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~~March 31, 2020



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.~~May 1, 2020: 43,463,983.

~~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 (unaudited) as of March 31,2020, March 31, 2019, and December 31, 2019	4
	Condensed Consolidated Statements of Earnings and Comprehensive Income (unaudited) for the Three Months Ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Stockholders' Equity (unaudited) at March 31, 2020, 2019 and December 31, 2019	6
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3 - Quantitative and Qualitative Disclosures about Market Risk		28
Item 4 - Controls and Procedures		28
Part II - Other Information
Item 1 - Legal Proceedings		29
Item 1A - Risk Factors		29
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 6 - Exhibits		31

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,			March 31,						December 31,
	2017			2016			2016			2020			2019			2019
ASSETS
Current assets
Cash and cash equivalents	$	204,171		$	218,720		$	226,537		$	301,741		$	113,407		$	230,210
Trade accounts receivable, net	159,571			141,716			112,423			168,736			173,140			139,364
Inventories	244,476			220,207			232,274			255,720			272,459			251,907
Assets held-for-sale										—			2,546			—
Other current assets	13,276			12,321			14,013			25,786			14,186			19,426
Total current assets	621,494			592,964			585,247			751,983			575,738			640,907

Property, plant and equipment, net	265,178			229,670			232,810			246,941			251,398			249,012
Operating lease right-of-use assets										33,725			34,324			35,436
Goodwill	137,313			126,845			124,479			131,599			131,712			131,879
Equity investment (see Note 6)	2,582			—			2,500
Equity investment										2,474			2,511			2,480
Intangible assets, net	30,050			24,629			22,864			23,454			24,148			25,071
Other noncurrent assets	11,766			10,195			12,074			8,072			10,521			10,581
Total assets	$	1,068,383		$	984,303		$	979,974		$	1,198,248		$	1,030,352		$	1,095,366
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Capital lease obligations - current portion	$	1,047		$	—		$	—
Trade accounts payable	30,857			24,777			27,674			$	44,505		$	35,549		$	33,351
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										118,346			115,029			125,556
Total current liabilities	142,533			117,382			108,796			162,851			150,578			158,907

Capital lease obligations - net of current portion	2,875			—			—
Operating lease liabilities										26,084			28,878			27,930
Long term debt, net of current portion										150,000			—			—
Deferred income tax and other long-term liabilities	6,933			5,817			5,336			17,719			15,422			16,572
Total liabilities	152,341			123,199			114,132			356,654			194,878			203,409
Commitments and contingencies (see Note 8)
Commitments and contingencies (see Note 12)
Stockholders’ equity
Common stock, at par value	476			486			473			444			455			442
Additional paid-in capital	265,490			243,900			255,917			272,872			274,836			280,216
Retained Earnings	683,554			687,052			642,422
Retained earnings										672,485			641,168			645,507
Treasury stock	(20,000		)	(47,002		)	—			(72,058		)	(55,000		)	(9,379		)
Accumulated other comprehensive loss	(13,478		)	(23,332		)	(32,970		)	(32,149		)	(25,985		)	(24,829		)
Total stockholders’ equity	916,042			861,104			865,842			841,594			835,474			891,957
Total liabilities and stockholders’ equity	$	1,068,383		$	984,303		$	979,974		$	1,198,248		$	1,030,352		$	1,095,366

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
	September 30,						September 30,						March 31,
	2017			2016			2017			2016			2020			2019
Net sales	$	262,476		$	230,974		$	745,345		$	660,470		$	283,668		$	259,244
Cost of sales	142,591			117,499			401,779			342,985			154,002			148,990
Gross profit	119,885			113,475			343,566			317,485			129,666			110,254
Operating expenses:
Research and development and other engineering	8,679			10,932			35,051			33,807			13,382			12,260
Selling	28,156			24,304			86,150			74,313			28,527			28,112
General and administrative	36,501			32,543			108,049			96,786			38,471			39,549
Net gain on disposal of assets	(147		)	(81		)	(147		)	(763		)
	73,189			67,698			229,103			204,143
Total operating expenses													80,380			79,921
Net loss (gain) on disposal of assets													(64		)	310
Income from operations	46,696			45,777			114,463			113,342			49,350			30,023
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 expense, net and other													(2,533		)	(763		)
Income before taxes	44,778			45,695			120,504			112,942			46,817			29,260
Provision for income taxes	16,581			15,898			40,972			40,601			9,991			6,598
Net income	$	28,197		$	29,797		$	79,532		$	72,341		$	36,826		$	22,662
Other comprehensive income
Translation adjustment													(7,593		)	(1,335		)
Unamortized pension adjustments													273			—
Comprehensive net income													$	29,506		$	21,327

Earnings per common share:
Net income per common share:
Basic	$	0.60		$	0.62		$	1.67		$	1.50		$	0.84		$	0.51
Diluted	$	0.59		$	0.62		$	1.66		$	1.49		$	0.83		$	0.50

Number of shares outstanding
Basic	47,367			48,119			47,544			48,231			44,099			44,874
Diluted	47,686			48,352			47,843			48,429			44,286			45,213

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

~~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~~March 31, 2019 and ~~2017,~~2020, and December 31, ~~2016~~2019

(In thousands except per-share amounts, unaudited)

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands, unaudited)

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.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation under GAAP. Uncertainty created by the COVID-19 pandemic will likely impact our operations, customers, and various areas of risk. We assessed certain accounting matters that require the use of estimates and assumptions in context with the known and projected future impacts of COVID-19. The Company's actual results could differ materially from those estimates.

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.~~2019 (the “2019 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 2019 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.

Generally, the Company’s revenue contract with a customer exists when goods are shipped, and services (if any) are rendered; and 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 standalone selling price. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer at a point in time. The Company’s shipping terms provide the ~~earnings process is complete, net~~primary indicator of ~~applicable provision for discounts, returns and incentives, whether actual 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 and risk~~transfer of ~~loss pass to the customer, collectability is reasonably assured and pricing is fixed or determinable.~~control. The Company’s general shipping terms are F.O.B. shipping point, where title and ~~title is transferred~~risk and ~~revenue is recognized~~rewards of ownership transfer at the point when the products ~~are shipped to customers. When~~leave the ~~Company sells F.O.B. destination point, title is transferred and the~~Company’s warehouse. The Company recognizes revenue based on ~~delivery or~~the consideration specified in the invoice with a customer, ~~acceptance, depending~~less any sales incentives, discounts, and amounts collected on ~~terms~~behalf of third parties (i.e., governmental tax authorities). Based on historical experience with the ~~sales agreement. Service sales, representing after-market repair~~customer, the customer's purchasing pattern and ~~maintenance, engineering activities and software license sales and services, although less than 1.0%~~its significant experience selling products, the Company concluded that a significant reversal in the cumulative amount of ~~net sales and~~revenue recognized will not ~~material~~occur when the uncertainty (if any) is resolved (that is, when the total amount of purchases is known). Refer 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.Note 2 for additional information.

Net ~~Earnings~~Income Per Common Share

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

Accounting for Leases

The ~~following is a reconciliation of basic earnings per common share to diluted earnings per share~~Company has operating and finance leases for ~~the three months~~certain facilities, equipment, autos and ~~nine months ended September 30, 2017 and 2016, respectively:~~

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 and Notice of Annual Meeting~~

~~On September 28, 2017, the Board of Directors of~~data centers. As an accounting policy for short-term leases, the Company ~~(the "Board") declared~~elected to not recognize the right-of-use asset and liability, if, at the commencement date, the lease (1) has a ~~cash dividend~~term of ~~$0.21per share, payable on January 25, 2018 to shareholders of record as of January 4, 2018~~12 months or less and ~~scheduled the Company’s 2018 annual meeting of stockholders for Monday, April 24, 2018.~~

~~Share Repurchases~~

~~During the third quarter of 2017,~~(2) does not include renewal and purchase options that the Company ~~received 35,887 shares of~~is reasonably certain to exercise. Monthly payments on short-term leases are recognized on the ~~Company's common stock pursuant to~~straight-line basis over the Company’s $20.0 million accelerated share repurchase program (the “ASR Program”) with Wells Fargo Bank, National Association, which constituted the final delivery under the ASR Program initiated in June 2017. In August 2017, the Board increased its previous $125 million share repurchase authorization by $150 million to $275 million and extended such authorization to December 31, 2018.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~~service periods of the awards, which is generally a performance period of three years. The performance conditions are based on the Company's achievement of revenue growth and return on invested capital over the performance period, and are evaluated for the probability of vesting at each reporting period end with changes in expected results recognized as an adjustment to ~~whom the stock-based compensation is awarded.~~expense. 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 experience. Stock-based compensation capitalized in inventory was $0.3 million and $0.5 million as of September 30, 2017 and 2016, respectively.~~Company's expectations.

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~~March 31, 2020 and ~~2016 and December 31, 2016,~~2019, 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 March 31, 2020 and 2019 was$0.1 million and $0.2 million, respectively. The carrying amounts of trade accounts receivable, accounts payable, ~~and~~ accrued liabilities and long-term debt approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s contingent consideration related to acquisitions isand equity investment are 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.~~

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.

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. 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 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~~

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, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2016, with early adoption permitted. On January 1, 2017, theprobable incurredloss recognition in current GAAP. The Company adopted ASU ~~2016-09.~~2016-13 prospectively on January 1, 2020. Historically, the Company's actual credit losses have not been material. The Company's financial assets in the scope of ASU 2016-13 mainly consist

~~This new guidance requires all excess tax benefits~~of short-term trade receivables. In estimating expected credit loss, we are using the aging method, such as pooling receivable based on the levels of delinquency and ~~tax deficiencies be recognized as income tax expense or benefit in the income statement~~applying historical loss rates, adjusted for current conditions and ~~classified as an operating activity in the statement of cash flows.~~reasonable and supportable forecasts, to each pool. The Company ~~prospectively adopted this guidance with~~will regularly reassess the ~~tax impact of a $1.1 million tax benefit recognized~~customer group by using its best judgment when considering changes in ~~the consolidated income statements~~customers' credit ratings, customers' historical payments and classified it as an operating activity in the consolidated statement of 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 fromloss experience, current market and economic conditions, and the Company's ~~previous method~~expectations of ~~classification of such cash payments as an operating activity. Accordingly, the Company applied this provision retrospectively~~future market and ~~for the nine months~~

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.economic conditions. Adoption of ASU ~~2016-07 has~~2016-13 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 first quarter of 2020 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 86% and 84% of total net sales in the three months ended March 31, 2020 and 2019, respectively.

Concrete Construction Products Revenue. Concrete construction products represented 14% and 16% of total net sales in the three months ended March 31, 2020 and 2019, 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 transfer) additional goods or services. The Company offers certain customers discounts for paying invoices ahead of the 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 by transferring control over a product to a customer at a point in time. 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 within the context of the contract. A distinct service is separately identifiable from other items in the bundled package if a customer can benefit from the service on 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 relative 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 ~~that it expects~~collected from customers in advance of the contract period commencing. As of March 31, 2020, 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 months ended March 31, 2020 and 2019, respectively:



	Three Months Ended March 31,
(in thousands, except per share amounts)	2020		2019
Net income available to common stockholders	$	36,826	$	22,662
Basic weighted-average shares outstanding	44,099		44,874
Dilutive effect of potential common stock equivalents — restricted stock units	187		339
Diluted weighted-average shares outstanding	44,286		45,213
Net income per common share:
Basic	$	0.84	$	0.51
Diluted	$	0.83	$	0.50

4. Stockholders' Equity

During the first quarter of 2020, the Company repurchased 902,340 shares of the Company's common stock in the open market at an average price of $69.46 per share, for a total of $62.7 million. As of March 31, 2020, approximately $37.3 million remains available for repurchase under the previously announced $100.0 million share repurchase authorization (which expires at the end of 2020).

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 the 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 $0.3 million and $4.1 million for the three months ended March 31, 2020 and 2019, respectively. The $3.8 million decrease in stock-based compensation expense was due to the reevaluation of the expected performance conditions and updated expected vesting during the first quarter of 2020.

During the three months ended March 31, 2020, the Companygranted 157,712 restricted stock units ("RSUs") to the Company's employees, including officers at an estimated weighted average fair value of $75.86 per share based on the closing price (adjusted for the present value of dividends) of the Company's common stock on the grant date. The RSUs granted to the Company's employees may be time-based 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 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 key employees also receive time-based RSUs, which vest pursuant to a three-year graded vesting schedule. Time-based RSUs that are granted to the Company's employees excluding officers and certain key employees, vest ratably over the four year vesting-term of the award.

The Company’s 7 non-employee directors are entitled to receive ~~for those goods or services. ASC 606 also requires additional disclosures about the nature, timing and uncertainty~~approximately $690 thousand in equity compensation annually. The number 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 the new standard on January 1, 2018.

~~Company management has completed a review of our significant customer contracts and~~shares ultimately granted are based on ~~that preliminary review, we expect~~ the ~~adoption of ASC 606 will not result in material differences from our accounting for revenues under the current revenue recognition guidance effective~~average closing share price for the Company ~~today.~~over the 60 day period prior to approval of the award in April of each year. In April 2020, the Companygranted 9,239 shares of common stock to the Company's non-employee directors, based on the average closing price of $74.66 per share. 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 expense on these shares 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 identifying and preparing to implement changes to our accounting policies and practices, business processes, systems 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 for the income tax effects of intercompany sales and transfers of assets other than inventory when 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, the Company does not know whether ASU 2016-16 will have a material impact on its financial statements upon adoption.~~

~~In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350):~~ ~~Simplifying the Test for Goodwill Impairment~~ ~~("ASU 2017-04"), which eliminates the requirement to calculate the implied~~estimated 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~~$58.72 per share based on the ~~excess of a reporting unit's carrying amount over its fair value using Step 1~~closing price of the ~~goodwill impairment analysis. The standard~~Company's common stock on the grant date, for a total expense of $543 thousand.

As of March 31, 2020, the Company's aggregate unamortized stock compensation expense was approximately $8.9 million, which is ~~required~~entirely attributable to unvested RSUs and is expected to be adopted for annual and interim impairment tests performed after December 15, 2019. The amendment is 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 and circumstances, the Company does not know whether ASU 2017-04 will haverecognized in expense over a ~~material impact on its financial statements upon adoption.~~weighted-average period of 2.7 years.

6. Trade Accounts Receivable, Net

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



	At March 31,						At December 31,
(in thousands)	2020			2019			2019
Trade accounts receivable	$	174,853		$	176,896		$	144,729
Allowance for doubtful accounts	(2,761		)	(1,195		)	(1,935		)
Allowance for sales discounts and returns	(3,356		)	(2,561		)	(3,430		)
	$	168,736		$	173,140		$	139,364

At September 30, At December 31,
(in thousands) 2017 2016 2016
Trade accounts receivable $ 165,101
$ 145,966
$ 116,368
Allowance for doubtful accounts (1,166 ) (945 ) (895 )
Allowance for sales discounts and returns (4,364 ) (3,305 ) (3,050 )
$ 159,571
$ 141,716
$ 112,423

Inventories at the dates indicated consisted of the following:



	At March 31,				At December 31,
(in thousands)	2020		2019		2019
Raw materials	$	89,903	$	91,850	$	95,575
In-process products	19,464		24,690		23,672
Finished products	146,353		155,919		132,660
	$	255,720	$	272,459	$	251,907

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:

9. Goodwill and Intangible Assets, Net

Goodwill at the dates indicated was as follows:



	At March 31,				At December 31,
(in thousands)	2020		2019		2019
North America	$	95,988	$	96,491	$	96,244
Europe	34,445		33,867		34,300
Asia/Pacific	1,166		1,354		1,335
Total	$	131,599	$	131,712	$	131,879

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 December 31, 2019
	Gross					Net
(in thousands)	Carrying Amount		Accumulated Amortization			Carrying Amount
North America	$	33,756	$	(19,173	)	$	14,583
Europe	25,500		(15,012		)	10,488
Total	$	59,256	$	(34,185	)	$	25,071

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 the three months ended September 30, 2017 and 2016, totaled~~was $1.5 million and ~~$1.5~~$1.3 million ~~respectively;~~for each of the three-month periods ended March 31, 2020 and ~~during the nine months ended September 30, 2017 and 2016, totaled $4.7 million and $4.6 million,~~2019, respectively. The weighted-average amortization period for all amortizable intangibles on a combined basis is 5.7 years.

The only indefinite-lived intangible asset, consisting of a trade name, totaled $0.6 million at ~~September 30, 2017.~~March 31, 2020.

At ~~September 30, 2017,~~March 31, 2020, the estimated future amortization of definite-lived intangible assets was as follows:



(in thousands)

Remaining nine months of 2020	$	4,441
2021	5,370
2022	3,437
2023	2,611
2024	1,660
2025	1,315
Thereafter	4,004
	$	22,838

(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~~three months ended ~~September 30, 2017,~~March 31, 2020, were as follows:



				Intangible
(in thousands)	Goodwill			Assets
Balance at December 31, 2019	$	131,879		$	25,071
Amortization	—			(1,526		)
Foreign exchange	(280		)	(91		)
Balance at March 31, 2020	$	131,599		$	23,454

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, 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 using the equity accounting method. Ruby Sketch develops software that assists in designing residential structures, primarily used in Australia,Operating Lease and ~~potentially for the North America market. The Company has no obligation to make any additional capital contributions to Ruby Sketch.~~Finance Obligations

For the three and nine months ended September 30, 2017, the Company recorded an equity loss 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 balance as of September 30, 2017.

~~Credit Facilities~~

The Company has ~~revolving lines~~operating leases for certain facilities, equipment and autos. The existing operating leases expire at various dates through 2024, some of ~~credit with various banks in~~which include options to extend the ~~United States and Europe. Total available credit~~leases for up to 5 years. The Company measured the lease liability at ~~September 30, 2017, was $304.0 million including revolving credit lines and an irrevocable standby letter~~the present value of ~~credit in support of various insurance deductibles.~~

the lease payments to be made over the lease term. The Company’s primary credit facility is a revolving line of credit with $300 million in available credit. On July 25, 2016, the Company entered into a second amendment (the "Amendment") to the credit facility. For additional information about the Amendment, seelease payments are discounted using 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 borrowed under this credit facility bear interest at an annual rate equal to either,incremental borrowing rate. The Company measured the ROU assets at the ~~Company’s option, (a)~~amount at which 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,~~lease liability is recognized 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%),~~initial direct costs incurred or ~~(b) a base rate, plus a spread of 0.00% to 0.45%, determined quarterly based on the Company’s leverage ratio.~~prepayment amounts. 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 determinedROU assets are amortized on a ~~quarterly~~straight-line basis ~~based on~~over 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 revolving 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 no outstanding debt balance as of September 30, 2017 and 2016, and December 31, 2016, respectively. The Company was in compliance with its financial covenants at September 30, 2017.lease term.

~~Capital~~Finance Lease Obligations

The Company ~~entered into two four-year lease agreements~~has finance leases for data centers and 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~~finance 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.

AsThe following table provides a summary of ~~September 30, 2017,~~leases included on the ~~current portion~~condensed consolidated balance sheets, condensed consolidated statements of ~~the outstanding liability for the leased equipment was approximately $1.0 million~~earnings, and ~~the long-term portion was approximately $2.9 million.~~condensed consolidated statements of cash flows as of March 31, 2020 and 2019:



	Condensed Consolidated Balance Sheets Line Item	March 31,
(in thousands)		2020			2019
Operating leases
Assets
Operating leases	Operating lease right-of-use assets	$	33,725		34,324
Liabilities
Operating - current	Accrued expenses and other current liabilities	$	7,603		6,256
Operating - noncurrent	Operating lease liabilities	26,084			28,878
Total operating lease liabilities		$	33,687		35,134
					—
Finance leases
Assets
Property and equipment, gross	Property, plant and equipment, net	$	3,566		3,569
Accumulated amortization	Property, plant and equipment, net	(2,903		)	(2,255	)
Property and equipment, net	Property, plant and equipment, net	$	663		1,314
Liabilities
Other current liabilities	Accrued expenses and other current liabilities	$	1,125		1,098
Other long-term liabilities	Deferred income tax and other long-term liabilities	6			1,319
Total finance lease liabilities		$	1,131		2,417

The components of lease expense were as follows:



	Condensed Consolidated Statements of Operations Line Item	Three Months Ended March 31,
(in thousands)		2020		2019
Operating lease cost	General administrative expenses and cost of sales	$	2,492	$	2,191

Finance lease cost:
Amortization of right-of-use assets	General administrative expenses	$	218	$	218
Interest on lease liabilities	Interest expense, net	11		20
Total finance lease		$	229	$	238

Supplemental cash flow information related to leases as follows:

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2020:



(in thousands)	Operating Leases			Finance Leases
Remaining nine months of 2020	$	7,200		$	870
2021	8,477			285
2022	6,392			—
2023	4,358			—
2024	2,458			—
Thereafter	11,282			—
Total lease payments	40,167			1,155
Less: Present value discount	(6,480		)	(24		)
Total lease liabilities	$	33,687		$	1,131

The following table summarizes the Company's lease terms and discount rates as of March 31, 2020 and 2019:



Weighted-average remaining lease terms (in years):	2020		2019
Operating leases	6.38		7.21
Finance leases	1.19		2.18
Weighted-average discount rate:
Operating leases	5.36	%	5.37	%
Finance leases	3.24	%	3.22	%

The Company is a borrower, and certain of its domestic subsidiaries are guarantors under a credit agreement, which provides the Company with $304.0 million in revolving credit lines and an irrevocable standby letter of credit in support of various insurance deductibles.

As previously disclosed, the Company's primary credit facility is the $300.0 million revolving line of credit (the “Credit Facility”). In March 2020, the Company elected to draw down $150.0 million from the Credit Facility to increase its cash position and preserve financial flexibility in light of current uncertainty resulting from the COVID-19 outbreak. Total available credit as of March 31, 2020, was $153.8 million, including the Credit Facility and other revolving credit lines.

The Company had $0.2 million and $0.7 million outstanding balance under other revolving credit lines, as of March 31, 2020, and December 31, 2019, respectively, and had $1.5 million outstanding balance as of March 31, 2019. The Company was in compliance with its financial covenants at March 31, 2020.

12. Commitments and Contingencies

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 and Potential Claims

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.

As of the date of this Quarterly Report on Form 10-Q, the Company 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, theThe 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.

~~Potential Third-Party Claims~~

Gentry Homes, Ltd. v. Simpson Strong-Tie Company Inc., et al., Case No. 17-cv-00566, was filed in a federal district court in Hawaii against Simpson Strong-Tie Company Inc. and the Company on November 20, 2017. The Gentry case is a product of a previous state court class action, Nishimura v. Gentry Homes, Ltd., et al., Civil No. 11-1-1522-07, ~~was filed~~which is now closed. The Nishimura case concerned alleged corrosion of the Company’s galvanized “hurricane straps” and mudsill anchor products used in ~~the Hawaii First Circuit court on July 20, 2011. The~~ ~~Nishimura~~ ~~case involves claims by homeowners at~~a residential project in Ewa by Gentry, a Honolulu, ~~development of approximately 2,400 homes. The claims arise out of alleged corrosion of strap-tie holdowns and mud-sill anchor products supplied by~~Hawaii. In the ~~Company. The~~Nishimura case, the plaintiff homeowners ~~originally sued~~and the developer, Gentry Homes, Ltd. (“Gentry”), ~~as well as the Company. In 2012~~arbitrated their dispute and ~~2013, the Hawaii First Circuit granted the Company’s motions to dismiss and for summary judgment, resulting~~agreed on a settlement in the ~~dismissal~~amount of all of the homeowners’ 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.

~~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~~million. In the ~~plaintiff homeowners.~~

~~In October 2017,~~subsequent Gentry case, Gentry ~~demanded that the Company pay Gentry the amount it paid the plaintiff homeowners to settle their claims, asserting the Company was responsible for~~alleges breach of warranty and negligent misrepresentation by the Company related to its “hurricane strap” and ~~fraud in connection with the supply of strap-tie holdowns and mud-sill~~mudsill anchor products, and demands general, special, and consequential damages from the Company in an amount to ~~Gentry. As of the date of this Quarterly Report on Form 10-Q,~~be proven at trial. Gentry ~~had not yet initiated legal proceedings against the Company.~~

also seeks pre-judgment and post-judgment interest, attorneys’ fees and costs, and other relief. The Company admits no liability ~~in connection with~~and will vigorously defend the ~~Nishimura~~ ~~case.~~claims brought against it. 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 the facts currently known, ~~to the Company~~ and subject to future events and circumstances, the Company believes that all or part of ~~any~~the claims ~~that any party might seek to allege~~brought against it ~~related to~~in the ~~Nishimura~~Gentry 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. 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.~~

~~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,~~Gentry proceeding, the Company is unable to estimate reasonably athe likelihood of possible loss or a 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 brought against the Company and the legal theories on which they are ~~based (iii)~~based; (ii) 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)~~trial; (iii) how the discovery process will affect the ~~litigation, (vi)~~litigation; (iv) the settlement posture of the other parties to the ~~litigation, (vii)~~litigation; (v) the damages to be proven at trial, particularly if the damages are not specified or are indeterminate; (vi) 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;~~all; and ~~(ix)~~(vii) any other factors that may have a material effect on the ~~litigation.~~proceeding.

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 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 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:

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



							At
	At March 31,						December 31,
(in thousands)	2020			2019			2019
Total Assets
North America	$	1,153,775		$	1,155,633		$	1,269,545
Europe	163,476			167,769			169,785
Asia/Pacific	27,919			27,131			30,055
Administrative and all other	(146,922		)	(320,181		)	(374,019		)
Total	$	1,198,248		$	1,030,352		$	1,095,366

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

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~~$248.7 million, ~~$128.6~~$76.0 million, and ~~$137.4~~$161.4 million, as of ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, and December 31, ~~2016,~~2019, 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 March 31,
(in thousands)	2020		2019

Wood construction products	$	242,520	$	217,613
Concrete construction products	41,012		41,577
Other	136		54
Total	$	283,668	$	259,244

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.

No customer accounted for as much as 10% of net sales for the three months ended March 31, 2020. The Company’s largest customer for three months ended March 31, 2019 accounted for 10.6% of net sales, which was attributable mostly to the North America segment.

~~11.~~14. Subsequent Events

In March 2020, the ~~fourth quarter~~World Health Organization categorized coronavirus disease 2019 (COVID-19) as a pandemic, and the President of ~~2017,~~the United States declared the COVID-19 outbreak a national emergency. COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of its effects are currently unknown. While the response to the COVID-19 outbreak continues to rapidly evolve, it has led to stay-at-home orders and social distancing guidelines that have seriously disrupted activities in large segments of the economy.

As of the date of issuance of the financial statements, April 2020 sales decreasedapproximately 15.0% percent compared to March 2020 sales, driven by the COVID-19 related economic slowdown. The Company considers the outbreak of COVID-19 as a nonrecognized subsequent event in accordance with accounting standards codification Topic 855, Subsequent Events, requiring disclosure in these unaudited condensed consolidated financial Statements. The Company’s consolidated financial statements presented herein reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented.

We are mitigating negative impacts to our operating results by taking significant actions, including postponing non-essential capital expenditures, reducing operating costs, modulating production in line with demand, and substantially reducing discretionary spending. These countermeasures are expected to partially mitigate the impacts of COVID-19 on the Company's full-year 2020 financial results. As the impact of the COVID-19 pandemic on the economy and the Company's operations evolves, the Company ~~announced employee reductions in~~will continue to assess the ~~North America~~impact on the Company's operations and ~~Europe segments and related~~respond accordingly.

On April 23, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.23 per share, estimated ~~severance expenses of approximately $3.0 million to $3.5 million, most of which~~ to be ~~recorded~~$10.2 million in total. The dividend will be payable on July 23, 2020, to the ~~fourth quarter~~Company's stockholders of ~~2017.~~record on July 2, 2020.

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 that are difficult to predict and could cause our actual results to vary in 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 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 2019 Form 10-K and Item2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II Item 1A Risk Factors in this Form 10-Q. Additional risks include: the cyclicality and impact of general economic conditions; changing conditions in global markets including the impact of sanctions and tariffs, quotas and other trade actions and import restrictions; the impact of pandemics, epidemics or other public health emergencies, such as the ~~factors discussed~~recent outbreak of coronavirus disease 2019 (COVID-19); volatile supply and demand conditions affecting prices and volumes in ~~Part I, Item 1A, “Risk Factors”~~the markets for both our products and raw materials we purchase; the impact of foreign currency fluctuations; potential limitations on our ability to access capital resources and existing credit facilities; restrictions on our business and financial covenants under our bank credit agreement; and reliance on employees subject to collective bargaining agreements.

We caution that you should not place undue reliance on these forward-looking statements, which speak only as of the 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 ~~Annual Report on Form 10-K for~~other reports filed with the ~~year ended December 31, 2016.~~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~~Achieve 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~~Rationalize 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~~

Improve our concrete product line, zero-based budgeting for certain expense categories 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.

~~Third, improving~~ 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 ~~factories. We believe we can achieve an overall 30% reduction~~ of our ~~raw material and finished good inventory over the next three years without impacting day-to-day production and shipping procedures.~~factories.

~~We believe our efforts to achieve~~Through execution on the 2020 Plan, ~~will contribute to improved business performance and operating results, improve returns~~we targeted a return on invested capital⁽¹⁾ within the range of 15% to 16% by the end of fiscal 2020.

On January 30, 2020, the WHO announced a global health emergency because of COVID-19 and ~~allow~~the risks to the international community as the virus spreads globally beyond its point of origin in Wuhan, China. In March 2020, the WHO categorized COVID-19 as a pandemic based on the rapid increase in exposure globally, and the President of the United States declared the COVID-19 outbreak a national emergency. COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of its effects are currently unknown. Additionally, government authorities in the countries and states where we operate have issued various and differing shelter in place, stay at home, social distancing guidelines and other measures in response to the COVID-19 pandemic. In many of those locations our products and services are classified as an essential business and all of our North America manufacturing and distribution facilities continue to operate in accordance with those orders.

However in late March, two of our larger European manufacturing facilities in the United Kingdom and France were ordered to cease nearly all operations, forcing us to temporarily furlough many of those affected employees. Our supply chain partners have been very supportive and continue to do their part to ensure that service levels to our customers remain strong and, to date, we have not experienced any supply-chain disruptions related to COVID-19 and have been able to meet our customers’ needs.

A significant portion of the Company's total product sales is dependent on US housing starts and its business, financial condition and results of operations depends significantly on the level of housing and residential construction activity, which is expected to be ~~more aggressive~~negatively affected by the COVID-19 outbreak and pandemic. The Company anticipates a downturn in ~~repurchasing shares~~economic conditions and a slowdown in single-family housing starts. In the month of ~~our stock in the near-term.~~

~~We believe our ability~~April sales declined compared to ~~achieve industry-leading margins from a gross profit and operating income standpoint is~~March levels due to lower demand from the high level of value-added services that we provide to our customers. Aside from our strong brand recognition and trusted reputation, Simpson 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; 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 deliveryanticipated slowdown in typically 24 hours or less; 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 U.S. single-family housing starts ~~to continue to grow~~and general construction activity. Declines in housing and residential construction, such as ~~a percentage in the mid to high single digits over the next few years,~~housing starts and home improvement projects, which ~~should support a sustainable organic revenue growth outlook in North America for many of our products.~~

Wegenerally occur during economic downturns, 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 acquisitions were part of a dual-fold approach to growth~~ in the past significantly reduced, and in the future can be expected to reduce, the demand for, and net sales, of the Company's products.

During the first quarter of 2020, the execution of our ~~go-forward strategy~~2020 Plan continued to deliver financial and operational efficiencies. However, we anticipate that the effects of responses to COVID-19 will have a negative effect on our North America and Europe operations in the short term. The magnitude and duration of the outbreak, including its impact on our operations, supply chain partners and general economic conditions, is uncertain and we continue to monitor the impact of the pandemic on our operations and financial condition, which was not significantly adversely impacted in the first quarter of 2020. We are uncertain of the long-term effects on the North America segment and Europe segment at this time

The Company has proactively taken measures to maintain and preserve its strong financial position and flexibility, including drawing down on the Credit Facility, temporarily suspending our stock repurchase program, implementing a hiring freeze and adjusting employee hours based on lower production levels in the near term. The Company will also remain conservative in our capital allocation approach with a focus on ~~organic growth, supported by strategic capital investments~~cash preservation.

The rapidly developing COVID-19 pandemic has generated significant uncertainty in the ~~business.~~economy and the full impact of the outbreak continues to evolve. As such, ~~we will de-emphasize acquisitions activities going forward, especially~~it is uncertain as ~~it relates~~ to the ~~concrete space. An exception~~full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2020.

Given the uncertainties surrounding the impact of COVID-19 on our business, which may ~~occur if~~include the ~~right opportunity were~~economic impact on our operations, consumers, suppliers and vendors, we are withdrawing our prior full year 2020 guidance, as well as the financial targets from our 2020 Plan and, at this time, we are unable to ~~arise in our core fastener space, which is the particular area where we believe it would be beneficial to gain additional production capacity to support our wood business.~~provide updated full year 2020 guidance.

Factors Affecting Our Results of Operations

Unlike lumber or other products that have a more direct correlation to U.S. 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~~the amount of inventory on-hand.

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the ~~second quarter~~recent outbreak of ~~2017, primarily due~~COVID-19 which has spread from China to ~~lower stock-based compensation expense~~many other countries including the United States. The outbreak has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, social distancing guidelines, “shelter in place” and ~~cash profit sharing expense on lower operating income~~“stay at home” orders, travel restrictions, business curtailments, school closures, and ~~reduced payouts under our executive officer cash profit sharing plan.~~other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.

~~Acquisitions~~Notwithstanding our continued operations and first quarter performance, COVID-19 may have negative impacts on our operations, supply chain, transportation networks and customers, which may compress our margins, including as a result of preventative and precautionary measures that we, other businesses and governments are taking. The COVID-19 outbreak is a widespread public health crisis that is adversely affecting the economies and financial markets of many countries. Any resulting economic downturn could adversely affect demand for our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products, services and raw materials. The progression of this matter could also negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers, among others.

~~North America~~

In ~~January 2017, we acquired CG Visions for approximately $20.8 million subject~~addition, the ability of our employees and our suppliers’ and customers’ employees to ~~specified holdback provisions and post-closing adjustments. This acquisition is expected~~work may be significantly impacted by individuals contracting or being exposed 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~~COVID-19, or as a result of the ~~home building process. We expect~~control measures noted above, which may significantly hamper our production throughout the supply chain and constrict sales channels. The extent to ~~look for opportunities to incorporate~~which COVID-19 may adversely impact our ~~products into CG Visions' building~~business depends on future developments, which are highly uncertain and unpredictable, including new 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 intoconcerning 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~~severity 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,~~outbreak and the ~~sale~~effectiveness of ~~Gbo Romania closed on October~~actions globally to contain or mitigate its effects. The current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time. Our consolidated financial statements and discussion and analysis of financial condition and results of operations reflect estimates and assumptions made by management as of March 31, ~~2017. The Company~~2020. Events and changes in circumstances arising after March 31, 2020, including those resulting from the impacts of COVID-19, will ~~retain Gbo Fastening Systems' operations~~be reflected in ~~Sweden and Norway.~~management’s estimates for future periods. For further discussion of this matter, refer “Item 1A. Risk Factors” in Part II of this Form 10-Q.

ERP Integration

In July 2016, our Board of Directors (the ~~"Board"~~“Board”) approved a plan to replace our current in-house enterprise resource planning ~~("ERP"~~(“ERP”) and externally sourced accounting platforms with a fully integrated ERP platform from SAP America, Inc. ~~("SAP"~~(“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 three additional locations in 2019 and 2020. We are tracking toward rolling out SAP technology in our remaining North America branches by late 2020, and companywide completion of the SAP roll-out is currently targeted for the end of 2021. Meeting the 2021 goal is highly dependent on the lifting of current travel restrictions, which are the result of COVID-19. 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~~SAP implementation, 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,~~March 31, 2020, we have capitalized ~~$8.3~~$19.4 million and expensed $29.3 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~~Historically our North America segment has generated more revenues ~~primarily~~ from wood construction products compared to concrete construction products. ~~Due to improved~~During most of the first quarter of 2020, favorable economic conditions ~~including~~and weather resulted in higher than projected single-family housing starts and increased wood construction product sales volumes over the same time period of 2019, which had extremely wet weather and lower single family housing starts. Our wood construction product net sales increased 14.5% for the quarter ended March 31, 2020 compared to March 31, 2019, primarily due to increased sales volumes. Our concrete construction product net sales increased 1.4% for the quarter ended March 31, 2020 compared to March 31, 2019 due to lower volumes higher average prices. Operating profits increased due to higher sales, lower cost of goods sold, mostly due to lower material and factory and overhead costs, and flat operating expenses. In operating expenses, a reduction in stock-based compensation expense was partly offset by an increase in housing starts, net sales in regions of the segment have trended up, primarily due to increases in unit sales volumes and an approximately 4% price increase 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.cash profit sharing expense.

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 of 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 we are currently operating at approximately 60% factory utilization. Based on current information and subject to future events and circumstances, we estimate this transition will save approximately $3.0 million per year, mostly in production costs. Both the Riverside and Western Canada locations will continue as sales and distribution locations, and maintain the capability to manufacture custom orders to continue to meet the Company's service and product availability commitments to customers in the Southwestern region of the United States and Western region of Canada.

In late 2016, we collaborated with The Home Depot, Inc. (“The Home Depot”) to roll out our mechanical anchor line of products that are available at The Home Depot. This collaboration increased a portion of our finished goods inventory and we expect to continue to introduce our mechanical anchor line of products through approximately 1,900 of The Home Depot store locations throughout 2017 and beyond. Once the rollout is completed, we anticipate this opportunity will meaningfully contribute 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.

Our Europe segment also generates more revenues from wood construction products than concrete construction products. Europe net sales decreased primarily due to the effects of COVID-19, which was primarily due to a number of countries issuing home and shelter orders ahead of the United States and also due to a decreased number concrete jobs in the first quarter of 2020 compared to the first quarter of 2019. Wood construction product sales ~~increased 67% in~~decreased 6.8% for the ~~third~~ quarter ~~of 2017~~ended March 31, 2020 compared to ~~the third quarter of 2016, primarily due to the acquisition of Gbo Fastening Systems.~~March 31, 2019. Concrete construction product sales are mostly project based, and net sales ~~increased 11% in~~decreased 17.8% for the ~~third~~ quarter ~~of 2017~~ended March 31, 2020 compared to ~~the third quarter of 2016, primarily~~March 31, 2019. Europe net sales were negatively affected by approximately $1.0 million in foreign currency translations due to Europe currencies weakening against the ~~completion of large projects during the third quarter of 2017. We are uncertain whether concrete construction product net sales will continue~~United States dollar. Gross margins improved slightly, mostly due to ~~grow at this pace~~lower material costs while operating expenses increased $0.4 million for the ~~remainder of 2017. In connection with the Gbo Fastening Systems acquisition, we estimated demand for wood connector products for the Nordic region~~quarter ended March 31, 2020 compared to March 31, 2019, which was partly due to increased severance and have placed inventory in Sweden. Our Western European locations are working on sales and marketing plans for a complete line of fastener products and expect to introduce them to our customers by the end of 2017. See “Europe” below.intangible amortization expense.

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.

As of the date of issuance of the financial statements, April 2020 sales decreased approximately 15% percent compared to March 2020 sales, driven by the COVID-19 related economic slowdown.



(1	)	When referred to above, the Company’s return on invested capital (“ROIC”) for a fiscal year is calculated based on (i) the net income of that year as presented in the Company’s 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, as presented in the Company’s consolidated balance sheets prepared pursuant to GAAP for that applicable year. As such, the Company’s ROIC, a ratio or statistical measure, is calculated using exclusively financial measures presented in accordance with GAAP.

Results of Operations for the Three Months Ended ~~September 30, 2017,~~March 31, 2020, Compared with the Three Months Ended ~~September 30, 2016~~March 31, 2019

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,~~March 31, 2020, against the results of operations for the three months ended ~~September 30, 2016.~~March 31, 2019. Unless otherwise stated, the results announced below, when referencing “both quarters,” refer to the three months ended ~~September 30, 2016~~March 31, 2019 and the three months ended ~~September 30, 2017. To avoid fractional percentages, all percentages presented below were rounded to the nearest whole number.~~March 31, 2020.

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~~First Quarter ~~2017~~2020 Consolidated Financial Highlights

The following table illustrates the differences in ~~the~~ our operating results for the three months ended ~~September 30, 2017,~~March 31, 2020, from the three months ended ~~September 30, 2016,~~March 31, 2019, 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,			March 31,			North						Asia/			Admin &			March 31,
(in thousands)	2016			America			Europe			Pacific			All Other			2017			2019			America			Europe			Pacific			All Other			2020
Net sales	$	230,974		$	15,795		$	15,652		$	55		$	—		$	262,476		$	259,244		$	27,619		$	(3,048	)	$	(147	)	$	—		$	283,668
Cost of sales	117,499			13,691			11,084			357			(40		)	142,591			148,990			7,221			(2,194		)	5			(20		)	154,002
Gross profit	113,475			2,104			4,568			(302		)	40			119,885			110,254			20,398			(854		)	(152		)	20			129,666
Research and development and other engineering expense	10,932			(2,331		)	116			(38		)	—			8,679			12,260			1,153			7			(27		)	(11		)	13,382
Selling expense	24,304			2,007			1,839			6			—			28,156			28,112			449			93			(102		)	(25		)	28,527
General and administrative expense	32,543			2,892			1,384			173			(491		)	36,501			39,549			(1,590		)	344			41			127			38,471
Loss (gain) on sale of assets	(81		)	(80		)	(11		)	25			—			(147		)
Total operating expenses																			79,921			12			444			(88		)	91			80,380
Net loss (gain) on disposal of assets																			310			(361		)	(12		)	(1		)	—			(64		)
Income from operations	45,777			(384		)	1,240			(468		)	531			46,696			30,023			20,747			(1,286		)	(63		)	(71		)	49,350
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																			(763		)	(733		)	(1,390		)	180			173			(2,533		)
Income before income taxes	45,695			(374		)	(618		)	(438		)	513			44,778			29,260			20,014			(2,676		)	117			102			46,817
Provision for income taxes	15,898			(657		)	433			(123		)	1,030			16,581			6,598			3,809			(486		)	53			17			9,991
Net income	$	29,797		$	283		$	(1,051	)	$	(315	)	$	(517	)	$	28,197		$	22,662		$	16,205		$	(2,190	)	$	64		$	85		$	36,826

Net sales increased ~~14%~~9.4% to ~~$262.5~~$283.7 million from ~~$231.0~~$259.2 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 and average net~~increases in sales ~~unit prices.~~volumes. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 86% and 84% of the Company's total net sales in the ~~third~~first quarters of ~~2017~~2020 and ~~2016,~~2019, respectively. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 14% and 16% of the Company's total net sales in the ~~third~~first quarters of ~~2017~~2020 and ~~2016,~~2019, respectively.

Gross profit increased 17.6% to $129.7 million from $110.3 million. Gross margins increased to ~~$119.9 million~~45.7% from ~~$113.5 million.~~42.5%, primarily due to lower material and factory and overhead expense (on higher production), partly offset by higher warehouse, labor and shipping expense each as a percentage of net sales. Gross ~~profit margins decreased to 46% from 49%. Recently acquired businesses had an average gross profit margin of 31% in the third quarter of 2017. 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~~increased to ~~46%~~47.5% from ~~50%~~44.7% for wood construction products and increased to ~~35%~~45.3% from ~~32%~~39.4% for concrete construction ~~products.~~products, respectively.

Research and development and engineering expense ~~decreased 21%~~ increased 9.2% to ~~$8.7~~$13.4 million from ~~$10.9~~$12.3 million, ~~mostly~~primarily due to ~~a reclassification~~increases of ~~$2.5 million year-to-date expenses associated with recent the North America acquisition from engineering expense to selling expense and general and administrative expense as well decreases of $0.4~~$0.6 million in cash profit sharing expense and ~~$0.3~~$0.4 million in ~~stock-based compensation expense.~~personnel costs.

Selling expense increased ~~16%~~1.5% to ~~$28.2~~$28.5 million from ~~$24.3~~$28.1 million, primarily due to increases of ~~$3.2~~$1.7 million in cash profit sharing and sales commission expense, $0.7 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~~$0.3 million in advertising and promotion expense and $0.2 million in professional fees.

General and administrative expense decreased 2.7% to $38.5 million from $39.5 million, primarily due to decreases of $2.4 million 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 and administrative expense~~ ~~increased 12% to $36.5 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~~including consulting fees, partly offset by ~~decreases~~increases of ~~$2.4~~$1.5 million in personnel expense, $1.4 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~~$0.7 million in ~~stock-based compensation. Recent acquisitions increased~~bad debt expense. Included in general and administrative ~~expenses by $5.2 million, including the reclassification~~expense are SAP implementation and support costs of ~~$2.2 million year-to-date expenses, associated with the North America acquisition from engineering expense to selling expense.~~

~~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$3.4 million, which ~~represented an estimate of~~increased $1.0 million from 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.prior quarter.

~~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%~~21.3% from ~~35%~~22.5%, primarily due to a ~~reduction~~windfall tax credit on the vesting of restricted stock units during the ~~nonrecurring gain on a bargain purchase related to the Gbo Fastening Systems acquisition (see "Gain (adjustment) on bargain purchase~~first quarter of ~~a business" above), which~~ 2020.

Consolidated net income was ~~not taxable.~~

~~Net income~~ ~~was $28.2~~$36.8 million compared to ~~$29.8~~$22.7 million. Diluted net income per common share was ~~$0.59~~$0.83 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.$0.50.

The following table represents net sales by segment for the three-month periods ended ~~September 30, 2016~~March 31, 2020 and ~~2017,~~2019, respectively:

The following table represents segment net sales as percentages of total net sales for the three-month periods ended ~~September 30, 2016~~March 31, 2020 and ~~2017,~~2019, respectively:

The following table represents gross profit by segment for the three-month periods ended ~~September 30, 2016~~March 31, 2020 and ~~2017,~~2019, respectively:

* 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~~March 31, 2020 and ~~2017,~~2019, respectively:

* The statistic is not meaningful or material.

~~Administrative and All Other~~


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
	2017			2016			2020			2019
Cash flows from operating activities
Net income	$	79,532		$	72,341		$	36,826		$	22,662
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of assets	(147		)	(763		)
(Gain)/loss on sale of assets and other							(58		)	286
Depreciation and amortization	26,881			21,485			9,734			9,758
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		)	—
Noncash lease expense							1,997			1,675
Deferred income taxes	2,552			1,481			1,430			1,371
Noncash compensation related to stock plans	11,816			9,707			277			4,105
Excess tax benefit of options exercised and restricted stock units vested	—			(162		)
Recovery (provision) of doubtful accounts	79			(131		)
Changes in operating assets and liabilities, net of acquisitions:
Provision (benefit) of doubtful accounts							721			(3		)
Changes in operating assets and liabilities:
Trade accounts receivable	(40,607		)	(35,463		)	(32,161		)	(26,968		)
Inventories	1,813			(22,992		)	(5,962		)	3,080
Trade accounts payable	698			2,806			11,018			1,915
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		)	(6,821		)	323
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							(4,927		)	(6,718		)
Other noncurrent assets and liabilities							651			(1,838		)
Net cash provided by operating activities	84,591			66,883			12,725			9,648
Cash flows from investing activities
Capital expenditures	(45,106		)	(29,934		)	(6,795		)	(7,352		)
Asset acquisitions, net of cash acquired	(27,921		)	(5,361		)	—			(3,492		)
Proceeds from sale of property and equipment	617			1,278			561			38
Proceeds from sale of a business	9,613			—
Net cash used in investing activities	(62,797		)	(34,017		)	(6,234		)	(10,806		)
Cash flows from financing activities
Deferred and contingent consideration paid for asset acquisitions	(205		)	(27		)
Repurchase of common stock	(20,000		)	(53,502		)	(62,679		)	(30,000		)
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							154,529			6,758
Repayments of line of credit and capital leases							(5,415		)	(6,459		)
Dividends paid	(27,044		)	(24,152		)	(10,169		)	(9,901		)
Cash paid on behalf of employees for shares withheld	(5,166		)	(3,996		)	(7,699		)	(5,864		)
Net cash used in financing activities	(49,342		)	(75,945		)
Net cash provided by (used) in financing activities							68,567			(45,466		)
Effect of exchange rate changes on cash and cash equivalents	5,182			2,974			(3,527		)	(149		)
Net decrease in cash and cash equivalents	(22,366		)	(40,105		)
Net increase (decrease) in cash and cash equivalents							71,531			(46,773		)
Cash and cash equivalents at beginning of period	226,537			258,825			230,210			160,180
Cash and cash equivalents at end of period	$	204,171		$	218,720		$	301,741		$	113,407
Noncash activity during the period
Noncash capital expenditures	$	892		$	726		$	289		$	284
Capital lease obligations	4,362			—
Dividends declared but not paid	19,891			8,559			10,204			9,761
Contingent consideration for acquisition	1,314			—			—			309
Issuance of Company’s common stock for compensation	412			315			322			292


	At September 30,						At December 31,			At March 31,						At December 31,
(in thousands)	2017			2016			2016			2020			2019			2019
Land	$	33,030		$	30,217		$	32,127		$	27,964		$	29,251		$	28,092
Buildings and site improvements	201,877			176,430			183,882			193,971			196,848			195,210
Leasehold improvements	5,911			5,682			5,550			4,832			4,831			4,911
Machinery, equipment, and software	289,970			249,227			248,861			354,931			335,906			351,379
	530,788			461,556			470,420			581,698			566,836			579,592
Less accumulated depreciation and amortization	(297,321		)	(275,096		)	(273,302		)	(351,776		)	(326,181		)	(346,594		)
	233,467			186,460			197,118			229,922			240,655			232,998
Capital projects in progress	31,711			43,210			35,692			17,019			10,743			16,014
	$	265,178		$	229,670		$	232,810		$	246,941		$	251,398		$	249,012


	At September 30, 2016							At March 31, 2019
	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	$	30,824	$	(16,795	)	$	14,029
Europe	31,090		(16,602		)	14,488		23,435		(13,316		)	10,119
Total	$	58,578	$	(33,949	)	$	24,629	$	54,259	$	(30,111	)	$	24,148



	Three Months Ended March 31,
(in thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,418	$	2,087
Finance cash flows for finance leases	290		270

Operating right-of-use assets obtained in exchange for lease obligations during the current period	2,068		407


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(in thousands)	2017			2016			2017			2016			2020			2019
Net Sales
North America	$	213,254		$	197,459		$	612,765		$	569,198		$	249,050		$	221,431
Europe	47,137			31,485			126,752			86,003			32,732			35,780
Asia/Pacific	2,085			2,030			5,828			5,269			1,886			2,033
Total	$	262,476		$	230,974		$	745,345		$	660,470		$	283,668		$	259,244
Sales to Other Segments*
North America	$	625		$	732		$	2,403		$	1,994		$	640		$	341
Europe	175			157			424			338			1,254			458
Asia/Pacific	4,088			10,821			14,657			22,550			4,813			6,396
Total	$	4,888		$	11,710		$	17,484		$	24,882		$	6,707		$	7,195
Income (Loss) from Operations
North America	$	41,972		$	42,356		$	110,748		$	112,924		$	53,561		$	32,814
Europe	5,139			3,899			7,443			4,180			(1,670		)	(384		)
Asia/Pacific	(218		)	250			(341		)	1,257			(604		)	(542		)
Administrative and all other	(197		)	(728		)	(3,387		)	(5,019		)	(1,937		)	(1,865		)
Total	$	46,696		$	45,777		$	114,463		$	113,342		$	49,350		$	30,023


						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, 2019																					44,998		$	453		$	276,504		$	628,207		$	(24,650	)	$	(25,000	)	$	855,514
Net income	—		—			—			72,341			—			—			72,341			—		—			—			22,662			—			—			22,662
Translation adjustment, net of tax	—		—			—			—			5,244			—			5,244			—		—			—			—			(1,335		)	—			(1,335		)
Options exercised	227		3			6,692			—			—			—			6,695
Stock-based compensation	—		—			9,039			—			—			—			9,039			—		—			3,903			—			—			—			3,903
Tax benefit of options exercised	—		—			140			—			—			—			140
Shares issued from release of Restricted Stock Units	216		2			(3,998		)	—			—			—			(3,996		)	164		2			(5,863		)	—			—			—			(5,861		)
Repurchase of common stock	(1,090	)	—			(6,500		)	—			—			(47,002		)	(53,502		)	(505	)	—			—			—			—			(30,000		)	(30,000		)
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
Cash dividends declared on common stock, $0.22 per share																					—		—						(9,701		)	—			—			(9,701		)
Common stock issued at $54.31 per share for stock bonus																					5		—			292			—			—			—			292
Balance, at March 31, 2019																					44,662		455			274,836			641,168			(25,985		)	(55,000		)	835,474
Net income	—		—			—			17,393			—						17,393			—		—			—			111,320			—						111,320
Translation adjustment, net of tax	—		—			—			—			(9,164		)	—			(9,164		)	—		—			—			—			2,220			—			2,220
Pension adjustment, net of tax	—		—			—			—			(474		)	—			(474		)	—		—			—			—			(1,064		)	—			(1,064		)
Options exercised	43		—			1,281			—			—			—			1,281
Stock-based compensation	—		—			4,147			—			—			—			4,147			—		—			5,422			—			—			—			5,422
Tax benefit of options exercised	—		—			111			—			—			—			111
Shares issued from release of Restricted Stock Units	1		—			(22		)	—			—			—			(22		)	14		—			(42		)	—			—			—			(42		)
Repurchase of common stock	(154	)	—			6,500			—			—			(6,500		)	—			(467	)	—			—			—			—			(30,816		)	(30,816		)
Retirement of common stock	—		(13		)	—			(53,489		)	—			53,502			—			—		(13		)	—			(76,424		)	—			76,437			—
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, $0.69 per share																					—		—			—			(30,557		)	—			—			(30,557		)
Balance, at December 31, 2019																					44,209		442			280,216			645,507			(24,829		)	(9,379		)	891,957
Net income	—		—			—			79,532			—			—			79,532			—		—			—			36,826			—			—			36,826
Translation adjustment, net of tax	—		—			—			—			19,492			—			19,492			—		—			—			—			(7,593		)	—			(7,593		)
Options exercised	120		1			3,565			—			—			—			3,566
Pension adjustment, net of tax																					—		—			—			—			273			—			273
Stock-based compensation	—		—			10,764			—			—			—			10,764			—		—			33			—			—			—			33
Shares issued from release of Restricted Stock Units	210		2			(5,168		)	—			—			—			(5,166		)	153		2			(7,699		)	—			—			—			(7,697		)
Repurchase of common stock	(461	)	—			—			—			—			(20,000		)	(20,000		)	(902	)	—			—			—			—			(62,679		)	(62,679		)
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
Cash dividends declared on common stock, $0.23 per share																					—		—			—			(9,848		)	—			—			(9,848		)
Common stock issued at $80.38 per share for stock bonus																					4		—			322			—			—			—			322
Balance at March 31, 2020																					43,464		$	444		$	272,872		$	672,485		$	(32,149	)	$	(72,058	)	$	841,594



	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	—		—		—		—



	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 September 30, 2017							At March 31, 2020
	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	$	33,755	$	(20,039	)	$	13,716
Europe	29,430		(16,575		)	12,855		25,410		(15,672		)	9,738
Total	$	63,353	$	(33,303	)	$	30,050	$	59,165	$	(35,711	)	$	23,454



	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


*	~~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.~~



	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.



	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	%



(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	%


(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 - April 30, 2020									902	$	62,679	$	20,400	$	83,079
January 1 - December 31, 2019									972	60,816		40,258		101,074
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	7,550	$	404,681	$	199,593	$	604,274



	(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 ^[1][2]	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ^[2]	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs ^[2]
January 1 - January 31, 2020	750	$	81.81	500	$100.0 million
February 1 - February 29, 2020	199,670	$	81.82	109,457	$91.3 million
March 1 - March 31, 2020	792,472	68.14		792,383	$37.3 million
Total	992,892



		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)



		Simpson Manufacturing Co., Inc.
		(Registrant)


DATE:	~~November 8, 2017~~May 7, 2020	By /s/Brian J. Magstadt
		Brian J. Magstadt
		Chief Financial Officer
		(principal accounting and financial officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

Emerging growth company