. Included in general and administrative expense are costs associated with the SAP implementation of $1.9 million for the first nine-months of 2019, and an increase of $0.4 million over the first nine-months of 2018. These expenses were primarily professional fees.

Income from operations increased ~~$3.3~~$3.6 million, ~~mostly~~primarily due to ~~increased gross profits, which were partially offset by higher~~lower operating expenses.

Asia/Pacific

For information about the Company's Asia/Pacific segment, please refer to the ~~table~~tables above setting forth changes in our operating results for the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018, respectively.

~~Administrative and All Other~~

General and administrative expenses decreased, primarily due to a decrease of $2.4 million in cash profit sharing expense, partly offset by increases of $0.7 million in personnel costs and $0.3 million in stock based compensation.

Effect of New Accounting Standards

See "Note 1 Basis of Presentation - — Recently Adopted Accounting Standards” and “Recently Issued Accounting Standards Not Yet Adopted” to the accompanying unaudited interim condensed consolidated financial statements.

Liquidity and Sources of Capital

Our primary sources of liquidity are cash and cash equivalents, ~~our~~ cash flow from operations and our $300.0 million credit facility that expires on July 23, 2021. As of September 30, ~~2017,~~2019, there were no amounts outstanding under this facility. We also received proceeds through the exercise of stock options by our employees. Our outstanding stock options, all of which are currently in-the-money, will expire by February 2018 if not exercised by then. As a result, we anticipate that we will receive up to $3.9 million from stock option exercises through that time.

Our principal uses of liquidity include the costs and expenses associated with our operations, continuing our capital allocation strategy, which includes growing our business by internal improvements, repurchasing our common stock, paying cash dividends, and meeting other liquidity requirements for the next twelve months.

As of September 30, ~~2017,~~2019, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions. Cash and cash equivalents of ~~$86.3~~$55.8 million are held in the local currencies of our foreign operations and could be subject to additional taxation if ~~it were~~ repatriated to the United States. ~~We have no current plans~~The Company is maintaining a permanent reinvestment assertion on its foreign earnings relative to ~~repatriate~~remaining cash ~~and cash equivalents~~ held outside the United ~~States, as it is expected to be used to fund future international growth and acquisitions.~~States.

The following table presents selected financial information as of September 30, ~~2017 and 2016, and~~2019, December 31, ~~2016,~~2018 and September 30, 2018, respectively:


	At September 30,		At December 31,		At September 30,		At September 30,		At December 31,		At September 30,
(in thousands)	2017		2016		2016		2019		2018		2018

Cash and cash equivalents	$	204,171	$	226,537	$	218,720	$	194,061	$	160,180	$	166,961
Property, plant and equipment, net	265,178		232,810		229,670		250,950		254,597		257,679
Goodwill, intangible assets and equity investment	169,945		149,843		151,474		155,492		157,139		164,414
Working capital	478,961		476,451		475,582		469,387		447,949		493,465

The following table provides cash flow indicators for the nine-month periods ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively:


	Nine Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2017			2016			2019			2018
Net cash provided by (used in):
Operating activities	$	84,591		$	66,883		$	149,235		$	107,969
Investing activities	(62,797		)	(34,017		)	(25,526		)	(21,175		)
Financing activities	(49,342		)	(75,945		)	(88,371		)	(84,363		)

Cash flows from operating activities result primarily from our earnings, and are also affected by changes in operating assets and liabilities which consist primarily of working capital balances. As a building construction materials manufacturer, our operating cash flows are subject to seasonality and are cyclically associated with the volume and timing of construction project starts. For example, trade accounts receivable ~~net,~~ is generally at its lowest at the end of the fourth quarter and increases during the first, second and third quarters.

During the nine months ended September 30, ~~2017,~~2019, operating activities provided ~~$84.6~~$149.2 million in cash and cash equivalents, as a result of ~~$79.5~~$105.9 million from net income and ~~$34.5~~$45.5 million from non-cash adjustments to net income, which ~~includes~~included depreciation and amortization expense and stock-based compensation ~~expense, a nonrecurring gain on a bargain purchase of a business and changes in deferred income taxes,~~expense. The increase is partly offset by a decrease of ~~$29.4~~$2.1 million in the net change in operating assets and liabilities, including an increase of ~~$40.6~~$36.4 million in trade accounts receivable, net. Cash used in investing activities of $62.8 million during the nine months ended September 30, 2017, consisted primarily of $45.1 million for property, plant and equipment expenditures related to real estate improvements, machinery and equipment purchases and software in development, and $27.9 million, net of acquired cash of $4.0 million, for the acquisitions of Gbo Fastening Systems and CG Visions, which was partly offset by $9.6 million, net of delivered cash of $0.6 million, for the sale of all of the equity in Gbo Poland. Cash used in financing activities of $49.3 million during the nine months ended September 30, 2017, consisted primarily of $20.0 million recorded for share repurchases and $27.0 million used to pay cash dividends.

During the nine months ended September 30, 2016, operating activities provided $66.9 million in cash and cash equivalents, as a result of $72.3 million from net income and $31.8 million from non-cash adjustments to net income which included depreciation and amortization expense, stock-based compensation expense, software development write-offs and changes in deferred income taxes, partly offset by a decrease of ~~$41.2 million in the net change in operating assets and liabilities, due to increases of $35.5 million in trade accounts receivable, net, and $23.0~~$31.2 million in inventory. Cash used in investing activities of ~~$34.0~~$25.5 million during the nine months ended September 30, ~~2016,~~2019 consisted primarily of ~~$29.9~~$24.5 million for property, plant and equipment expenditures, related to real estate improvements, machinery and equipment purchases and software development, and $5.4 million, net of acquired cash of $1.5 million, for the acquisition of MS Decoupe, partly offset by $1.3 million in proceeds from sale of property, plant and equipment.expenditures. Cash used in financing activities of ~~$75.9~~$88.4 million during the nine months ended September 30, ~~2016,~~2019 consisted primarily of ~~$24.2~~$51.4 million used for share repurchases and $30.0 million used to pay cash dividends, $53.5 million for share repurchases, including a $50.0 million accelerated share repurchase program, partly offset by $6.7 million received from the issuance of common stock on the exercise of stock options.dividends.

Capital Allocation Strategy

We have a strong cash position and remain committed to seeking growth opportunities in ~~the~~lines of building products ~~range~~ where we can leverage our expertise in engineering, testing, manufacturing and distribution to invest in and grow our business. Those opportunities include internal improvements or acquisitions that fit within our strategic growth plan. Additionally, we have financial flexibility and are committed to providing returns to our stockholders. Below are highlights of our execution on our capital allocation strategy, ~~since the beginning of~~first announced in August 2015 and updated in August 2016.

3529

~~In August 2016, we~~Our asset acquisitions, net of cash acquired ~~all~~and proceeds from sales of business, in 2017, 2018 and the stock of MS Decoupe (a former customer of one of our subsidiaries) for a net cost of approximately $5.4 million. Our preliminary measurement of MS Decoupe assets acquired included goodwill and intangible assets of $3.1 million. In January 2017, we acquired Gbo Fastening Systems for approximately $10.2nine months ended September 30, 2019 were $18.5 million, $2.0 million and ~~CG Visions for approximately $20.8~~$3.5 million, subject to specified holdback provisions and post-closing adjustments. Our preliminary measurement of Gbo Fastening Systems' assets acquired resulted in a $6.3 million gain on a bargain purchase of a business. Our preliminary measurement of CG Visions assets acquired included goodwill and intangible assets of $20.4 million. See "Note 1 Basis of Presentation —~~Acquisitions" to the accompanying unaudited interim condensed consolidated financial statements.~~

respectively.

In December 2016, we acquired a 25.0% equity interest in Ruby Sketch Pty Ltd. (“Ruby Sketch”) for $2.5 million, for which we account for our ownership interest using the equity accounting method. See "Note 6 — Investments" to the accompanying unaudited interim condensed consolidated financial statements.

Our capital spending in ~~2016 was $42.0 million~~2017, 2018 and ~~was primarily used for~~ the ~~purchase and build-out of our West Chicago, Illinois, chemical facility, manufacturing equipment and software development. Our capital spending in the first~~ nine months ended September 30, ~~2017~~2019 was ~~$45.1~~$58.0 million, $29.3 million and $24.5 million, respectively, which was primarily ~~related to our Texas facility expansion (to increase warehouse, office~~used for real estate improvements, machinery and ~~training center capacity), West Chicago chemical facility improvements, ERP project~~equipment purchases and ~~Poland facility expansion (to increase production and warehouse capacity).~~software in development. Based on current information and subject to future events and circumstances, we estimate that our full-year ~~2017~~2019 capital spending will be approximately ~~$55~~$30 million to ~~$60~~$35 million, ~~which includes~~including $7 to $10 million on maintenance-type capital expenditures, ~~finishing the work on our Texas facility, as well as for the purchase of manufacturing equipment and development and licensing of software,~~ assuming all such projects will be completed by the end of ~~2017.~~2019. Based on current information and subject to future events and circumstances, we estimate that our full-year ~~2017~~2019 depreciation and amortization expense towill be approximately ~~$34~~$39 million to ~~$36~~$41 million, of which approximately ~~$28~~$33 million to ~~$29~~$35 million is related to depreciation.

On ~~September 28, 2017,~~April 26, 2019, the Board raised the quarterly cash dividend by 4.5% to $0.23 per share. On October 24, 2019, the Board declared a quarterly cash dividend of ~~$0.21~~$0.23 per share, estimated to be ~~$9.9~~$10.2 million in total. ~~Such~~The dividend ~~is scheduled to~~will be ~~paid~~payable on January ~~25, 2018,~~23, 2020, to the Company's stockholders of record on January ~~4, 2018.~~2, 2020.

~~In February 2016, the Board authorized~~During 2019, the Company to repurchase up to $50.0 million of the Company’s common stock in 2016. In August 2016, the Board increased and extended the $50.0 million repurchase authorization from February 2016 by authorizing the Company to repurchase up to $125.0 million of the Company's common stock through December 2017. In August 2017, the Board increased its previous $125.0 million share repurchase authorization by $150.0 million to $275.0 million and extended the authorization from December 2017 to December 2018.

In August 2016, the Company entered into a Supplemental Confirmation with Wells Fargo Bank, National Association (“Wells Fargo”) for a $50.0 million accelerated share repurchase program (the “2016 August ASR Program”), which has been completed. In June 2017, the Company entered into another Supplemental Confirmation for a $20.0 million accelerated share repurchase program with Wells Fargo (the “2017 June ASR Program”). During the third quarter of 2017, the Company received 35,887purchased 854,349 shares of the Company's common stock ~~pursuant to~~on the ~~2017 June ASR Program, which constituted the final delivery thereunder.~~open market at an average price of $60.21 per share, for a total of $51.4 million. In total, as illustrated in the table below, the Company ~~received 460,887~~has repurchased over six-and-a-half million shares of the Company's common stock, ~~under~~which represents approximately 13.3% of our shares of common stock outstanding at the ~~2017 June ASR Program at an average price~~beginning of ~~$43.39 per share.~~

~~The following table presents~~2015. Including dividends, we have returned cash ~~used~~of $501.6 million, which represents 77.7% of our total cash flow from operations during the same period. We expect to ~~pay our dividends and~~continue to repurchase shares ~~of our common stock for~~as the ~~nine-month period ended September 30, 2017 and the twelve-month periods ended December 31, 2016 and 2015, respectively, in aggregated amounts:~~opportunities present themselves


(in thousands)	Dividends Paid		Open Market Share Repurchases		Accelerated Share Repurchases		Total		Number of Shares Repurchased	Cash Paid for Share Repurchases		Cash paid for Dividends		Total
January 1 - September 30, 2017	$	27,044	$	—	$	20,000	$	47,044
January 1 - September 30, 2019									854	$	51,437	$	30,002	$	81,439
January 1 - December 31, 2018									1,955	110,540		39,891		150,431
January 1 - December 31, 2017									1,138	70,000		36,981		106,981
January 1 - December 31, 2016	32,711		3,502		50,000		86,213		1,244	53,502		32,711		86,213
January 1 - December 31, 2015	29,352		22,144		25,000		76,496		1,339	47,144		29,352		76,496
Total	$	89,107	$	25,646	$	95,000	$	209,753	6,530	$	332,623	$	168,937	$	501,560

As of September 30, ~~2017,~~2019, approximately ~~$201.5~~$48.6 million remained available under the ~~$275.0~~$100.0 million repurchase authorization, ~~from August 2017.~~which expires December 31, 2019.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, ~~2017.~~2019.

Inflation and Raw Materials

We believe that the effect of inflation has not been material in recent years, as general inflation rates have remained relatively low. Our main raw material is steel. As such, increases in steel prices may adversely affect our gross profit margin if we cannot recover the higher costs through price increases.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course

of our business.

Foreign Exchange Risk

The Company has foreign exchange rate risk in its international operations, and through purchases from foreign vendors. Changes in the values of currencies of foreign countries affect our financial position, income statement and cash flows when translated into U.S. dollars. The Company does not currently hedge this risk. The Company estimates that if the exchange rate were to change

by 10% in any one country where the Company has operations, the change in net income would not be material to the Company’s operations taken as a whole.

Foreign currency translation ~~adjustment~~adjustments on the Company's underlying assets and liabilities resulted in an accumulated other comprehensive profit of ~~$5.5~~$5.8 million for the three months ended September 30, ~~2017,~~2019, and for the nine months ended September 30, 2019, due to the ~~effect of the weakening~~strengthening of the United States dollar in relation to most other currencies, partly offset by the United States dollar strengthening against the Switzerland franc, New Zealand dollar and South African rand. Foreign currency translation adjustment on the Company's underlying assets and liabilities resulted in accumulated other comprehensive profit of $19.5 million for the nine months ended September 30, 2017, due to the effect of the weakening of the United States dollar in relation toalmost all ~~other~~ currencies.

Interest Rate Risk

The Company has no variable interest-rate debt outstanding. ~~The Company estimates that a hypothetical 100 basis point change in U.S. interest rates would not be material to the Company’s operations taken as a whole.~~

Item 4. Controls and Procedures.

Disclosure Controls and Procedures. As of September 30, ~~2017,~~2019, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the chief executive officer (“CEO”) and the chief financial officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”).~~Act. Based on this evaluation, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level. Disclosure controls and procedures are controls and other procedures designed reasonably to assure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed reasonably to assure that this information is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, including the CEO and the CFO, does not, however, expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent all fraud and material errors. Internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the facts that there are resource constraints and that the benefits of controls must be considered relative to their costs. The inherent limitations in internal control over financial reporting include the realities that judgments can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of internal control is also based in part on assumptions about the likelihood of future events, and there can be only reasonable, not absolute, assurance that any design will succeed in achieving its

stated goals under all potential events and conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.

Changes in Internal Control over Financial ~~Reporting.~~ ~~During~~Reporting. In 2016, we began the process of implementing a fully integrated ERP platform from SAP America, Inc. (“SAP”), as part of a multi-year plan to integrate and upgrade our systems and processes. The first phase of this implementation became operational, at most of our North America sales, production, warehousing and administrative locations on February 5, 2018, and on April 1, 2019. We believe the necessary steps have been taken to monitor and maintain appropriate internal control over financial reporting during this period of change and will continue to evaluate the operating effectiveness of related key controls during subsequent periods.

As the phased implementation of this system continues, we are experiencing certain changes to our processes and procedures which, in turn, result in changes to our internal control over financial reporting. While we expect SAP to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as each of the affected areas evolves. For a discussion of risks related to the implementation of new systems, see Item 1A - "Risk Factors - Other Risks - We rely on complex software systems and hosted applications to operate our business, and our business may be disrupted if we are unable to successfully/efficiently update these systems or convert to new systems." in the 2018 Form 10-K.

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended September 30, ~~2017, the Company made no changes to its internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)~~2019 that ~~have~~ materially affected, or are reasonably likely to materially affect, ~~its~~our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. Corrosion, hydrogen ~~enbrittlement,~~embrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors can contribute to failure of fasteners, connectors, anchors, adhesives, specialty chemicals, such as fiber reinforced polymers, and tool products. In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets, and the Company’s website.

The Company currently is not a party to any legal proceedings, which the Company expects individually or in the aggregate to have a material adverse effect on the Company’s financial condition, cash flows or results of operations. Nonetheless, the resolution of any claim or litigation is subject to inherent uncertainty and we could ~~have a material adverse effect on~~in the ~~Company’s~~future, incur judgments, enter into settlements of claims or revise our expectations regarding the outcome of the various legal proceedings and other matters we are currently involved in, which could materially impact our financial condition, cash flows or results of operations. See “Note 812 — Commitments and Contingencies” to the accompanying unaudited interim condensed consolidated financial statements for certain potential third-party claims.

Item 1A. Risk Factors

We are affected by risks specific to us, as well as risks that generally affect businesses operating in global markets. In addition to the ~~other~~ information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in ~~our Annual Report on~~the 2018 Form 10-K ~~for the year ended December 31, 2016~~ (available at www.simpsonmfg.com/docs/~~10K-2016.pdf~~10K-2018.pdf or www.sec.gov). The risks ~~disclosed~~discussed in the ~~Annual Report on~~2018 Form 10-K and information provided elsewhere in this Quarterly Report, could materially adversely affect our business, financial condition or results of operations. ~~While we believe there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, additional~~Additional risks and uncertainties not currently known or we currently deem to be immaterial may also materially adversely affect our business, financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The table below presents the monthly repurchases of shares of our common stock in the third quarter of ~~2017.~~2019.

(a) (b) (c) (d)
Period Total Number of Shares Purchased Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^[1]
Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
July 1 - July 31, 2017 —
N/A

$54.0 million^[1]
August 1 - August 31, 2017 35,887
43.39
35,887

$201.5 million^[2]
September 1 - September 30, 2017 —
N/A
—

$201.5 million^[2]
Total 35,887



	(a)	(b)		(c)	(d)
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ^[1]	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs ^[1]
July 1 - July 31, 2019	78,000	$	60.48	78,000	$65.3 million
August 1 - August 31, 2019	270,901	$	61.79	270,901	$48.6 million
September 1 - September 30, 2019	—	—		—	$48.6 million
Total	348,901

^[1] Pursuant to the Board’s ~~$125.0~~$100.0 million repurchase authorization that was publicly announced on ~~August 24, 2016, and was scheduled to expire on December 31, 2017, which was later increased by $150.0 million and extended on August 1, 2017.~~

^[2] ~~Pursuant to the Board’s increased and extended $275.0 million repurchase authorization that was publicly announced on August 1, 2017,~~February 4, 2019, which authorization is scheduled to expire on December 31, ~~2018.~~2019.

In June 2017, the Company entered into a Supplemental Confirmation with Wells Fargo, for a $20.0 million 2017 June ASR Program. The Company received 460,887 shares of the Company's common stock under the 2017 June ASR Program, including 35,887 shares received in August 2017, which constituted the final delivery thereunder, at an average price of $43.39 per share.

Item 6. Exhibits.

~~EXHIBIT INDEX~~



		EXHIBIT INDEX
3.1		Certificate of Incorporation of Simpson Manufacturing Co., Inc. is, as amended, are incorporated by reference to Exhibit 3.1 of its Quarterly Report on Form 10-Q ~~for the quarter ended September 30, 2007.~~filed on May 9, 2018


3.2	~~Certificate of Incorporation of Simpson Manufacturing Co., Inc., as amended, is incorporated by reference to Exhibit 3.1 of its Current Report on Form 8-K dated March 28, 2017~~.


~~3.3~~	Amended and Restated Bylaws of Simpson Manufacturing Co., Inc., as amended, are incorporated by reference to Exhibit 3.2 of its Current Report on Form 8-K dated March 28, 2017.


~~4.1~~	Certificate of Designation, Preferences and Rights of Series A Participating Preferred Stock of Simpson Manufacturing Co., Inc., dated July 30, 1999, is incorporated by reference to Exhibit 4.2 of its Registration Statement on Form 8-A dated August 4, 1999.


31.1		Chief Executive Officer's Rule 13a-14(a)/15d-14(a) Certifications is filed herewith.


31.2		Chief Financial Officer's Rule 13a-14(a)/15d-14(a) Certifications is filed herewith.


32		Section 1350 Certifications are furnished herewith.
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Schema Linkbase Document
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Labels Linkbase Document
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Simpson Manufacturing Co., Inc.
		(Registrant)


DATE:	November ~~8, 2017~~6, 2019	By /s/Brian J. Magstadt
		Brian J. Magstadt
		Chief Financial Officer
		(principal accounting and financial officer)

4134



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except percentages)	2017			2016			2017			2016
Effective tax rate	37.0		%	34.8		%	34.0		%	35.9		%
Provision for income taxes	$	16,581		$	15,898		$	40,972		$	40,601



(In thousands)
Assets *
	Cash and cash equivalents	$	3,956
	Accounts receivable	4,914
	Inventory	13,591
	Other current assets	760
	Property, plant, equipment and noncurrent assets	3,929
		27,150
Liabilities
	Accounts payable	4,500
	Other current liabilities	6,146
		10,646

Total net assets		16,504
	Gain (adjustment) on bargain purchase of a business	(6,336		)
	Total purchase price	$	10,168
*	Intangible assets acquired were determined to have little to no value, thus were not recognized.



	At December 31, 2016
	Gross					Net
(in thousands)	Carrying Amount		Accumulated Amortization			Carrying Amount
North America	$	23,562	$	(13,811	)	$	9,751
Europe	27,880		(14,767		)	13,113
Total	$	51,442	$	(28,578	)	$	22,864



(in thousands)

Remaining three months of 2017	$	1,635
2018	5,505
2019	5,185
2020	5,155
2021	4,675
2022	2,774
Thereafter	4,505
	$	29,434



	Shares		Weighted- Average Price		Aggregate Intrinsic Value *
Unvested Restricted Stock Units (RSUs)	(in thousands)		Weighted- Average Price		(in thousands)
Outstanding at January 1, 2017	615		$	31.81	26,915
Awarded	616
Vested	(327	)
Forfeited	(38	)
Outstanding at September 30, 2017	866		$	36.14	$	42,469
Outstanding and expected to vest at September 30, 2017	844		$	36.11	$	41,366



	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value *
Non-Qualified Stock Options	(in thousands)				(in years)	(in thousands)
Outstanding at January 1, 2017	251		$	29.66	1.1	3,558
Exercised	(120	)
Forfeited	—
Outstanding and exercisable at September 30, 2017	131		$	29.66	0.3	$	2,534

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