SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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

For the quarterly period ended: March 31, ~~2020~~2021



☐			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, including zip code)

(~~925~~) (925) 560-9000

(Registrant’s telephone number, including area code)



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 every Interactive Data File required to be submitted 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 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.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 ☐ 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 May ~~1, 2020: 43,463,983~~.

Simpson Manufacturing Co., Inc. and Subsidiaries

TABLE OF CONTENTS

Part I - Financial Information


Item 1 - Financial Statements
					Page No.
~~Item 1 - Financial Statements~~
		~~Page No.~~
	Condensed Consolidated Balance Sheets (unaudited) as of March ~~31,2020, March~~ 31, ~~2019,~~2021, 2020 and December 31, ~~2019~~2020			4
			Condensed Consolidated Statements of Earnings and Comprehensive Income (unaudited) for the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020		5
			Condensed Consolidated Statements of Stockholders' Equity (unaudited) atfor the Three Months ended March 31, ~~2020, 2019~~2021 and ~~December 31, 2019~~2020		6
			Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020		7
			Notes to Condensed Consolidated Financial Statements		8
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations					2021
Item 3 - Quantitative and Qualitative Disclosures about Market Risk					2829
Item 4 - Controls and Procedures					2830
Part II - Other Information
Item 1 - Legal Proceedings					2930
Item 1A - Risk Factors					2931
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds					3031
Item 3 - Defaults Upon Senior Securities					32
Item 4 - Mine Safety Disclosures					32
Item 5 - Other Information					32
Item 6 - Exhibits					3133

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, unaudited)


	March 31,				December 31,
	2021		2020		2020
ASSETS
Current assets
Cash and cash equivalents	$	257,428	$	301,741	$	274,639
Trade accounts receivable, net	227,201		168,736		165,128
Inventories	296,640		255,720		283,742

Other current assets	37,732		25,786		29,630
Total current assets	819,001		751,983		753,139

Property, plant and equipment, net	255,684		246,941		255,184
Operating lease right-of-use assets	44,236		33,725		45,792
Goodwill	133,477		131,599		135,844

Intangible assets, net	25,059		23,454		26,800
Other noncurrent assets	17,270		10,546		15,810
Total assets	$	1,294,727	$	1,198,248	$	1,232,569
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	66,236	$	44,505	$	48,271
Accrued liabilities and other current liabilities	158,578		118,346		145,790



Total current liabilities	224,814		162,851		194,061
Operating lease liabilities	35,810		26,084		37,199
Long term debt, net of current portion	0		150,000		0
Deferred income tax and other long-term liabilities	19,594		17,719		20,366
Total liabilities	280,218		356,654		251,626
Commitments and contingencies (see Note 13)	0		0		0
Stockholders’ equity
Common stock, at par value	435		444		433
Additional paid-in capital	285,896		272,872		284,007
Retained earnings	760,862		672,485		720,441
Treasury stock	(13,510)		(72,058)		(13,510)
Accumulated other comprehensive loss	(19,174)		(32,149)		(10,428)
Total stockholders’ equity	1,014,509		841,594		980,943
Total liabilities and stockholders’ equity	$	1,294,727	$	1,198,248	$	1,232,569

The accompanying notes are an integral part of these condensed consolidated financial statements

March 31, December 31,
2020 2019 2019
ASSETS

Current assets

Cash and cash equivalents $ 301,741
$ 113,407
$ 230,210
Trade accounts receivable, net 168,736
173,140
139,364
Inventories 255,720
272,459
251,907
Assets held-for-sale —
2,546
—
Other current assets 25,786
14,186
19,426
Total current assets 751,983
575,738
640,907

Property, plant and equipment, net 246,941
251,398
249,012
Operating lease right-of-use assets 33,725
34,324
35,436
Goodwill 131,599
131,712
131,879
Equity investment 2,474
2,511
2,480
Intangible assets, net 23,454
24,148
25,071
Other noncurrent assets 8,072
10,521
10,581
Total assets $ 1,198,248
$ 1,030,352
$ 1,095,366
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Trade accounts payable $ 44,505
$ 35,549
$ 33,351
Accrued liabilities and other current liabilities 118,346
115,029
125,556
      Total current liabilities 162,851
150,578
158,907
   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 17,719
15,422
16,572
Total liabilities 356,654
194,878
203,409
Commitments and contingencies (see Note 12)

Stockholders’ equity

Common stock, at par value 444
455
442
Additional paid-in capital 272,872
274,836
280,216
Retained earnings 672,485
641,168
645,507
Treasury stock (72,058 ) (55,000 ) (9,379 )
Accumulated other comprehensive loss (32,149 ) (25,985 ) (24,829 )
Total stockholders’ equity 841,594
835,474
891,957
Total liabilities and stockholders’ equity $ 1,198,248
$ 1,030,352
$ 1,095,366

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Income

(In thousands except per-share amounts, unaudited)


	Three Months Ended							Three Months Ended
	March 31,							March 31,
	2020			2019					2021		2020
Net sales	$	283,668		$	259,244		Net sales		$	347,642	$	283,668
Cost of sales	154,002			148,990			Cost of sales		185,360		154,002
Gross profit	129,666			110,254			Gross profit		162,282		129,666
Operating expenses:							Operating expenses:
Research and development and other engineering	13,382			12,260			Research and development and other engineering		14,591		13,382
Selling	28,527			28,112			Selling		30,823		28,527
General and administrative	38,471			39,549			General and administrative		48,565		38,471
Total operating expenses	80,380			79,921			Total operating expenses		93,979		80,380
Net loss (gain) on disposal of assets	(64		)	310
Net gain on disposal of assets							Net gain on disposal of assets		(80)		(64)
Income from operations	49,350			30,023			Income from operations		68,383		49,350
Interest expense, net and other	(2,533		)	(763		)	Interest expense, net and other		(1,778)		(2,533)
Income before taxes	46,817			29,260			Income before taxes		66,605		46,817
Provision for income taxes	9,991			6,598			Provision for income taxes		16,218		9,991
Net income	$	36,826		$	22,662		Net income		$	50,387	$	36,826
Other comprehensive income							Other comprehensive income
Translation adjustment	(7,593		)	(1,335		)	Translation adjustment		(9,264)		(7,593)
Unamortized pension adjustments	273			—			Unamortized pension adjustments		492		273
Unrealized gains on derivative instruments							Unrealized gains on derivative instruments		26		0
Comprehensive net income	$	29,506		$	21,327		Comprehensive net income		$	41,641	$	29,506

Net income per common share:							Net income per common share:
Basic	$	0.84		$	0.51		Basic		$	1.16	$	0.84
Diluted	$	0.83		$	0.50		Diluted		$	1.16	$	0.83

Number of shares outstanding							Number of shares outstanding
Basic	44,099			44,874			Basic		43,379		44,099
Diluted	44,286			45,213			Diluted		43,612		44,286

Cash dividends declared per common share	$	0.23		$	0.22		Cash dividends declared per common share		$	0.23	$	0.23

The accompanying notes are an integral part of these condensed consolidated financial statements

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

~~At March 31, 2019 and 2020, and December 31, 2019~~

(In thousands except per-share ~~amounts, unaudited)~~data)

Three Months Ended March 31, 2021 and 2020 (unaudited)


	Common Stock			Additional Paid-in		Retained		Accumulated Other Comprehensive		Treasury
	Shares	Par Value		Capital		Earnings		Income (Loss)		Stock		Total
Balance at December 31, 2020	43,326	$	433	$	284,007	$	720,441	$	(10,428)	$	(13,510)	$	980,943
Net income	—	—		—		50,387		—		—		50,387
Translation adjustment, net of tax	—	—		—		—		(9,264)		—		(9,264)
Pension adjustment and other, net of tax	—	—		—		—		492		—		492
Unrealized gains on derivative instruments								26				26
Stock-based compensation	—	—		6,462		—		—		—		6,462
Shares issued from release of Restricted Stock Units	97	1		(5,264)		—		—		—		(5,263)

Cash dividends declared on common stock, $0.23 per share	—	—		—		(9,966)		—		—		(9,966)
Common stock issued at $93.45 per share for stock bonus	7	1		691		—		—		—		692
Balance at March 31, 2021	43,430	$	435	$	285,896	$	760,862	$	(19,174)	$	(13,510)	$	1,014,509

Balance at December 31, 2019	44,209	$	442	$	280,216	$	645,507	$	(24,829)	$	(9,379)	$	891,957
Net income	—	—		—		36,826		—		—		36,826
Translation adjustment and other, net of tax	—	—		—		—		(7,593)		—		(7,593)
Pension adjustment, net of tax	—	—		—		—		273		—		273
Stock-based compensation	—	—		33		—		—		—		33
Shares issued from release of Restricted Stock Units	153	2		(7,699)		—		—		—		(7,697)
Repurchase of common stock	(902)	—		—		—		—		(62,679)		(62,679)

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

The accompanying notes are an integral part of these condensed consolidated financial statements

Additional
Accumulated
Other

Common Stock Paid-in Retained Comprehensive Treasury
Shares Par Value Capital Earnings Income (Loss) Stock Total
Balance at January 1, 2019 44,998
$ 453
$ 276,504
$ 628,207
$ (24,650 ) $ (25,000 ) $ 855,514
Net income —
—
—
22,662
—
—
22,662
Translation adjustment, net of tax —
—
—
—
(1,335 ) —
(1,335 )
Stock-based compensation —
—
3,903
—
—
—
3,903
Shares issued from release of Restricted Stock Units 164
2
(5,863 ) —
—
—
(5,861 )
Repurchase of common stock (505 ) —
—
—
—
(30,000 ) (30,000 )
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 —
—
—
111,320
—

111,320
Translation adjustment, net of tax —
—
—
—
2,220
—
2,220
Pension adjustment, net of tax —
—
—
—
(1,064 ) —
(1,064 )
Stock-based compensation —
—
5,422
—
—
—
5,422
Shares issued from release of Restricted Stock Units 14
—
(42 ) —
—
—
(42 )
Repurchase of common stock (467 ) —
—
—
—
(30,816 ) (30,816 )
Retirement of common stock —
(13 ) —
(76,424 ) —
76,437
—
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 —
—
—
36,826
—
—
36,826
Translation adjustment, net of tax —
—
—
—
(7,593 ) —
(7,593 )
Pension adjustment, net of tax —
—
—
—
273
—
273
Stock-based compensation —
—
33
—
—
—
33
Shares issued from release of Restricted Stock Units 153
2
(7,699 ) —
—
—
(7,697 )
Repurchase of common stock (902 ) —
—
—
—
(62,679 ) (62,679 )
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

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands, unaudited)


	Three Months Ended
	March 31,
	2021		2020
Cash flows from operating activities
Net income	$	50,387	$	36,826
Adjustments to reconcile net income to net cash provided by operating activities:
Loss/(gain) on sale of assets and other	333		(58)
Depreciation and amortization	11,225		9,734
Noncash lease expense	2,393		1,997

Deferred income taxes	314		1,430
Noncash compensation related to stock plans	6,542		277
Provision of doubtful accounts	(215)		721
Changes in operating assets and liabilities:
Trade accounts receivable	(62,660)		(32,161)
Inventories	(14,750)		(5,962)
Trade accounts payable	17,301		11,018
Other current assets	(14,109)		(6,821)
Accrued liabilities and other current liabilities	22,126		(4,927)
Other noncurrent assets and liabilities	(1,054)		651
Net cash provided by operating activities	17,833		12,725
Cash flows from investing activities
Capital expenditures	(10,505)		(6,795)

Invest in equity investments	(5,329)		0
Proceeds from sale of property and equipment	105		561
Net cash used in investing activities	(15,729)		(6,234)
Cash flows from financing activities

Repurchase of common stock	0		(62,679)
Proceeds from lines of credit	0		154,529
Repayments of lines of credit and capital leases	(192)		(5,415)

Dividends paid	(9,967)		(10,169)
Cash paid on behalf of employees for shares withheld	(5,263)		(7,699)
Net cash used by in financing activities	(15,422)		68,567
Effect of exchange rate changes on cash and cash equivalents	(3,893)		(3,527)
Net (decrease) increase in cash and cash equivalents	(17,211)		71,531
Cash and cash equivalents at beginning of period	274,639		230,210
Cash and cash equivalents at end of period	$	257,428	$	301,741
Noncash activity during the period
Noncash capital expenditures	$	1,526	$	289

Dividends declared but not paid	9,967		10,204

Issuance of Company’s common stock for compensation	692		322

The accompanying notes are an integral part of these condensed consolidated financial statements

Three Months Ended
March 31,
2020 2019
Cash flows from operating activities

Net income $ 36,826
$ 22,662
Adjustments to reconcile net income to net cash provided by operating activities:

(Gain)/loss on sale of assets and other (58 ) 286
Depreciation and amortization 9,734
9,758
Noncash lease expense 1,997
1,675
Deferred income taxes 1,430
1,371
Noncash compensation related to stock plans 277
4,105
Provision (benefit) of doubtful accounts 721
(3 )
Changes in operating assets and liabilities:

Trade accounts receivable (32,161 ) (26,968 )
Inventories (5,962 ) 3,080
Trade accounts payable 11,018
1,915
Other current assets (6,821 ) 323
Accrued liabilities and other current liabilities (4,927 ) (6,718 )
Other noncurrent assets and liabilities 651
(1,838 )
Net cash provided by operating activities 12,725
9,648
Cash flows from investing activities

Capital expenditures (6,795 ) (7,352 )
Asset acquisitions, net of cash acquired —
(3,492 )
Proceeds from sale of property and equipment 561
38
Net cash used in investing activities (6,234 )
(10,806 )
Cash flows from financing activities

Repurchase of common stock (62,679 ) (30,000 )
Proceeds from line of credit 154,529
6,758
Repayments of line of credit and capital leases (5,415 ) (6,459 )
Dividends paid (10,169 ) (9,901 )
Cash paid on behalf of employees for shares withheld (7,699 ) (5,864 )
Net cash provided by (used) in financing activities 68,567
(45,466 )
Effect of exchange rate changes on cash and cash equivalents (3,527 ) (149 )
Net increase (decrease) in cash and cash equivalents 71,531
(46,773 )
Cash and cash equivalents at beginning of period 230,210
160,180
Cash and cash equivalents at end of period $ 301,741
$ 113,407
Noncash activity during the period

Noncash capital expenditures $ 289
$ 284
Dividends declared but not paid 10,204
9,761
Contingent consideration for acquisition —
309
Issuance of Company’s common stock for compensation 322
292

~~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”). Investments in 50% or less owned entities are accounted for using either cost or the equity method. All significant intercompany transactions have been eliminated.

Use of Estimates

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

The accompanying unaudited 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”)~~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, ~~2019~~2020 (the ~~“2019~~“2020 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~~2020 Form 10-K, but do not include all disclosures required by GAAP. The Company’s quarterly results fluctuate. As a result, the Company believes the results of operations for this interim period presented are not indicative of the results to be expected for any future periods.

Revenue Recognition

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 stated 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 primary indicator of the transfer of control. The Company’s general shipping terms are F.O.B. shipping point, where title and risk and rewards of ownership transfer at the point when the products leave the Company’s warehouse. The Company recognizes revenue based on the consideration specified in the invoice with a customer, ~~less~~excluding any sales incentives, discounts, and amounts collected on behalf of third parties (i.e., governmental tax authorities). Based on historical experience with the customer, the customer's purchasing pattern and its significant experience selling products, the Company concluded that a significant reversal in the cumulative amount of revenue recognized will not occur when the uncertainty (if any) is resolved (that is, when the total amount of purchases is known). Refer to Note 2 for additional information.

Net Income Per Common Share

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

Accounting for Leases

The Company has operating and finance leases for certain facilities, equipment, autos and data centers. As an accounting policy for short-term leases, the Company elected to not recognize the right-of-use asset and liability, if, at the commencement date, the lease (1) has a term of 12 months or less and (2) does not include renewal and purchase options that the Company is reasonably certain to exercise. Monthly payments on short-term leases are recognized on the straight-line basis over the full lease term.

Accounting for Stock-Based Compensation

The Company recognizes stock-based compensation expense related to the estimated fair value of restricted stock ~~unit~~ awards on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally athe vesting term of four years. Stock-based expense related to performance share grants are measured based on ~~the~~ grant date fair value and expensed on a graded basis over the service ~~periods~~period 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 expense. The assumptions used to calculate the fair value of ~~options or~~ restricted stock ~~units~~grants are evaluated and revised, as necessary, to reflect market conditions and the ~~Company's expectations.~~Company’s experience.

~~Fair~~0Fair Value of Financial Instruments

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 liabilities recorded at fair value are measured and classified under a three-tier fair valuation hierarchy based on the observability of the inputs available in the 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. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

As of March 31, 2020 and 2019, the Company’s investments included in cash equivalents consisted of only money market funds, which are the Company’s primary financial instruments and carried at cost, approximating fair value, based on Level 1 inputs. The balance of the Company’s primary financial instruments as of March 31, 2020 and 2019 was~~$0.1 million and $0.2 million, respectively.~~ The carrying amounts of trade accounts receivable, accounts payable, accrued liabilities and ~~long-term debt~~other current liabilities approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s contingent consideration related to acquisitions and 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. The fair value of foreign currency forward contracts, calculated based on Level 1 inputs, was not material as of March 31, 2021.

Derivative Instruments - Foreign Currency Contracts

The Company uses derivative instruments as a risk management tool to mitigate the potential impact of certain market risks. Foreign currency exchange rate risk is the primary market risk the Company manages through the use of derivative instruments, which are accounted for as cash flow hedges under the accounting standards and carried at fair value as other current assets or other current liabilities in the consolidated balance sheets. Net deferred gains and losses related to changes in fair value are included in accumulated other comprehensive loss, a component of shareholders' equity in the consolidated balance sheets, and are reclassified into the line item in the consolidated statement of income in which the hedged items are recorded in the same period the hedged item affects earnings. Changes in fair value of any derivatives that are determined to be ineffective are immediately reclassified from other comprehensive income into earnings. The cash flow impact of the Company's derivative instruments is primarily included in the consolidated statement of cash flows in net cash provided by operating activities. Refer to Note 8.

Cash and Cash Equivalents

The Company classifies investments that are highly liquid and have maturities of three months or less at the date of purchase as cash equivalents. As of March 31, 2021 and 2020, the value of these investments were $28.2 million and $0.1 million, respectively, consisting of U.S. Treasury securities and money market funds. The value of the investments is based on cost, which approximates fair value based on Level 1 inputs.

Current Estimated Credit Loss - Allowance for doubtful accounts

The Company maintains an allowance for doubtful accounts receivable for estimated future expected credit losses resulting from customers' failure to make payments on its accounts receivable. The Company determines the estimate of the allowance for doubtful accounts receivable by considering several factors, including (1) specific information on the financial condition and the current creditworthiness of customers, (2) credit rating, (3) payment history and historical experience, (4) aging of the accounts receivable, and (5) reasonable and supportable forecasts about collectability. The Company also reserves 100% of the amounts deemed uncollectible due to a customer's deteriorating financial condition or bankruptcy.

Every quarter, the Company evaluates the customer group using the accounts receivable aging report and its best judgment when considering changes in customers' credit ratings, level of delinquency, customers' historical payments and loss experience, current market and economic conditions, and expectations of future market and economic conditions.

The changes in the allowance for doubtful accounts receivable for the year ended March 31, 2021 are outlined in the table below:


	Balance at		Amounts		Balance at
(in thousands)	December 31, 2020		Charged to Expense	Write-Offs1	March 31, 2021

Allowance for Doubtful Accounts	$	2,110	(215)	119	$	1,776

1Amount is net of recoveries and the effect of foreign currency fluctuations for the year ended March 31, 2021.

Income Taxes

The Company uses an estimated annual tax rate to measure the tax benefit or tax expense recognized in each interim period.

Accounting Standards ~~- Recently~~Not Yet Adopted

In ~~June 2016,~~March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848). ASU ~~No. 2016-13,~~ ~~“Financial Instruments - Credit Losses (Topic 326~~): ~~Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 amendments provide~~2020-04 provides optional guidance onto ease the potential burden in accounting for ~~current expected credit losses~~reference rate reform on financial ~~instruments~~reporting in response to the risk of cessation of the London Interbank Offered Rate (“LIBOR”) on December 31, 2021. The ASU allows the option to account for and present a modification 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 probable incurredloss recognition in current GAAP. The Company adopted ASU 2016-13 prospectively on January 1, 2020. Historically, the Company's actual credit losses have not been material. The Company's financial assets inmeets the scope of the standard as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination required under the relevant topic or subtopic. Generally, the ASU ~~2016-13 mainly consist~~allows hedge accounting to continue if the hedge was highly effective or met other standards prior to reference rate reform. Entities are permitted to apply the amendments to all contracts, cash flow and net investment hedge relationships that exist as of March 12, 2020. The relief provided in this ASU is only available for a limited time, generally through December 31, 2022. The Company's Credit Facility maturing on July 23, 2022 bears interest using LIBOR plus an applicable margin. We do not expect a material impact to our consolidated operating results, financial position or cash flows from the transition from LIBOR to alternative reference interest rates, but we will continue to monitor the impact of this transition until it is completed.

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 applying historical loss rates, adjusted for current conditions and reasonable and supportable forecasts, to each pool. The Company will regularly reassess the customer group by using its best judgment when considering changes in customers' credit ratings, customers' historical payments and loss experience, current market and economic conditions, and the Company's expectations of future market and economic conditions. Adoption of ASU 2016-13 had no material effect on the Company's consolidated financial statements and footnote disclosures.

All ~~other~~ issued and effective accounting standards during the first quarter of ~~2020~~2021 were determined to be not relevant or material to the Company.

2. Revenue from Contracts with Customers

Disaggregated revenue

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 Note ~~13.~~14.

Wood Construction Products Revenue. Wood construction products represented ~~86%~~87% and ~~84%~~86% of total net sales in the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Concrete Construction Products Revenue. Concrete construction products represented ~~14%~~13% and ~~16%~~14% of total net sales in the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, 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 accounted for as a revenue contract under the standard, the Company recognizes revenue in the amount of nonrefundable consideration received when the Company has transferred control of the goods or services 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 collected from customers in advance of the contract period commencing. As of March 31, ~~2020,~~2021, 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~~2021 and ~~2019,~~2020, respectively:


	Three Months Ended March 31,
(in thousands, except per share amounts)		2021		2020
Net income available to common stockholders		$	50,387	$	36,826
Basic weighted-average shares outstanding		43,379		44,099
Dilutive effect of potential common stock equivalents — restricted stock units		233		187
Diluted weighted-average shares outstanding		43,612		44,286
Net income per common share:
Basic		$	1.16	$	0.84
Diluted		$	1.16	$	0.83

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

~~Share Repurchases~~Treasury Shares

~~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~~2021, the ~~previously announced $100.0 million share repurchase authorization (which expires at the end~~Company held 150,974 shares of ~~2020).~~its common stock as treasury shares.

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~~$6.5 million and ~~$4.1~~$0.3 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. The ~~$3.8~~$6.2 million ~~decrease~~increase in stock-based compensation expense was due to the reevaluation of the expected performance conditions and updated expected vesting during the first quarter of 2021 compared to the first quarter of 2020.

During the three months ended March 31, ~~2020,~~2021, the Companygranted ~~157,712~~133,424 restricted stock units ("RSUs") to the Company's employees, including officers at an estimated weighted average fair value of ~~$75.86~~$100.26 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.~~performance-based and/or time-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 approximately $690 thousand in equity compensation annually. The number of shares ultimately granted are based on the average closing share price for the Company 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 recognized expense on these shares at an estimated fair value of $58.72 per share based on the closing price of the Company's common stock on the grant date, for a total expense of $543 thousand.

As of March 31, ~~2020,~~2021, the Company's aggregate unamortized stock compensation expense was approximately ~~$8.9~~$24.0 million, ~~which is entirely attributable to unvested RSUs and~~ is expected to be recognized in expense over a weighted-average period of ~~2.7~~2.6 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)	2021		2020		2020
Trade accounts receivable	$	232,646	$	174,853	$	170,001
Allowance for doubtful accounts	(1,776)		(2,761)		(2,110)
Allowance for sales discounts and returns	(3,669)		(3,356)		(2,763)
	$	227,201	$	168,736	$	165,128

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

7. Inventories

Inventories at the dates indicated consisted of the following:


	At March 31,				At December 31,
(in thousands)	2021		2020		2020
Raw materials	$	94,340	$	89,903	$	95,777
In-process products	22,678		19,464		21,803
Finished products	179,622		146,353		166,162
	$	296,640	$	255,720	$	283,742

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

8. Derivative Instruments

8.The Company transacts business in various foreign countries and may therefore be exposed to foreign currency exchange rate risk. The Company has established risk management programs to protect against volatility in the value of non-functional future cash flows caused by changes in foreign currency exchange rates and tries to maintain a partial or fully hedged position for certain transaction exposures when management considers appropriate. The Company enters into short-term foreign currency derivatives contracts, namely forward contracts, to hedge only those currency exposures associated with cash flows denominated in non-functional currencies. Gains and losses on the Company's derivative contracts are designed to offset losses and gains on the transactions hedged, and accordingly, generally do not subject the Company to risk of significant accounting losses. The Company hedges committed exposures and does not engage in speculative transactions. The credit risk of these derivative contracts is minimized since the contracts are with a large financial institution and accordingly, fair value adjustments related to the credit risk of the counterparty financial institution are not material.

The Company sources certain materials for its concrete products from a wholly owned subsidiary in China, and as a result is exposed to variability in cash outflows associated with changes in the foreign exchange rate between the U.S. Dollar and the Chinese Yuan (CNY). As of March 31, 2021, the aggregate notional amount of the Company's outstanding foreign currency derivative contracts was to buy CNY62.2 million by selling $9.1 million throughout fiscal 2021. These forward contracts are accounted for as cash flow hedges under the accounting standards, and fair value is included in other current assets or other current liabilities, as applicable, in the consolidated balance sheet was $0.4 million.

Net deferred gains and losses on these contracts relating to changes in fair value are included in accumulated other comprehensive loss ("OCI"), a component of shareholders' equity in the consolidated balance sheets, and are reclassified into the line item in the consolidated statement of income in which the hedged items are recorded in the same period the hedged item affects earnings. There were no amounts recognized for gains or losses on these contracts during the quarter ended March 31, 2021.Changes in fair value of any forward contracts that are determined to be ineffective are immediately reclassified from OCI into earnings. The amounts deferred in OCI are expected to be recognized as a component of cost of sales in the consolidated statement of operations from 2021 to 2022. There were no amounts recognized due to ineffectiveness during the quarter ended March 31, 2021.

9. Property, Plant and Equipment, Net

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


	At March 31,				At December 31,
(in thousands)	2021		2020		2020
Land	$	28,280	$	27,964	$	28,553
Buildings and site improvements	201,283		193,971		203,421
Leasehold improvements	7,023		4,832		7,091
Machinery, equipment, and software	385,195		354,931		372,923
	621,781		581,698		611,988
Less accumulated depreciation and amortization	(382,907)		(351,776)		(377,460)
	238,874		229,922		234,528
Capital projects in progress	16,810		17,019		20,656
	$	255,684	$	246,941	$	255,184

At March 31, At December 31,
(in thousands) 2020 2019 2019
Land $ 27,964
$ 29,251
$ 28,092
Buildings and site improvements 193,971
196,848
195,210
Leasehold improvements 4,832
4,831
4,911
Machinery, equipment, and software 354,931
335,906
351,379
581,698
566,836
579,592
Less accumulated depreciation and amortization (351,776 ) (326,181 ) (346,594 )
229,922
240,655
232,998
Capital projects in progress 17,019
10,743
16,014
$ 246,941
$ 251,398
$ 249,012

9.10. 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 March 31,				At December 31,
(in thousands)	2021		2020		2020
North America	$	96,340	$	95,988	$	96,311
Europe	35,684		34,445		38,059
Asia/Pacific	1,453		1,166		1,474
Total	$	133,477	$	131,599	$	135,844

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


	At March 31, 2021
	Gross				Net
	Carrying		Accumulated		Carrying
(in thousands)	Amount		Amortization		Amount
North America	$	40,785	$	(23,724)	$	17,061
Europe	26,347		(18,349)		7,998
Total	$	67,132	$	(42,073)	$	25,059


	At March 31, 2020
	Gross					Net			At March 31, 2020
	Carrying		Accumulated			Carrying			Gross				Net
(in thousands)	Amount		Amortization			Amount		(in thousands)	Carrying Amount		Accumulated Amortization		Carrying Amount
North America	$	33,755	$	(20,039	)	$	13,716	North America	$	33,755	$	(20,039)	$	13,716
Europe	25,410		(15,672		)	9,738		Europe	25,410		(15,672)		9,738
Total	$	59,165	$	(35,711	)	$	23,454	Total	$	59,165	$	(35,711)	$	23,454

At March 31, 2019
Gross Net
(in thousands)
Carrying
Amount

Accumulated
Amortization

Carrying
Amount
North America $ 30,824
$ (16,795 ) $ 14,029
Europe 23,435
(13,316 ) 10,119
Total $ 54,259
$ (30,111 ) $ 24,148

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, 2020
	Gross				Net
(in thousands)	Carrying Amount		Accumulated Amortization		Carrying Amount
North America	$	40,786	$	(22,697)	$	18,089
Europe	26,341		(17,630)		8,711
Total	$	67,127	$	(40,327)	$	26,800

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 of definite-lived intangible assets was $1.7 million and $1.5 million ~~and $1.3 million~~ for ~~each of~~ the ~~three-month periods~~three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. The weighted-average amortization period for all amortizable intangibles on a combined basis is ~~5.7~~6.3 years.

The only indefinite-lived intangible asset, consisting of a trade name, totaled $0.6 million at March 31, ~~2020.~~2021.

At March 31, ~~2020,~~2021, 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 nine months of 2021	$	4,619
2022	4,223
2023	3,390
2024	2,343
2025	2,086
2026	1,483
Thereafter	6,300
	$	24,444

The changes in the carrying amount of goodwill and intangible assets for the three months ended March 31, ~~2020,~~2021, were as follows:


			Intangible
(in thousands)	Goodwill		Assets
Balance at December 31, 2020	$	135,844	$	26,800

Reclassifications	(106)		348
Amortization	—		(1,746)
Foreign exchange	(2,261)		(343)
Balance at March 31, 2021	$	133,477	$	25,059

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

~~10.~~11. Leases

Operating Lease and Finance Obligations

The Company has operating leases for certain facilities, equipment and autos. The existing operating leases expire at various dates through ~~2024,~~2025, some of which include options to extend the leases for up to 5 years. The Company measured the lease liability at the present value of the lease payments to be made over the lease term. The lease payments are discounted using the Company's incremental borrowing rate. The Company measured the ~~ROU~~right-of-use assets ("ROU") assets at the amount at which the lease liability is recognized plus initial direct costs incurred or prepayment amounts. The ROU assets are amortized on a straight-line basis over the lease term.

Finance Lease Obligations

The Company has finance leases for data centers and certain office equipment, which was recorded in fixed assets as capital lease obligations. These finance lease obligations are included in current liabilities and other long-term liabilities in the accompanying 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.

The following table provides a summary of leases included on the condensed consolidated balance sheets March 31, 2021, 2020 and December 31, 2020, condensed consolidated statements of earnings, and condensed consolidated statements of cash flows as of the three months and three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


	Condensed Consolidated Balance Sheets Line Item	March 31,				December 31,
(in thousands)		2021		2020		2020
Operating leases
Assets
Operating leases	Operating lease right-of-use assets	$	44,236	$	33,725	$	45,792
Liabilities
Operating - current	Accrued expenses and other current liabilities	$	8,941	$	7,603	$	9,143
Operating - noncurrent	Operating lease liabilities	35,810		26,084		37,199
Total operating lease liabilities		$	44,751	$	33,687	$	46,342

Finance leases
Assets
Property and equipment, gross	Property, plant and equipment, net	$	3,569	$	3,566	$	3,569
Accumulated amortization	Property, plant and equipment, net	(3,188)		(2,903)		(3,112)
Property and equipment, net	Property, plant and equipment, net	$	381	$	663	$	457
Liabilities
Other current liabilities	Accrued expenses and other current liabilities	$	193	$	1,125	$	384
Other long-term liabilities	Deferred income tax and other long-term liabilities	0		6		0
Total finance lease liabilities		$	193	$	1,131	$	384

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)			2021		2020
Operating lease cost	General administrative expenses and cost of sales		$	2,859	$	2,492

Finance lease cost:
Amortization of right-of-use assets	General administrative expenses		$	216	$	218
Interest on lease liabilities	Interest expense, net		2		11
Total finance lease			$	218	$	229

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

Other information

Supplemental cash flow information related to leases as follows:

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 March 31,
(in thousands)		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		$	2,805	$	2,418
Finance cash flows for finance leases		290		290

Operating right-of-use assets obtained in exchange for lease obligations during the current period		786		2,068

The following is a schedule, by years, of maturities of lease liabilities as of March 31, ~~2020:~~2021:


(in thousands)	Finance Leases		Operating Leases
Remaining nine months of 2021	$	193	$	8,089
2022	0		9,102
2023	0		6,994
2024	0		5,449
2025	0		5,046
Thereafter	0		19,066
Total lease payments	193		53,746
Less: Present value discount	0		(8,995)
Total lease liabilities	$	193	$	44,751

(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~~2021 and ~~2019:~~2020:

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~~As previously disclosed, the Company's primary credit facility is ~~a borrower, and~~the $300.0 million revolving line of credit (the "Credit Facility") with Wells Fargo Bank. In addition to the Credit Facility, certain of ~~its~~the Company’s domestic subsidiaries are guarantors ~~under~~for a credit agreement ~~which provides~~between certain of its foreign subsidiaries and institutional lenders. Together, these credit facilities provide the Company with a total of $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 There were 0 outstanding balances 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,~~2021 and December 31, ~~2019, respectively, and had $1.5~~2020. There was $150.2 million outstanding balance as of March 31, ~~2019.~~ 2020.

The Company was in compliance with its financial covenants atunder the loan agreement as of March 31, ~~2020.~~2021.

~~12.~~13. 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

misuse, design and assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors can contribute to failure of fasteners, connectors, anchors, adhesives, specialty chemicals, such as fiber reinforced polymers, and tool products. In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets, and the Company’s website.

The 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.

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, which is now closed. The Nishimura case concerned alleged corrosion of the Company’s galvanized “hurricane straps” and mudsill anchor products used in a residential project in Ewa by Gentry, Honolulu, Hawaii. In the Nishimura case, the plaintiff homeowners and the developer, Gentry Homes, Ltd. (“Gentry”), arbitrated their dispute and agreed on a settlement in the amount of approximately $90 million. In the subsequent Gentry case, Gentry alleges breach of warranty and negligent misrepresentation by the Company related to its “hurricane strap” and mudsill anchor products, and demands general, special, and consequential damages from the Company in an amount to be proven at trial. Gentry also seeks pre-judgment and post-judgment interest, attorneys’ fees and costs, and other relief. The Company admits no liability and will vigorously defend the claims brought against it.products. At this time, the Company ~~cannot reasonably ascertain~~and the ~~likelihood~~plaintiffs have reached a settlement in principle and are currently negotiating a definitive written agreement memorializing the settlement. Should the parties be unable to reach an accord on terms of the written agreement, further negotiations may take place that ~~it will be found responsible for substantial damages~~could result in a different settlement, or the case may continue on to ~~Gentry.~~trial. Based on the facts currently known, and subject to future events and

circumstances, the Company believes that all or part of the damages for the claims brought against it in the Gentry case may be covered by its insurance policies.

~~Given the nature and the complexities involved in the~~ ~~Gentry~~ proceeding, the Company is unable to estimate reasonably the likelihood of possible loss or a range of possible loss until the Company knows, among other factors, (i) the specific claims brought against the Company and the legal theories on which they are based; (ii) what claims, if any, might be dismissed without trial; (iii) how the discovery process will affect the litigation; (iv) the settlement posture of the other parties to the 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; and (vii) any other factors that may have a material effect on the proceeding.

~~13.~~14. Segment Information

The Company is organized into 3 ~~reportable~~reporting 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~~(comprised primarily of the ~~United States~~Company’s operations in the U.S. and ~~Canada;~~Canada), the Europe segment ~~comprising continental Europe and the United Kingdom;~~ and the Asia/Pacific segment ~~comprising~~(comprised of the Company’s operations in ~~China, Hong Kong,~~Asia, the South Pacific, and the Middle ~~East. The Company's China and Hong Kong operations are manufacturing and administrative support locations, respectively.~~East). These ~~three reportable~~ segments are similar in several ways, including the types of materials used, inthe 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:

* 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 March 31,				December 31,
(in thousands)	2021		2020		2020
Total Assets
North America	$	1,125,887	$	1,153,775	$	1,059,967
Europe	198,363		163,476		198,647
Asia/Pacific	31,831		27,919		32,754
Administrative and all other	(61,354)		(146,922)		(58,799)
Total	$	1,294,727	$	1,198,248	$	1,232,569

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 $183.2 million, $248.7 million, ~~$76.0 million,~~ and ~~$161.4~~$199.8 million, as of March 31, ~~2020~~2021 and ~~2019,~~2020, and December 31, ~~2019,~~2020, 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, 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)		2021		2020

Wood construction products		$	301,578	$	242,520
Concrete construction products		45,523		41,012
Other		541		136
Total		$	347,642	$	283,668

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

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.

~~14.~~15. Subsequent Events

In March 2020, the World Health Organization categorized coronavirus disease 2019 (COVID-19) as a pandemic, 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. 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 decreased~~approximately 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 will continue to assess the impact on the Company's operations and respond accordingly.

On ~~April 23, 2020,~~May 4, 2021, the Company’s Board of Directors declared a quarterly cash dividend of ~~$0.23~~$0.25 per share, estimated to be ~~$10.2~~$10.9 million in total. The dividend will be payable on July ~~23, 2020,~~22, 2021, to the Company's stockholders of record on July ~~2, 2020.~~1, 2021.

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

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. 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 information about the Company.

“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.

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 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.~~Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the ~~2019~~2020 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.~~10-K. 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 recent outbreak of coronavirus disease 2019 (COVID-19); volatile supply and demand conditions affecting prices and volumes in 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 other reports filed with the SEC that advise of the risks and factors that may affect our business.

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

At our March 23, 2021 virtual analyst and investor day, we unveiled several key growth initiatives that we believe will help us continue our track record of above market growth through a combination of organic and inorganic opportunities. Our ~~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~~organic opportunities are focused on expansion into new markets within our core competencies of wood and concrete products. These growth initiatives will focus on the original equipment manufacturers, repair and remodel or do-it-yourself, mass timber, concrete and structural steel markets.

In order to grow in these markets, we aspire to be among the leaders in engineered load-rated construction building products ~~offering~~and systems and customer-facing technology while leveraging our ~~strengths~~engineering expertise, deep-rooted relationships with top builders, engineers, contractors, code officials and distributors, along with our ongoing commitment to testing, research and innovation. Importantly, we currently have existing products, testing results, distribution and manufacturing capabilities for all five of our growth initiatives. It is also important to note that these initiatives are all currently in ~~engineering,~~different stages of development. Our successful growth in these areas will ultimately be a function of expanding our sales and/or marketing functions to promote our products to different end users and distribution channels, expanding our customer base, and potentially introducing new products in the future.

Also during the virtual analyst and investor day, we highlighted our ~~strong brand name. We believe these initiatives and objectives~~Five-year Ambitions, which are ~~crucial~~as follows:

1.strengthen our values-based culture;

2.be the business partner of choice;

3.strive to ~~not only offer a more complete solution~~be an innovative leader in our product categories;

4.continue above market growth relative 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.~~starts;

~~On October 30, 2017, we announced~~5.remain within the ~~2020 Plan to provide additional transparency into the execution~~top quartile of our ~~strategic plan~~proxy peers for operating income margins; and ~~financial objectives. Under the 2020 Plan, we initially assumed (i) housing starts growing as a percentage~~

6.remain in the mid-single digit, (ii) increasing our market share and 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 was centered on the following three key operational objectives.

~~Through execution on the 2020 Plan, we targeted a~~proxy peers for return on invested ~~capital (1) within~~capital.

As with our growth initiatives, further updates will be forthcoming related to material developments with our Five-year Ambitions.

A novel strain of coronavirus (“COVID-19”) surfaced in late 2019 and has spread around 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 the risks~~world, including to the ~~international community as the virus spreads globally beyond its point of origin in Wuhan, China.~~United States. In March 2020, the ~~WHO categorized~~World Health Organization declared COVID-19 as a worldwide 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~~As of April 30, 2021, the virus continues to spread ~~throughout~~and has had a significant impact on worldwide economic activity and on macroeconomic conditions. Vaccines are available in various countries and distribution of the ~~United States~~vaccine also varies by country and ~~other countries across~~in the ~~world, and the~~U.S. by state. The duration and severity of its effects are ~~currently~~still unknown. ~~Additionally, government~~

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~~operations are classified as an essential business and ~~all~~we continue to operate our business in compliance with applicable state and local laws and are observing recommended CDC guidelines to minimize the risk of spreading the COVID-19 virus. We have undertaken numerous steps and instituted additional precautions to protect our employees, suppliers and customers, as their safety and well-being is one of our ~~North America~~top priorities, and to comply with health and safety guidelines, including enhanced deep cleaning, staggered shifts, temperature checking, use of face masks, practicing social distancing and limiting non-employees at our locations, amongst other safety related policies and procedures. Many of our office workers in our manufacturing and distribution facilities, as well as the corporate headquarters, continue to work remotely, where possible

The Company’s management team continues to monitor and manage its ability to operate ~~in accordance with those orders.~~

~~However in late March, two of our larger European manufacturing facilities in~~effectively and, to date, the ~~United Kingdom and France were ordered to cease nearly all operations, forcing us to temporarily furlough many of those affected employees.~~Company has not experienced any significant disruptions within its supply chain. 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. We will continue to communicate with our supply chain partners to identify and mitigate risk and to manage inventory levels.

In response to the COVID-19 pandemic the Company proactively took measures to maintain and preserve its strong financial position and flexibility. Based on updated expectations, the Company resumed hiring to meet increased demand levels that it has experienced. The Crisis Management Team, which includes members of senior management, meets regularly to review and assess the status of the Company's operations and the health and safety of its employees. Notwithstanding the Company's continued efforts, as the COVID-19 pandemic continues, health concern risks remain, and we cannot predict whether we or any of our suppliers will experience disruptions, or how long such disruptions would last. It also remains unclear how various national, state, and local governments will react if the distribution of vaccines is slower than expected or new variants of the virus become more dominant.

A significant portion of the Company's total product sales is dependent on USU.S. 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~~activity. We anticipated previously that housing starts would continue to ~~be negatively affected by the COVID-19 outbreak and pandemic.~~grow at slow pace as in prior years. However, single-family housing starts increased significantly from prior-year's level of starts. The ~~Company anticipates a downturn in economic conditions~~return of Lowe's and a ~~slowdown~~strong home repair and

remodel market also contributed to increased demand and a significant increase in ~~single-family housing starts. In the month of April~~ sales declined compared to March levels due to lower demand from the anticipated slowdown in housing starts and general construction activity. Declines in housing and residential construction, such as housing starts and home improvement projects, which generally occur during ~~economic downturns, have 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,~~2021 compared to the ~~execution of our 2020 Plan continued to deliver financial and operational efficiencies. However,~~2020. While we ~~anticipate that the effects of responses to COVID-19~~believe demand will ~~have a negative effect on our North America and Europe operations~~remain strong in the ~~short term.~~short-term, and factoring in recently announced sales price increases, will result in higher net sales in future periods. However, our sales in the first quarter 2021 and a significant portion of 2020 were positively impacted by the return of Lowe's. The ~~magnitude~~remaining quarters of this fiscal year and ~~duration~~the comparable periods of 2020 will include the ~~outbreak, including its impact on our operations, supply chain partners~~return of Lowes and, ~~general economic conditions, is uncertain and~~as a result, we ~~continue~~don't think sales volumes for the remainder of 2021 will grow at the same year-over-year rate as the first quarter of 2021 compared 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. WeIn the short-term, operating profits are ~~uncertain~~expected to improve on increased selling prices and lower average material costs as higher costs of raw material purchases are absorbed into current product costs. However, increased steel costs, product sourcing logistic complications and potential increases in US income tax rates could result in lower operating and net income margins by the ~~long-term effects on the North America segment and Europe segment at this time~~end of 2021.

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 cash preservation.

~~The rapidly developing COVID-19 pandemic has generated significant uncertainty in the economy and the full impact of the outbreak~~Management continues to evolve. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoringmonitor 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 include the 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 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.

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. 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, 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 have an effect on our gross and operating profits as well as the amount of inventory on-hand. Our operations can also be affected by a volatile steel market. Changes in raw material cost could negatively affect our gross profit margins depending on the timing of raw material purchases or how much sales prices can be increased to offset higher raw material costs.

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the ~~recent outbreak of~~ COVID-19 pandemic which ~~has~~ spread from China to 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 “stay at home” orders, travel restrictions, business curtailments, school closures, and 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.U.S.

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.

In addition, the ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of the control measures noted above, which may significantly hamper our production throughout the supply chain and constrict sales channels. The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the outbreak and the effectiveness of 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, 2020. Events and changes in circumstances arising after March 31, 2020, including those resulting from the impacts of COVID-19, will be reflected in 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.

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

We went live with our first wave of the SAP implementation project in February of 2018, and ~~we implemented SAP~~completed implementation 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~~operations in 2021. We expect to complete the company-wide SAP ~~roll-out is currently targeted for the end of 2021.~~implementation during 2022. Meeting the ~~2021~~ goal is highly dependent on the lifting of current travel restrictions, which are the result of ~~COVID-19.~~the COVID-19 pandemic. While we believe the SAP implementation will be beneficial to the Company over time, annual operating expenses have and are expected to continue to increase through 2024 as a result of the SAP implementation, primarily due to increases in training costs and the depreciation of previously capitalized costs. ~~As of March 31, 2020, we have capitalized $19.4 million and expensed $29.3 million of the costs, including depreciation of capitalized costs associated with the ERP project.~~

Business Segment Information

Historically our North America segment has generated more revenues from wood construction products compared to concrete construction products. During ~~most of~~ the first ~~quarter~~three months of ~~2020,~~2021, the return of Lowe's, favorable ~~economic conditions~~weather, increased home improvement activity and ~~weather~~increased housing starts 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.~~2020. Our wood construction product net sales increased ~~14.5%~~22.4% for the quarter ended March 31, ~~2020~~2021 compared to March 31, ~~2019,~~2020, primarily due to increased sales ~~volumes.~~volumes in connection with the return of Lowe's and increased housing starts and repair and remodel activity, which resulted in increased sales to some of our other distribution channels. Our concrete construction product

net sales increased ~~1.4%~~9.6% for the quarter ended March 31, ~~2020~~2021 compared to March 31, ~~2019~~2020, primarily due to ~~lower volumes~~ higher ~~average prices.~~sales volumes. Operating profits increased due to higher sales, lower cost of goods sold, mostly due to lower ~~material~~labor 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~~higher operating expenses including primarily stock-based compensation expense. If current economic conditions continue and factoring in ~~cash profit sharing expense.~~recently announced sales price increases, we believe North America operating margins could be higher in 2021 compared to 2020. However, increased steel costs and product sourcing complications could result in lower operating margins towards the end of 2021 or early 2022.

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 decreased 6.8%increased for the quarter ended March 31, ~~2020~~2021 compared to March 31, ~~2019.~~2020, primarily due to higher sales volumes in local currency and were positively affected by approximately $3.6 million in foreign currency translation related to Europe's currencies strengthening against the United States dollar. Wood construction product sales increased 37.8% for the quarter ended March 31, 2021 compared to March 31, 2020. Concrete construction product sales are mostly project based, and net sales ~~decreased 17.8%~~increased 20.6% for the quarter ended March 31, ~~2020~~2021 compared to 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 United States dollar.~~2020. Gross margins ~~improved slightly,~~increased, mostly due to lower factory, warehouse and shipping costs, partly offset by higher material ~~costs while operating~~costs. Operating expenses increased, ~~$0.4 million for the quarter ended March 31, 2020~~primarily due to higher cash profit sharing and stock-based compensation expense. If current economic conditions continue and factoring in recently announced sales price increases, we believe Europe operating margins could be higher in 2021 compared to ~~March 31, 2019, which was partly due to~~2020. However, increased ~~severance~~steel costs and ~~intangible amortization expense.~~product sourcing complications could offset sales price increases, negatively affecting operating margins towards the end of 2021 or early 2022.

Our Asia/Pacific segment has generated revenues from both wood and concrete construction products. 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.~~

On February 8, 2021, the Company provided a full-year outlook. The Company is updating its full year outlook, primarily reflecting one quarter of actual results, as well as improved visibility on the progression of pandemic-related restrictions and the impact of those restrictions on the Company’s operations. Based on business trends and conditions as of today, April 26, the Company's outlook for the full fiscal year ending December 31, 2021 is as follows:

•Operating margin is estimated to be in the range of 19.5% to 22.0%.

•The effective tax rate is estimated to be in the range of 25.0% to 26.0%, including both federal and state income tax rates.

•Capital expenditures are estimated to be in the range of $50 million to $55 million.

Results of Operations for the Three Months Ended March 31, ~~2020,~~2021, Compared with the Three Months Ended March 31, ~~2019~~2020

Unless otherwise stated, the below results, 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 March 31, ~~2020,~~2021, against the results of operations for the three months ended March 31, ~~2019.~~2020. Unless otherwise stated, the results announced below, when referencing “both quarters,” refer to the three months ended March 31, ~~2019~~2020 and the three months ended March 31, ~~2020.~~2021.

First Quarter ~~2020~~2021 Consolidated Financial Highlights

The following table illustrates the differences in our operating results for the three months ended March 31, ~~2020,~~2021, from the three months ended March 31, ~~2019,~~2020, and the increases or decreases for each category by segment:

Net sales increased ~~9.4%~~22.6% to ~~$283.7~~$347.6 million from ~~$259.2 million. Net sales to home centers, dealer distributors, lumber dealers and contract distributors increased~~$283.7 million primarily due to increases in sales volumes. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented ~~86%~~86.7% and ~~84%~~85.5% of the Company's total net sales in the first quarters of ~~2020~~2021 and ~~2019,~~2020, respectively. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented ~~14%~~13.1% and ~~16%~~14.5% of the Company's total net sales in the first quarters of ~~2020~~2021 and ~~2019,~~2020, respectively.

Gross profit increased ~~17.6%~~25.2% to ~~$129.7~~$162.3 million from ~~$110.3~~$129.7 million. Gross margins increased to ~~45.7%~~46.7% from ~~42.5%~~45.7%, primarily due to lower ~~material and~~ factory and ~~overhead expense (on higher production),~~labor, partly offset by higher ~~warehouse, labor and shipping expense~~material costs each as a percentage of net sales. Gross margins, including some inter-segment expenses, which were eliminated in consolidation, and excluding other expenses that are allocated according to product group, increased to ~~47.5%~~46.6% from ~~44.7%~~45.3% for wood construction products and ~~increased~~decreased to ~~45.3%~~42.5% from ~~39.4%~~44.2% for concrete construction products, respectively.

Research and development and engineering expense increased ~~9.2%~~9.0% to ~~$13.4~~$14.6 million from ~~$12.3~~$13.4 million, primarily due to increases of $0.6 million in ~~cash profit sharing expense and $0.4~~personnel costs, $0.3 million in ~~personnel~~professional fees and $0.2 million in patent expense, partly offset by $0.2 million reduction in travel-associated costs.

Selling expense increased ~~1.5%~~8.0% to ~~$28.5~~$30.8 million from ~~$28.1~~$28.5 million, primarily due to increases of ~~$1.7~~$1.5 million in ~~cash profit sharing and sales commission expense, $0.7~~stock-based compensation, $0.9 million in personnel costs, and $0.8 million in professional fees, partly offset by decreases of ~~$0.3~~$0.8 million in ~~advertising and promotion expense and $0.2 million in professional fees.~~travel–associated expenses.

General and administrative expense ~~decreased 2.7%~~increased 26.2% to ~~$38.5~~$48.6 million from ~~$39.5~~$38.5 million, primarily due to ~~decreases~~increases of ~~$2.4~~$5.0 million in stock-based compensation expense, ~~and $2.0~~$2.4 million in professional fees, ~~including consulting fees,~~$2.1 million in personnel costs, and $0.9 million in amortization and depreciation expense, partly offset by ~~increases~~a decrease of ~~$1.5 million in personnel expense, $1.4 million in cash profit sharing expense and~~ $0.7 million in ~~bad debt expense.~~travel–associated expenses. Included in general and administrative expense are SAP implementation and support costs of ~~$3.4~~$3.3 million, which increased ~~$1.0~~$0.7 million from the prior quarter.

Our effective income tax rate de~~creased~~increased to ~~21.3%~~24.3% from ~~22.5%~~21.3%, primarily due to alower windfall tax ~~credit~~benefits on the vesting of restricted stock units during the first quarter of 2021 compared to 2020.

Consolidated net income was ~~$36.8~~$50.4 million compared to ~~$22.7~~$36.8 million. Diluted net income per common share was ~~$0.83~~$1.16 compared to ~~$0.50.~~$0.83.

The following table represents net sales by segment for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively:


	North						Asia/
(in thousands)	America			Europe			Pacific			Total
Three months ended
March 31, 2020	$	249,050		$	32,732		$	1,886		$	283,668
March 31, 2021	300,564			44,296			2,782			347,642
Increase	$	51,514		$	11,564		$	896		$	63,974
Percentage increase	20.7		%	35.3		%	47.5		%	22.6		%

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

March 31, 2019 $ 221,431
$ 35,780
$ 2,033
$ 259,244
March 31, 2020 249,050
32,732
1,886
283,668
Increase (decrease) $ 27,619
$ (3,048 ) $ (147 ) $ 24,424
Percentage Increase (decrease) 12.5 % (8.5 )% (7.2 )% 9.4 %

The following table represents segment net sales as percentages of total net sales for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively:

The following table represents gross profit by segment for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, 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 March 31, ~~2020~~2021 and ~~2019,~~2020, respectively:

* The statistic is not meaningful or material.

•Net sales increased ~~12.5%~~20.7%, primarily due to higher sales volumes from the return of Lowe's and increased repair and remodel activity, as well as from other distribution channels, which also benefited from increases in ~~sales volumes.~~new housing starts and repair and remodel activity. Canada's net sales also increased primarily due to higher sales volumes and were ~~negatively affected~~positively impacted by approximately $0.8 million in foreign currency translation.

•Gross profit as a percentage of net sales increased to ~~47.7%~~48.5% from ~~44.4%~~47.7%, primarily due to lower ~~material~~labor, factory, warehouse and freight costs, ~~and factory and overhead costs (on higher production), partly offset by higher warehouse, labor and shipping expense,~~ each as a percentage of net sales, partly offset by higher material costs as a percentage of net sales.

•Research, ~~and~~ development and engineering ~~expense~~expenses increased ~~$1.2 million, primarily due to an increases of $0.7 million in cash profit sharing expense and $0.4 million in personnel costs.~~

~~General and administrative~~•Selling expense ~~decreased $1.6 million,~~increased 9.1%, primarily due to ~~decreases~~increases of ~~$2.4~~$1.8 million in personnel costs, $1.5 million in stock-based compensation, and ~~$2.0~~$0.7 million in professional fees, offset by decreases of $2.0 million in travel–associated expenses.

•General and administrative expense increased 26.6%, primarily due to increases of $3.5 million in stock-based compensation expense, $2.8 million for professional\legal fees, $1.4 million in personnel costs, $0.9 million in depreciation and amortization, partly offset by ~~increases~~a decrease of ~~$1.6~~$0.5 million in personnel expense mostly from increased SAP implementation expenses, $0.7 million in bad debt expense and $0.7 million in cash profit sharing expense. Included in general and administrative expense are SAP related costs of $2.7 million, which increased $0.7 million from the prior quarter.travel-related expenses.

•Income from operations increased by ~~$20.7~~$15.8 million, primarily due to increased gross ~~profit.~~profit, partly offset by higher operating expenses.

•Net sales ~~decreased 8.5%~~increased 35.3%, primarily due to ~~lower~~higher sales volumes ~~which was partly~~and were positively affected by approximately $3.6 million in foreign currency translation related to ~~the COVID-19 pandemic. Net sales were impacted by approximately $1.0 million of negative foreign currency translations resulting from some Europe~~Europe's currencies ~~weakening~~strengthening against the United States dollar. ~~In local currency, Europe net sales decreased.~~

~~General and administrative expense~~•Income from operations increased ~~$0.3~~by $4.0 million, primarily due to increases of $0.2 million cash profit sharing expense and $0.2 million in severance expense, partly offset by an increase of $0.1 million in amortization expense on intangibles acquired in fiscal year 2019. Included in general and administrative expense are SAP related costs of $0.6 million, which increased $0.4 million from the prior quarter.higher gross profits.

•For information about the Company's Asia/Pacific segment, please refer to the tables above setting forth changes in our operating results for the three months ended March 31, 2021 and 2020, respectively.

•General and ~~2019, respectively.~~administrative expense increased $1.8 million, primarily due to increases of $0.7 million in cash profit sharing expense, $0.6 million in stock-based compensation expense, $0.6 million in professional/legal fees, and $0.4 million in increase personnel costs.

Effect of New Accounting Standards

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

Liquidity and Sources of Capital

The Company is a borrower, and certain ~~of its~~ domestic subsidiaries are guarantors, under a revolving credit agreement with Wells Fargo Bank, N.A. as administrative agent, and certain other lenders, which provides the Company with a $300.0 million revolving line of credit (the “Credit Facility”), that expires July 23, 2022, and an irrevocable standby letter of credit in support of various insurance deductibles.

As previously disclosed, as a proactive measure, 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. The proceeds from the borrowings are available to be used for working capital, general corporate or other purposes permitted by the Credit Facility. Total available credit as of March 31, 2020, was $153.6 million, including the Credit Facility and other revolving credit lines.

Given current circumstances, the Company has temporarily suspended until further notice its capital allocation strategy first announced in August 2015 and updated in August 2016, which included growing our business by internal improvements and repurchasing our common stock. Our ~~current~~ principal ~~use~~uses of liquidity ~~are~~include the costs and expenses associated with our ~~operations.~~operations, including financing working capital requirements and continuing our capital allocation strategy, which includes supporting capital expenditures, repurchasing the Company's common stock, paying cash dividends, and financing other investment opportunities over the next twelve months.

As of March 31, ~~2020,~~2021, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions. Cash and cash equivalents of ~~$53.1~~$74.2 million are held in the local currencies of our foreign

operations and could be subject to additional taxation if repatriated to the United States. The Company is maintaining a permanent reinvestment assertion on its foreign earnings relative to remaining cash held outside the United States.

The following table presents selected financial information as of March 31, ~~2020,~~2021, December 31, ~~2019~~2020 and March 31, ~~2019,~~2020, respectively:

At March 31, At December 31, At March 31,
(in thousands) 2020 2019 2019

Cash and cash equivalents $ 301,741
$ 230,210
$ 113,407
Property, plant and equipment, net 246,941
249,012
251,398
Goodwill, intangible assets and equity investment 157,527
159,430
158,371
Working capital 589,132
482,000
425,160

The following table provides cash flow indicators for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively:

Three Months Ended March 31,
(in thousands) 2020 2019
Net cash provided by (used in):
  Operating activities $ 12,725
$ 9,648
  Investing activities (6,234 ) (10,806 )
  Financing activities 68,567
(45,466 )

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

During the three months ended March 31, ~~2020,~~2021, operating activities provided ~~$12.7~~$17.8 million in cash and cash equivalents, as a result of ~~$36.8~~$50.4 million from net income and ~~$14.1~~$20.6 million from non-cash adjustments to net income, which included depreciation and amortization expense and stock-based compensation expense. ~~The increase in~~Cash provided from net ~~cash provided by operating activities~~income was partly offset by a decrease of ~~$38.2~~$53.1 million in the net change in operating assets and liabilities, including ~~an increase~~increases of ~~$32.2~~$62.7 million in trade accounts ~~receivable.~~ receivable, $14.8 million in inventory and $14.1 million in other current assets, partly offset by increases of $22.1 million in other current liabilities and $17.3 million in trade accounts payable.

Cash used in investing activities of ~~$6.2~~$15.7 million during the three months ended March 31, ~~2020 consisted primarily of $6.8~~2021 was mainly for capital expenditures and a $5.3 million ~~for property, plant and equipment expenditures. Cash provided by financing activities of $68.6 million during the three months ended March 31, 2020 consisted primarily of $150.0 million provided by~~investment in a ~~draw\ on our credit facility, partly offset by $62.7 million used for share repurchases and $10.2 million used to pay cash dividends.~~

~~Cash flow used for investing activities result primarily from the~~venture capital ~~expenditures.~~fund. Our capital spending in ~~2018,~~ 2019, 2020 and the three months ended March 31, ~~2020~~2021 was ~~$29.3~~$37.5 million, ~~$32.7~~$37.9 million and ~~$6.8~~$10.5 million, respectively, which was primarily used for machinery and equipment purchases and software in development. Based on current information and subject to future events and circumstances, we ~~postponed~~expect new capital spending for fiscal year 2021 will be in the $50 million to $55 million range which includes carryover projects from 2020 ~~except~~that were paused due to COVID-19 concerns. Capital spending will be primarily for safety ~~and~~needs, equipment replacement ~~projects.~~and productivity improvements. At this time only a small amount of capital spending is related to our growth initiatives.

Cash ~~flow provided by~~used in financing activities ~~was~~of $15.4 million during the three months ended March 31, 2021 consisted primarily ~~due to the Company borrowing $150.0~~of $10.0 million ~~on its credit facility. During the first quarter of 2020, we~~ used ~~$62.7 million to purchase 902,340 shares of the Company's common stock on the open market at an average price of $69.46 per share and we used $10.2 million~~ to pay dividends to our ~~stockholders.~~stockholders and $5.3 million used to pay income taxes on behalf of the employees for shares withheld with respect to their vested restricted stock units.

On ~~April 23, 2020,~~May 4, 2021, the Board ~~declared a~~raised the quarterly cash dividend ~~of $0.23~~to $0.25 per share, estimated to be ~~$10.2~~$10.9 million in total. The Company last raised the quarterly dividend $0.01 per share to $0.23 per share on April 26, 2019. The dividend will be payable on July ~~23, 2020,~~22, 2021, to the Company's stockholders of record on July ~~2, 2020.~~1, 2021.

As illustrated in the table below, since ~~2014,~~2015, the Company has repurchased over seven-and-a-half million shares of the Company's common stock, which represents approximately ~~15.4%~~15.7% of our shares of common stock outstanding at the beginning

of 2015. Including dividends, we have returned cash of ~~$604.3~~$647.8 million, which represents ~~84.6%~~69.9% of our total cash flow from operations during the same period.

(in thousands) Number of Shares Repurchased Cash Paid for Share Repurchases Cash paid for Dividends Total
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 1,244
53,502
32,711
86,213
January 1 - December 31, 2015 1,339
47,144
29,352
76,496
Total 7,550
$ 404,681
$ 199,593
$ 604,274

~~Given current circumstances, the Company has temporarily suspended its share repurchase program as of March 31, 2020.~~ As of March 31, ~~2020, approximately $37.3 million remained available under the~~2021, $100.0 million was available for future repurchases of common stock under our share repurchase authorization ~~which~~(which expires ~~December 31, 2020.~~at the end of 2021).

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, ~~2020.~~2021.

Inflation and Raw Materials

We believe that the effect of inflation has not been material in recent years, as general inflation rates have remained relatively low. However, the cost of steel, lumber and petroleum products have increased in the last few quarters as had housing prices on strong demand, especially for new housing compared to a limited supply. This could have an effect on the general inflation rates in future quarters. Our main raw material is steel. As such, ~~increases in~~increased steel prices may adversely affect our gross profit margin if we cannot recover the higher costs through price ~~increases.~~increases in a timely manner.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We have operations both within the United States and internationally, and are exposed to market risks in the ordinary course of our business.

Foreign Exchange Risk

~~The Company has~~We have foreign exchange rate risk in ~~its~~our international operations, and through purchases from foreign vendors. Changes in the values of currencies of foreign countries affect our financial position, income statement and cash flows when translated into U.S. dollars. ~~The Company does not currently hedge this risk. The Company estimates~~We estimate that if the exchange rate were to change by 10% in any one country where ~~the Company has~~we have our operations, the change in net income would not be material to ~~the Company’s~~our operations taken as a whole.

We may manage our exposure to transactional exposures by entering into foreign currency forward contracts for forecasted transactions and projected cash flows for foreign currencies in future periods. In 2020 and 2021, we entered into financial contracts to hedge the risk of fluctuations associated with the Chinese Yuan.

Foreign currency translation adjustments on ~~the Company's~~our underlying assets and liabilities resulted in an accumulated other comprehensive loss of ~~$7.6~~$9.3 million for the three months ended March 31, ~~2020, and an accumulated other comprehensive loss of $1.3 million for the three months ended March 31, 2019,~~2021, due to the ~~strengthening~~effects of the weakening United States dollar in relation to almost all other currencies.

Our primary exposure to interest rate risk results from outstanding borrowings under the Credit Facility, which bears interest at variable rates. The variable interest rates on the Credit Facility fluctuate and exposes us to short-term changes in market interest rates as our interest obligation on this instrument is based on prevailing market interest rates. Interest rates fluctuate as a result

of many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control. At March 31, 2020, the Company had $150.0 million outstanding under the Credit Facility at an average annualized interest rate of approximately 1.9%. We currently do not engage in any interest rate hedging activity and a 10% change in interest rates would affect our interest expense by approximately $0.3 million per year, assuming no changes in the amount outstanding or other variables under the Credit Facility.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures. As of March 31, ~~2020,~~2021, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the chief executive officer (“CEO”) and the chief financial officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act. Based on this evaluation, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level. Disclosure controls and procedures are controls and other procedures designed reasonably to assure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed reasonably to assure that this information is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.

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

likelihood of future events, and there can be only reasonable, not absolute assurance that any design will succeed in achieving its stated goals under all potential events and conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.

Changes in Internal Control over Financial Reporting. In 2016, we began the process of implementing a fully integrated ERP platform from SAP America, Inc. (“SAP”), as part of a multi-year plan to integrate and upgrade our systems and processes. The first phase of this implementation became operational, at most of our North America sales, production, warehousing and administrative locations between February 2018 and ~~March~~October 2020. We believe the necessary steps have been taken to monitor and maintain appropriate internal control over financial reporting during this period of change and will continue to evaluate the operating effectiveness of related key controls during subsequent periods.

As the phased implementation of this system continues, we are experiencing certain changes to our processes and procedures which, in turn, result in changes to our internal control over financial reporting. While we expect SAP to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as each of the affected areas evolves. For a discussion of risks related to the implementation of new systems, see Item 1A - "Risk Factors - Other Risks - We rely on complex software systems and hosted applications to operate our business, and our business may be disrupted if we are unable to successfully/efficiently update these systems or convert to new systems." in the ~~2019~~2020 Form 10-K.

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended March 31, ~~2020~~2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. Corrosion, hydrogen embrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors can contribute to failure of fasteners, connectors, anchors,

adhesives, specialty chemicals, such as fiber reinforced polymers, and tool products. In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets, and the Company’s website.

The Company currently is not a party to any legal proceedings, which the Company expects individually or in the aggregate to have a material adverse effect on the Company’s financial condition, cash flows or results of operations. Nonetheless, the resolution of any claim or litigation is subject to inherent uncertainty and we could in the future, incur judgments, enter into settlements of claims or revise our expectations regarding the outcome of the various legal proceedings and other matters we are currently involved in, which could materially impact our financial condition, cash flows or results of operations. See “Note 1213 — Commitments and Contingencies” to the accompanying unaudited interim condensed consolidated financial statements for certain potential third-party claims.

Item 1A. Risk Factors

There have been no material changes to our risk factors reported or new risk factors identified since the filing of our Annual Report on ~~From~~Form 10-K for the year ended December 31, ~~2019, except as follows:~~2020.

A pandemic, epidemic or other public health emergency, such as the recent outbreak of coronavirus disease 2019 ("COVID-19"), could have a material effect on our business, financial condition and cash flows.

Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the recent outbreak of COVID-19 which has spread from China to many other countries including the United States. In March 2020, the WHO characterized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The outbreak has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business

curtailments, school closures, and 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.

We are a company operating in a critical infrastructure industry, as defined by the U.S. Department of Homeland Security. Consistent with foreign and federal guidelines and with state and local orders to date, we currently continue to operate across our North America footprint but have temporarily ceased most operations at two of our larger manufacturing facilities in Europe as a result of government orders. Notwithstanding our level of continued operations, 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 our business, financial condition, 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.

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

The table below presents the monthly repurchases of shares of our common stock in the first quarter of ~~2020.~~2021.

Total Number of Shares Purchased ^[1][2]

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]


	(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, 2021	—	$	—	—	—
February 1 - February 28, 2021	55,157	$	95.53	—	—
March 1 - March 31, 2021	298	$	90.82	—	—
Total	55,455

[1] Total number of shares purchased includes shares withheld for settlement of payroll taxes from stock-based compensation awards vested for retirement eligible employees who retired during the first quarter of ~~2020.~~2021.

^[2]Pursuant to the Board’s $100.0 million repurchase authorization that was publicly announced on ~~December 9, 2019,~~December16, 2020, which authorization is scheduled to expire on December 31, ~~2020.~~2021.

Item 3. Defaults Upon Senior Securities.

Item 4. Mine Safety Disclosure.

Item 5. Other Information.


		EXHIBIT INDEX
3.1		~~EXHIBIT INDEX~~
~~3.1~~	Certificate of Incorporation of Simpson Manufacturing Co., Inc., as amended, are incorporated by reference to Exhibit 3.1 of its Quarterly Report on Form 10-Q filed on May 9, 2018
3.2		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.
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)

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



						Additional						Accumulated Other
	Common Stock					Paid-in			Retained			Comprehensive			Treasury
	Shares		Par Value			Capital			Earnings			Income (Loss)			Stock			Total
Balance at January 1, 2019	44,998		$	453		$	276,504		$	628,207		$	(24,650	)	$	(25,000	)	$	855,514
Net income	—		—			—			22,662			—			—			22,662
Translation adjustment, net of tax	—		—			—			—			(1,335		)	—			(1,335		)
Stock-based compensation	—		—			3,903			—			—			—			3,903
Shares issued from release of Restricted Stock Units	164		2			(5,863		)	—			—			—			(5,861		)
Repurchase of common stock	(505	)	—			—			—			—			(30,000		)	(30,000		)
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	—		—			—			111,320			—						111,320
Translation adjustment, net of tax	—		—			—			—			2,220			—			2,220
Pension adjustment, net of tax	—		—			—			—			(1,064		)	—			(1,064		)
Stock-based compensation	—		—			5,422			—			—			—			5,422
Shares issued from release of Restricted Stock Units	14		—			(42		)	—			—			—			(42		)
Repurchase of common stock	(467	)	—			—			—			—			(30,816		)	(30,816		)
Retirement of common stock	—		(13		)	—			(76,424		)	—			76,437			—
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	—		—			—			36,826			—			—			36,826
Translation adjustment, net of tax	—		—			—			—			(7,593		)	—			(7,593		)
Pension adjustment, net of tax	—		—			—			—			273			—			273
Stock-based compensation	—		—			33			—			—			—			33
Shares issued from release of Restricted Stock Units	153		2			(7,699		)	—			—			—			(7,697		)
Repurchase of common stock	(902	)	—			—			—			—			(62,679		)	(62,679		)
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 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



	At March 31, 2019
	Gross					Net
(in thousands)	Carrying Amount		Accumulated Amortization			Carrying Amount
North America	$	30,824	$	(16,795	)	$	14,029
Europe	23,435		(13,316		)	10,119
Total	$	54,259	$	(30,111	)	$	24,148



	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



(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


										North America		Europe		Asia/ Pacific		Total
	North America		Europe		Asia/ Pacific		Total
Percentage of total 2019 net sales	85	%	14	%	1	%	100	%
Percentage of total 2020 net sales	88	%	12	%	—	%	100	%	Percentage of total 2020 net sales	88	%	12	%	—	%	100	%
Percentage of total 2021 net sales									Percentage of total 2021 net sales	87	%	13	%	—	%	100	%


	North						Asia/			Admin &							North		Asia/	Admin &
(in thousands)	America			Europe			Pacific			All Other			Total			(in thousands)	America	Europe	Pacific	All Other	Total
Three months ended																Three months ended
March 31, 2019	$	98,397		$	11,555		$	319		$	(17	)	$	110,254
March 31, 2020	118,795			10,701			167			3			129,666			March 31, 2020	$118,795	$10,701	$167	$3	$129,666
Increase (decrease)	$	20,398		$	(854	)	$	(152	)	$	20		$	19,412
Percentage Increase (decrease)	20.7		%	(7.4		)%	*			*			17.6		%
March 31, 2021																March 31, 2021	145,830	15,250	1,244	(42)	162,282
Increase																Increase	$27,035	$4,549	$1,077	$(45)	$32,616
Percentage Increase																Percentage Increase	22.8%	42.5%	*	*	25.2%


(in thousands)	Number of Shares Repurchased	Cash Paid for Share Repurchases		Cash paid for Dividends		Total
January 1 - March 31, 2021	—	$	—	$	9,967	$	9,967
January 1 - December 31, 2020	1,053	$	76,189	$	40,400	$	116,589
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	1,244	53,502		32,711		86,213
January 1 - December 31, 2015	1,339	47,144		29,352		76,496
Total	7,701	$	418,191	$	229,560	$	647,751